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Physician practice consolidation shows no signs of slowing down. In fact, we may not have even reached the peak of this healthcare trend yet!

A new report from the U.S. Government Accountability Office reveals the latest physician consolidation patterns driven by hospitals, commercial insurers, and private equity firms.

In this article, I'll highlight the key findings, explore the forces driving these market shifts, and explain their potential impact on patients, physicians, and the broader health system.

The data tells a clear story: independent practice is becoming the exception, not the rule.

At least 47% of physicians now work for or are affiliated with hospital systems, up from less than 30% in 2012. That's nearly half of all practicing physicians.

The numbers vary by region, with the Midwest leading at 66% consolidation. Rural areas aren't far behind at 58%, up from 48% in just five years.

While the exact numbers vary by data source, every major insurer now owns physician practices or management service organizations (MSOs).

The pattern is quite obvious: insurers want direct control over care delivery, not just payment. This is driving their industy's own vertical integration race.

Though still small at 6.5% of physicians nationally, PE investment has jumped 4.5% in just two years.

The specialty breakdown reveals PE's targeted approach. Below are the share of specialties that work in PE-backed practices

Note that these are high-margin specialties!

Geography matters too. Some metropolitan areas see single PE firms controlling over 30% of gastroenterologists or over 50% of dermatologists.

So, who remains independent? Only 42% of physicians remain in truly private practice, down from 60% in 2012.

The consolidation wave is driven by specific economic and operational pressures that make independent practice increasingly difficult.

Overall, these economic pressures have created a consolidation wave that benefits hospital systems, insurers, and PE.

We're witnessing (or have witnessed) the end of an era in American healthcare. The independent physician practice—once the backbone of our healthcare system—is becoming a relic, not because it doesn't work, but because we've created a payment system that makes it financially impossible.

The consolidation trends in this GAO report represent a fundamental shift in how medicine is practiced, how physicians make career decisions, and how patients receive care.

For patients, consolidation creates a mixed bag of outcomes. Hospital-employed physicians might provide better care coordination within that system, but patients lose choice and face higher costs due to facility fees. The GAO data is clear: consolidation generally raises prices without improving quality.

From a physician's perspective, the math is simple. Hospital employment offers relief from administrative hell, better negotiating power with insurers, and financial stability. But it comes with trade-offs many of us don't fully appreciate until we're locked in—less clinical autonomy, productivity pressures, and the loss of entrepreneurial control over practice decisions.

But private equity presents a different bargain. PE firms promise the best of both worlds: maintain ownership while accessing resources and growth capital. But their 3-7 year exit timelines don't align with the decades-long patient relationships that define good medical practice.

The system-level implications are profound. We're creating healthcare oligopolies that reduce competition, increase prices, and concentrate market power among a few large players. When single private equity firms control 30-50% of specialists in a metropolitan area, market dynamics break down entirely.

What's particularly concerning is the policy response—or lack thereof. Most physician practice acquisitions fall below federal reporting thresholds, creating a regulatory blind spot. We're sleep-walking into a consolidated healthcare system without adequate oversight or understanding of long-term consequences.

The irony is that many of the problems driving consolidation are policy-created. Facility fees, prior authorization burdens, EHR requirements, and payment disparities between hospital and office settings aren't natural market forces—they're regulatory artifacts that we could fix if we had the political will.

For young physicians entering practice (me!), understanding these dynamics becomes crucial career knowledge. The traditional choice between employment and independence has evolved into a complex spectrum of arrangements—MSO partnerships, equity deals, and hybrid models that require careful evaluation.

The future likely holds even more consolidation unless we address the underlying drivers. Site-neutral payments, prior authorization reform, and regulatory simplification could slow the consolidation wave, but such changes require overcoming entrenched interests that benefit from the current system.

Healthcare consolidation isn't inherently good or bad—it depends on whether it improves patient outcomes and reduces costs. The current wave does neither consistently, suggesting our approach needs fundamental reconsideration.

In summary, physician consolidation represents the predictable response to policy failures that make independent practice financially unsustainable, creating market concentration that benefits large health systems and investors while raising costs for patients and limiting physician autonomy.

Healthcare clearinghouses are the digital middlemen of the revenue cycle, sitting between providers and payers to standardize, scrub, and route billions of insurance claims. They make the system work—but also add cost and complexity, reflecting the fragmentation of U.S. healthcare.

👉 Read more details here.

AI Isn’t Coming for Your Job—It’s Coming for Your Paperwork

We spend nearly $5 trillion on healthcare every year—but up to 15% of that is wasted on administrative bloat.

Think: prior auths, claims, referral faxes, and inboxes full of chart reviews. Not care. Just the stuff around it.

AI may finally be the tool to automate that waste away.

But which AI tools are actually moving the needle? What’s hype vs. reality? And how close are we to fully automated workflows like dynamic scheduling, ambient documentation, and claims adjudication?

👉 Full breakdown in my latest Huddle+ article here.

Every internist has been there: a healthy 60-year-old scheduled for cataract surgery ends up with an EKG, labs, maybe even a chest X-ray, all for a procedure that carries almost no systemic risk. We order them not because they’re useful, but because “that’s how it’s always been done.”

These pre-op assessments eat up valuable clinic slots, cost patients over $1,200 in unnecessary testing, and force them to take time off work for visits that add no measurable benefit. Multiply that by tens of thousands of low-risk surgeries every year, and the waste becomes staggering.

But what if we stopped doing them altogether, and replaced the whole process with something smarter?

👉 Full breakdown in my latest Inefficiency Insights article here.

We were trained to take care of patients. But no one ever taught us how the system actually works:

That’s why I built this course: How Healthcare Really Works.

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