The independent healthcare market has become increasingly cutthroat amid declining reimbursements, rising costs and increasing consolidation industrywide — making it significantly more difficult for private practice physicians to stay afloat.
Here are three updates on the industry at large that are negatively affecting independent physicians and practices:
1. Corporate entities — including insurance companies — are acquiring physician practices, leaving many physicians wary. Research by the Physicians Advocacy Institute and Avalere Health found that as of 2023, 58.5% of practices are owned by either health systems or corporations. Further, corporations own slightly more than health systems, owning 30%.
Udaya Padakandla, MD, president of the Texas Society of Anesthesiologists, told Becker's the uptick in profit-based insurers purchasing practices is "very brazen" and "very wrong."
"Patient care becomes severely compromised. Additionally, physicians will go out of practice if you drive down their payments too far for too long. Eventually, they will all quit. That's unsustainable, because the patients are left without the proper physicians and proper providers to take care of them. It happens a lot in rural areas because physicians will leave the practices because the payers don't pay well. Physician payment needs to be kept at a level that keeps them taking care of the patients."
2. The independent provider population is shrinking — quickly. Seventy-eight percent of physicians are now employed by hospitals, health systems and other corporate entities as of 2023, according to the Physician Advocacy Institute report. Moreover, young physicians are shying away from private practice — only 15% practice independently, according to a 2023 Medscape report.
3. Inflation, staggering supply costs, dwindling reimbursement rates and other headwinds are not letting up. Medical and surgical supply costs faced by practices per full-time physician increased by 82% from 2022 to 2023, according to a report released in May by the Medical Group Management Association.
"Without consistent payment updates and with continuing administrative burden, physicians are struggling to reinvest in their practices and communities with confidence," Adam Bruggeman, MD, an orthopedic surgeon at Texas Spine Care Center in San Antonio, told Becker's. "This has led to an erosion of the private practice of medicine."