Healthcare Consolidation Trends: What Your Practice Needs to Know

Private practice is no longer the norm for physicians. According to a new GAO report, less than half of doctors now work independently, down from 60% a decade ago. This shift toward hospital employment and corporate ownership affects everything from healthcare costs to practice operations. For Florida healthcare leaders, understanding these consolidation trends has become essential for making informed strategic decisions.

Understanding the Current Consolidation Landscape

According to the GAO’s September 2025 report, the percentage of physicians working in private practice has decreased over the past decade. Just over a decade ago, approximately 60% of physicians operated in private practices. Today, that number has fallen to only 42%.

The consolidation trend continues, with hospital systems leading the acquisition movement. Research cited by the GAO indicates the share of physicians operating under hospital systems increased from 29% in 2012 to 47% in 2024, with the highest concentration occurring in Midwestern states.

Main Factors Behind Physician Consolidation

For many independent practices, financial and administrative burdens have become challenging.

Several factors are driving this trend, according to the GAO report:

Negotiating Power: Independent physicians often struggle to secure favorable reimbursement rates with insurers. Joining larger entities provides enhanced influence in contract negotiations.

Rising Practice Expenses: As operational costs continue to climb, many practices find it difficult to maintain profitability. Consolidation can help reduce overhead through shared resources.

Access to Technology: Information systems and other costly technologies become more accessible when practices join larger organizations with established infrastructure.

Financial Implications for Healthcare Organizations

The GAO report highlights financial consequences of physician consolidation. When physicians move from private practice to hospital systems, healthcare spending typically increases. This occurs because services provided in hospital settings generally command higher reimbursement rates than identical services delivered in physician offices.

Private equity involvement in physician practice acquisitions presents another dimension to consider. The GAO notes that when private equity firms acquire practices, prices for commercially insured patients often increase.

Quality and Access Considerations

The GAO report raises questions about how consolidation affects quality and access. Current evidence suggests that when physicians join hospital systems, quality of care either remains unchanged or potentially declines.

Research on quality outcomes when physicians consolidate with health insurers or private equity firms remains limited according to the report. This knowledge gap makes it difficult for healthcare organizations to fully assess the potential impacts of different consolidation partners.

Similarly, the effects of consolidation on patient access remain poorly understood across all consolidation types according to the GAO findings. Healthcare leaders might want to consider how ownership changes could affect patient populations, particularly in underserved areas.

Strategic Considerations Based on GAO Findings

For healthcare executives facing consolidation decisions, several strategic considerations emerge from the GAO report:

Financial Assessment 

The GAO findings suggest organizations may want to examine how consolidation might affect cost structures and reimbursement rates.

Quality Measurement 

The report indicates quality metrics may remain unchanged or decline following consolidation with hospital systems, suggesting a need for careful monitoring.

Partnership Evaluation 

The GAO identifies different consolidation partners, including hospital systems, private equity firms, corporate entities, and health insurers, each with different potential impacts.

Alternative Structures 

While not explicitly stated in the GAO report, the findings about private practice decline suggest exploring various affiliation models may be prudent.

The Road Ahead According to GAO Data

The GAO report indicates consolidation continues to reshape the healthcare industry. The remaining independent practices may face increasing competitive pressures based on the documented decline in private practice numbers.

For healthcare organizations, understanding these trends provides valuable context for strategic planning. The GAO research suggests that whether considering consolidation options or working to maintain independence, healthcare leaders may benefit from financial analysis aligned with their specific circumstances.

How to Approach Consolidation Based on GAO Insights

The GAO report demonstrates that decisions about practice ownership and affiliation may require thorough financial analysis and strategic planning based on objective data. The findings suggest healthcare organizations may benefit from advisors who can interpret these trends for their specific situation.

Need clarity on how these changes impact your reimbursements or compliance obligations?

The James Moore healthcare team can help you interpret the numbers and prepare your strategy. Contact us today.

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