Patients can receive great care in many different settings, from a large national health system to the office of a single rural physician. So why is there so much concern about the decline of independent practices?
It all comes down to ensuring patients and providers have the options they need and want—patients being able to choose the setting in which they receive (and collaborate on) their care, and providers being able to choose the setting in which they will practice.
In 2018, only 31% of U.S. physicians were independent practice owners or partners, down sharply from 48.5% in 2012. And since 2018, health systems and private equity firms have continued to aggressively acquire independent practices.
This trend is especially acute in rural America. A recent study from Avalere Health in collaboration with the Physicians Advocacy Institute found that over 2019-2024 “the number of independent rural physicians declined -43% (9,500) and the number of independent medical practices declined -42% (7,300).” Over that same period, “the share of independent medical practices declined from 58% to 38%, while corporate-owned practices more than doubled from 11% to 23%.”
Practice consolidation enables healthcare organizations to compete effectively at scale in challenging markets with tight margins. For some physicians, running a practice is a burden they would rather not take on. Acquisition or employment makes sense. But other doctors want to practice independently. They and their patients deserve to have that choice.
At Phamily, we believe that the trusted relationships formed between providers and patients are the most valuable asset a practice can have. These relationships keep patients loyal to the practice and compliant with recommended treatments. They also promote effective communication. When patients are upfront with physicians about their symptoms and concerns, physicians can intervene effectively to restore or maintain health and drive clinical outcomes.
So how does the importance of this trusted patient-provider relationship intersect with concerns over the decline of independent practices?
The 2019 Survey of America’s Patients from The Physicians Foundation found that 92% of patients are satisfied with the relationship they have with their primary care physician. This satisfaction rate reflects the trusted relationships patients build over time with their doctors – especially primary care or community-based physicians.
But even though they value their physicians, patients are frustrated with rushed visits. that 2019 patient survey, only 35% of patients felt their physicians “have all the time they needed to provide the highest standards of care”.
Independent physicians do face financial pressures, and they do need to see a sufficient number of patients daily. However, they may have more flexibility than employed physicians when it comes to scheduling. (And when they can implement service lines that provide revenue outside of direct patient care, they can afford to spend more time with each patient.)
The 2024 murder of United Healthcare CEO Brian Thompson was a lightning rod for entrenched resentment toward insurers, reflecting consumer anger that has been building for years. In 2019, The Physicians Foundation found that 71% of patients wanted to make healthcare decisions in collaboration with their physicians, but 39% felt that “insurance companies make the ultimate decisions about their treatment”.
Patients feel unfairly burdened by insurance requirements. A 2021 study found that 1/4 of insured, non-elderly patients “reported delayed or foregone care due to an administrative task” like “scheduling, obtaining information, prior authorizations, resolving billing issues, and resolving premium problems.”
Obviously, these frustrations are very clearly attributable to insurers. Patients do not have such a clear line of sight into the ways in which health system administrators may impact their care, and there seems to be limited research in this space. However, we can infer that patients want easy access to care and want to make decisions about their care.
Patients want attentive, continuous care—the kind of care often provided in independent practices. Protecting independent private practices means protecting the physician-patient relationship that drives satisfaction and trust in healthcare—and ultimately enables earlier intervention for better outcomes.
Physicians who choose independent practice often do so to preserve certain professional values and work conditions. Quantitative data from physician surveys reveal key factors such as greater autonomy, higher potential income, and lower burnout as motivations for remaining independent, even amid pressures to consolidate.
Physicians often cite autonomy as the most important reason for maintaining a private practice. Being independent allows doctors more freedom to make clinical decisions based on the needs of their patients. Insurers already impose significant administrative burden; these doctors prefer not to deal with health system policies as well.
When The Physicians Foundation conducted the 2023 Survey of America’s Current and Future Physicians, they found that at least 50% of physicians and residents “report third-party involvement, including insurance requirements, documentation protocols, regulatory policies and mandatory training requirements, consistently hinder their autonomy to deliver high-quality and cost-efficient care”
Many doctors choose independent practice to regain control over how they deliver care, from scheduling, to referral choices, to care protocols. Autonomy helps reduce frustration and increase professional satisfaction.
| 2018 | 2016 | |
|---|---|---|
|
Not at all |
2.6% |
2.3% |
|
Little |
8.8% |
8.0% |
|
Somewhat |
26.6% |
17.6% |
|
A good deal |
33.0% |
33.4% |
|
A great degree |
29.0% |
38.7% |
Physicians worry that healthcare consolidation will impact patient care. In the 2023 Survey of America’s Current and Future Physicians 67% of physicians thought “consolidation is impacting patient access to high-quality, cost-efficient care.”
The 2018 survey had found that 57.5% of physicians do not believe hospital employment will enhance care quality and decrease costs. (This was even true for over a third of physicians who were actually employed by hospital systems.)
Physicians who practice independently may often offer high quality care at a lower cost to patients and payers.
Despite the challenges of running a business, independent physicians often report high satisfaction in their careers. They have the freedom to shape office culture, hire staff aligned with their vision, and innovate in care delivery, while spending less time on non-clinical work. The 2018 survey noted: “By contrast, employed physicians see 11.8% fewer patients than practice owners even though they work 3.4% more hours.”
| Employed Physicians | Practice Owners | |
|---|---|---|
|
2012 |
12.66 |
11.01 |
|
2014 |
10.63 |
9.79 |
|
2016 |
11.79 |
10.64 |
|
2018 |
11.61 |
10.78 |
A 2024 McKinsey survey found that 66% of physicians who were dissatisfied with their schedules experienced burnout. 35% of physicians likely to leave their roles in the next 5 years (of those, 60% expect to leave clinical practice entirely. When independent practice is an available choice, physicians have more control over their schedules to stave off burnout—protecting the U.S. healthcare system.
Independent practice isn’t a good fit for every physician. Not everyone wants the stress of running a business. But independent practice needs to be an option. Otherwise, we risk exacerbating physician shortages as doctors leave clinical practice.
After years of crushing margin compression, independent practice may seem harder than ever. Reimbursements are lower in an ambulatory setting, and revenue directly correlates to the number of patients seen. But many physicians are beginning to think like entrepreneurs, identifying practice management strategies that can help them create new sources of income without increasing workload.
One such entrepreneurial physician is Rohit Goyal, MD. When he became the managing partner of Pulmonary Associates of Fredericksburg, Dr. Goyal had to start thinking like an entrepreneur: identifying and evaluating new revenue opportunities that could bolster his practice’s operating income. He has been able to successfully add profitable service lines that deliver passive income—income that does not require additional effort from a physician. Want to learn more?
WEBINAR
Managing partner Rohit Goyal, MD of Pulmonary Associates of Fredericksburg takes an entrepreneurial approach to practice leadership. In this conversation with Darshan Bachhawat, Dr. Goyal will share lessons learned from his journey as a practice leader, including his implementation of Chronic Care Management at scale to deliver exceptional (and profitable) between-visit care.
Darshan has 15+ years experience co-founding and building high growth healthcare technology businesses committed to improving access to care and quality of care. More about Darshan…
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