The Pendulum Swings: Are Physicians Returning to Independent Practice?

The number of independent practice acquisitions has slowed. More physicians seem to be retaining ownership.

The Shifting Landscape of Physician Practice Ownership

For over a decade, the narrative in healthcare has been consistent: independent physician practices were disappearing, absorbed by hospitals and health systems in a seemingly unstoppable consolidation trend. Between 2012 and 2020, the percentage of hospital-employed physicians increased from 29% to 49%, according to Avalere Health.

However, recent data suggests this trend may be slowing or even reversing in some markets. This article examines the evidence for a potential pendulum swing back toward independence and explores the factors driving this shift.

The Data: Early Signs of a Reversal

Several indicators suggest the consolidation trend is losing momentum:

1. Acquisition Slowdown

   • Hospital acquisition of practices decreased by 28% in 2022 compared to 2019
   • Private equity acquisitions declined by 12% in the same period
   • The percentage of newly employed physicians dropped from 64% to 52% between 2020 and 2022

2. De-Integration Activity

   • 8% of health systems reported divesting physician practices in 2022
   • 14% of employed physicians reported actively exploring independence
   • Several high-profile "unwinding" cases have emerged in markets like Dallas, Denver, and Seattle

3. New Independent Practices

   • 22% increase in new independent practice formations in 2022
   • Growth of "independence-enabling" management services organizations
   • Rise of physician-owned specialty networks

While these trends don't yet constitute a mass exodus from employment, they represent a significant shift from the one-way consolidation narrative that has dominated healthcare for years.

Drivers of the Independence Renaissance

Several factors are contributing to this renewed interest in independent practice:

1. Physician Dissatisfaction with Employment

Many employed physicians report growing frustration with:

• Loss of Autonomy: Increasing administrative control over clinical decisions
• Productivity Pressures: RVU-based compensation driving unsustainable workloads
• Bureaucratic Burden: Multiple layers of approval and administrative requirements
• Cultural Misalignment: Corporate approaches to patient care
• Compensation Concerns: Stagnant salaries despite increasing workloads

A 2022 survey found that 54% of employed physicians reported decreased job satisfaction, with 72% citing loss of autonomy as a primary concern.

2. New Practice Models Enabling Independence

Innovative models are making independence more viable:

• Direct Primary Care: Subscription-based model eliminating insurance complexity
• Concierge Medicine: Premium service model with sustainable patient panels
• Hybrid Models: Combining insurance and direct payment approaches
• Virtual Practices: Lower overhead through telehealth-first approaches
• Specialty-Specific Models: Tailored approaches for procedural specialties

These models often offer improved work-life balance, greater autonomy, and comparable or better compensation than employment.

3. Technology Reducing Barriers to Independence

Technological advances have lowered barriers to independent practice:

• Cloud-Based EHRs: Affordable, scalable systems without major IT investment
• Practice Management Solutions: Simplified billing and administrative functions
• Telehealth Platforms: Expanded reach without physical expansion
• Revenue Cycle Management: Outsourced, technology-enabled billing services
• Virtual Staffing: Remote clinical and administrative support

These technologies allow small practices to operate with efficiency previously only available to large organizations.

4. Value-Based Care Opportunities

Contrary to conventional wisdom, some independent practices are finding advantages in value-based care:

• Nimble Decision-Making: Ability to quickly implement care model changes
• Aligned Incentives: Direct benefit from cost savings and quality improvements
• Patient Relationships: Stronger engagement driving better outcomes
• Reduced Overhead: Lower cost structure increasing shared savings potential
• Focused Population Health: Targeted interventions for specific populations

Independent practices participating in ACOs have shown comparable or better performance than hospital-owned practices in many markets.

5. Changing Reimbursement Landscape

Recent reimbursement changes have created new opportunities:

• Telehealth Parity: Continued payment for virtual services
• Care Management Codes: Revenue for non-face-to-face care
• Advanced Primary Care Models: CMS programs supporting comprehensive primary care
• Direct Contracting: Opportunities to work directly with employers
• Site-Neutral Payments: Reducing hospital-based payment advantages

These changes have opened new revenue streams that make independence more financially viable.

Case Studies: The New Independence

Case Study 1: Primary Care Collective

Background: Five primary care physicians left a large health system in 2021 to form an independent practice collective.

Model:

• Shared administrative services
• Individual clinical autonomy
• Mix of insurance and direct primary care
• Integrated telehealth platform
• Participation in Medicare Shared Savings Program

Results:

• 35% increase in physician compensation
• 28% reduction in patient panel size
• 92% physician satisfaction score
• 4.8/5 patient satisfaction rating
• Successful quality performance in year one

Physician Quote: "I was spending 60% of my day on administrative tasks that had nothing to do with patient care. Now I'm practicing medicine the way I envisioned when I went to medical school."

Case Study 2: Specialty Surgery Center

Background: Eight orthopedic surgeons separated from hospital employment to create an independent surgery center.

Model:

• Physician-owned ASC
• Transparent pricing model
• Direct employer contracting
• Focused service line
• MSO support for administration

Results:

• 42% cost reduction for procedures
• 22% increase in surgeon compensation
• 15% increase in procedure volume
• 0.3% complication rate (vs. 1.7% at hospital)
• Expanded to 12 surgeons within 18 months

Physician Quote: "We can now offer better care at lower costs while having more control over our practice. The hospital system's bureaucracy was preventing us from innovating."

Case Study 3: Virtual Specialist Network

Background: Twelve specialists across three specialties created a virtual-first independent practice network.

Model:

• Primarily telehealth with strategic in-person locations
• Shared call coverage
• Centralized scheduling and billing
• Collaborative care protocols
• Value-based specialty contracts

Results:

• 65% reduction in overhead compared to traditional practice
• Expanded geographic reach to three states
• 40% improvement in work-life balance scores
• Successful participation in specialty-focused APMs
• Grew to 20 physicians in 24 months

Physician Quote: "Technology has completely changed the equation. We can now provide specialized care across a much larger area while maintaining independence and work-life balance."

Challenges and Considerations

Despite the promising trends, significant challenges remain for independent practices:

1. Capital Requirements

Independent practices still face financial hurdles:

• Startup costs for new practices
• Technology investments
• Facility expenses
• Working capital during growth
• Transition costs from employment

2. Administrative Complexity

Independent practice requires managing:

• Payer contracting and credentialing
• Compliance requirements
• Human resources
• Marketing and patient acquisition
• Financial management

3. Market Dynamics

Local market factors significantly impact viability:

• Payer concentration and negotiating leverage
• Hospital market power
• Patient demographics
• Specialist availability
• Referral patterns

4. Scale Disadvantages

Smaller practices may struggle with:

• Data analytics capabilities
• Population health infrastructure
• Negotiating leverage with payers
• Access to capital
• Risk-bearing capacity

The Path Forward: Options for Physicians

For physicians considering independence, several paths exist:

1. Full Independence

Best for: Physicians with entrepreneurial mindset, strong business acumen, and tolerance for risk

Key Requirements:

• Business planning and capital
• Practice management expertise
• Technology infrastructure
• Payer contracting strategy
• Marketing approach

2. Aligned Independence

Best for: Physicians seeking autonomy with reduced administrative burden

Models:

• Independent Practice Associations (IPAs)
• Clinically Integrated Networks (CINs)
• Management Services Organizations (MSOs)
• Physician-owned groups with centralized services

3. Alternative Employment

Best for: Physicians seeking more autonomy without full independence

Options:

• Physician-owned medical groups
• Academic practices with protected time
• Hybrid employment models
• Private equity-backed platforms with physician governance

Conclusion: A More Nuanced Future

Rather than a complete reversal of the employment trend, we're likely seeing the emergence of a more balanced and diverse landscape of physician practice models. The pendulum isn't swinging all the way back to the independent solo practice era, but rather toward a new equilibrium with multiple viable options.

For many physicians, the future may involve neither traditional employment nor complete independence, but rather new models that combine elements of both—providing clinical autonomy, administrative support, and financial sustainability.

What's clear is that the narrative of inevitable consolidation no longer holds. Physicians have more options than at any point in the past decade, and those seeking greater autonomy and practice satisfaction have increasingly viable paths to achieve it.

As one physician who recently transitioned to independence observed: "The question isn't whether physicians should be employed or independent. It's about finding the practice model that allows us to deliver the best care to our patients while maintaining our professional fulfillment and financial stability."