According to the AMA, 42.2% of physicians worked in private practices in 2024. Just 12 years prior, over 60% of physicians delivered care in a private practice setting. The reality is that physicians are transitioning to large multi-specialty health systems, many of which are owned by hospitals or private equity firms.
If you own a private practice, here’s how this trend could impact your business.
What’s Happening in the Private Practice Market?
Physician practice consolidation has accelerated sharply over the last decade. Healthcare markets are becoming increasingly consolidated, with physicians more frequently employed by hospitals or health systems. Here are several factors that are pushing physicians away from independence:
- Rising administrative burden tied to billing, compliance, and reporting
- Reimbursement pressure from payors for value-based care arrangements
- Staffing shortages and increasing labor costs
- Capital constraints that limit investment in technology and analytics
For many physicians, selling becomes about survival. While consolidation isn’t inherently negative, you need to consider what’s the best option for your practice so you can choose a path that fits your long-term clinical and financial goals.
What to Do if You Want to Sell Your Private Practice
If you are leaning toward a sale, how you prepare impacts the value your practice drives. Here’s what you need to do:
Clean Up Financials
Investors and hospital systems don’t want to inherit a financial nightmare. While they may be willing to take a chance on a practice with good revenue, you’ve got to provide them with a clear, accurate financial picture that they can base their decision on. You need defensible financial statements to boost investor confidence.
Understand Your Payer Mix and Risk Exposure
Practices with predictable cash flow and limited downside risk are more attractive to prospective investors. While your risk profile doesn’t need to be flawless, it does need to be something investors can tolerate. Focus on reducing revenue leakage and providing actionable insights about your risk exposure.
Get Tight Operationally
When you have documented workflows and scalable processes, buyers will view your practice as being less risky. Tighten down your operations and document everything. If someone purchases your practice, they want a smooth handoff.
What to Do if You Don’t Want to Sell
If you want to maintain your independence and keep growing the practice you’ve worked so hard to build, prioritize the following steps:
Build Trust
The private practice experience is something that many patients still want. However, health-conscious patients also want to know that you can effectively meet their needs. Therefore, you need to build trust through consistent marketing efforts and quality service.
Demonstrate that you can effectively meet patient needs. Show them that you have the connections and network necessary to support their entire care journey, even when that means referring them out to trusted specialists in your area.
Improve Billing and Collections
Billing and payer contractors are more complex than ever. How you handle these challenges will have a huge impact on your financial health and stability.
Small improvements in clean claim rates and denial recovery can unlock meaningful cash flow. You need to protect your bottom line and guard against burdensome administrative processes that lead to bottlenecks. When cash is consistently flowing, you can more effectively weather other challenges, such as staffing concerns or growing pains.
Streamline Administrative Work
Outsourcing or optimizing your revenue cycle operations reduces overhead. You can also protect yourself and other physicians from the dangers of burnout.
Take a closer look at your practice and its current workflows. What are some opportunities to optimize? Identify solutions that you can implement quickly while achieving a strong return on investment.
There aren’t any magic fixes here that will solve all of your problems at once. You’ll need to make incremental improvements in phases.
Pick a Path and Follow Through
Private practices are under pressure. Now is the time to decide whether you want to sell your practice or weather these challenges and persevere. Only you can decide which approach is right for you. Choose a path, and be diligent so that you can achieve the best outcome for your patients and your business.
