The percentage of physicians who own their own practice dropped from 60% to 44% between 2012 and 2024 (all specialties combined). A number of factors explain this shift, including aging practice owners, a lack of entrepreneurship among younger physicians and increased burnout. Practice economics are also a key component: while practice-related costs have continued to rise over the past 20 years, the Medicare Physician Fee Schedule (MPFS) has fallen by approximately 26% when adjusted for inflation.
Given these challenges, some question whether physician-owned practices remain a sustainable business model. Private equity firms have capitalized on this uncertainty, actively acquiring practices, ambulatory surgery centers (ASCs) and hospital systems to build scale and optimize costs. Today, 56% of physicians work for hospitals, health systems or corporate entities.
But private equity isn’t the only path forward. For physicians who want to stay independent, there are several proven strategies to grow a successful practice.
Option 1: Maintain your current model, with strategic adjustments
Sometimes the best strategy is to stay the course with some adjustments. Rather than restructuring or merging, physicians can continue operating their practice while adapting to changing market conditions and reinvesting in talent, systems and data to drive success.
One practical approach is "tuck-in" acquisitions, absorbing a solo practitioner or smaller group into an existing practice. This strategy requires less capital and leverage than a large-scale deal, making it an appealing way to grow revenue without drastically changing the business model.
Option 2: Pursue independent practice growth
Physicians who want to actively expand should consider seeking additional debt financing or outside capital. Realigning share ownership—whether by buying out previous investors or offering equity to key staff—can position a practice for long-term strategic growth. That growth typically comes from a combination of revenue and cost strategies, including:
- Expanding ancillary services and office hours to include early mornings, evenings and weekends
- Introducing office-based surgery capabilities
- Improving retention and recruitment of revenue-generating staff through competitive compensation
- Engaging a professional practice management company to handle administrative functions, or outsourcing tasks such as HR, accounting and marketing directly
- Hiring a healthcare marketing consultant to reach new patients and communicate changes to existing ones
- Investing in practice management systems and AI-based platforms for incoming calls, confirmatory calls and refill requests, freeing staff for more complex work
- Leveraging non-physician practitioners to maximize clinical capacity
- Joining a Group Purchasing Organization (GPO) to access discounts on products and services
Option 3: Explore physician-led practice consolidation
Physicians seeking partners may be drawn to physician-led consolidation, in which a practice integrates into a "supergroup" rather than remaining solo. This approach allows providers to share critical infrastructure and reduce costs, though success hinges on finding a partner practice similar in scale and culture—which is often harder than it sounds. A partner can also be a hospital or ASC operator acquiring part of the organization.
Physicians pursuing this route should identify potential partners that align with their values and goals, retain legal, transactional and tax advisors early to protect their interests, and agree upfront on shared objectives such as growth targets, access to capital, expected cost savings and exit strategy options. Potential structures include:
- Management Services Agreement (MSA): Two practices partner to outsource administrative functions together
- Parent-subsidiary model: One practice acquires another while maintaining some operational independence
- Merger: Two practices combine into a single entity
- Joint venture: Practices create a shared business entity for specific purposes
Option 4: Consider investor-led growth, with caution
External investors can provide capital to support your practice, along with the talent and experience necessary to develop future growth. Healthcare remains an attractive investment sector due to steady demand for services, resilience during economic downturns and multiple revenue streams.
However, proceed with caution. Selling a minority stake while retaining majority control may seem like the best of both worlds, but investors typically expect high returns. Their focus on efficiency can sometimes conflict with the patient-centered approach many physicians prioritize. Before pursuing this path, carefully consider whether investor expectations align with your practice philosophy.
Consolidation in healthcare—whether led by investors or physicians—will continue. But private equity is not the only solution for building a sustainable, profitable practice. Independent physicians have multiple paths to success. The key is understanding your options and choosing the approach that best fits your goals, values and circumstances.
Isabelle Bibet-Kalinyak is a partner in the Health Care Practice at Pullman & Comley, LLC.
Cynthia Matossian, M.D., is a board-certified ophthalmologist and the founder and former medical director of Matossian Eye Associates, a multi-specialty practice.
Rajesh U. Kothari is the founder of Cascade Partners LLC, where he leads the firm's healthcare practice.