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Industry Voices—How physician practices can grow and succeed without the support of private equity

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Industry Voices—How physician practices can grow and succeed without the support of private equity

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.

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.

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.


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