Progressive Policy Institute finds hospital and corporate ownership of practices climbed to 59% by 2023, while independent practices declined fastest in rural communities and prices rose following acquisitions.
A new analysis from the Progressive Policy Institute (PPI) warns that an accelerating wave of hospital and corporate acquisitions of physician practices is reshaping where and how patients receive care — and how much they pay for it.
The report, “
Between 2019 and 2023, the share of physician practices owned by hospitals, health systems and other large corporate entities rose from 39% to 59%, while the share of physicians employed by those entities increased from 62% to 78%, according to PPI’s analysis of national data.
The Office-Based Facility Association (OBFA), which represents office-based interventional providers and other specialty practices, said the findings confirm what its members have experienced on the ground.
“Independent, office-based care provides high-quality, patient-preferred services at a lower cost and closer to home,” said Bob Tahara, M.D., health policy chair at OBFA, in
Using practice-level data from IQVIA, PPI focused on nine specialties — including family medicine, cardiology, oncology, obstetrics and gynecology, and general surgery — and tracked practices that were independent in 2017 but no longer independent in 2024,
Those “converted” practices accounted for roughly 29% of all practices that appeared in the dataset in both years, and roughly half of them were acquired by hospitals, according to the report.
Across the nine specialties, the decline in independent physician practices attributable specifically to hospital acquisitions ranged from 4% to 42%. General surgery, oncology and cardiology saw some of the steepest losses.
The report also finds that hospitals are concentrating their efforts on larger groups when they buy practices. Large independent physician practices decreased by about 45% and mid-sized practices by 36% over the study period, reflecting hospitals’ focus on acquiring multi-physician groups to quickly expand their footprint in key service lines, the authors write.
Some of the country’s biggest health systems were among the most active acquirers, deepening already high levels of concentration in both hospital and specialty markets, according to PPI.
The losses are not evenly distributed. PPI’s analysis shows independent practice ownership in rural areas declined by 34%, compared with 22% in urban areas, with the sharpest rural drops in the western Midwest and New England.
“One thing we know is that independent physicians have been
In that conversation — which followed the release of a PAI report documenting a five-year decline in practicing independent physicians — Kenney tied the exodus of rural physicians to payment and consolidation pressures, warning that “consolidation equals less competition equals higher prices for everybody,” particularly when Medicare pays more for the same services in hospital or hospital-owned settings than in independent physician offices.
Now in 2026, PPI warns that continued consolidation could worsen existing disparities in access for rural and underserved populations if independent practices continue to close or sell to larger systems.
Beyond access, the PPI report identifies a consistent pattern: prices tend to rise after hospitals acquire physician practices.
Across the studies it examined, PPI reports average price increases of about 14% following acquisitions, with some markets seeing increases of 30% or more, particularly where hospitals already hold a dominant position.
Those findings line up with what health economist Zack Cooper, Ph.D., an associate professor of public health and economics at the Yale School of Public Health,
“One of the big drivers of integration is the way Medicare pays physicians,” Cooper said, noting that the program pays for more physicians in hospital-owned practices than for comparable care delivered in independent practices.
Nearly half of the observed price hikes were attributed to hospitals taking advantage of Medicare’s site-of-service payment differentials once they reclassify office-based services as hospital outpatient care.
Several studies cited in the report document payment gaps of 74% to 224% for specialist services and roughly 78% for primary care visits when the same services is billed in a hospital outpatient department instead of a physician office.
Those payment differences do not reflect a change in the underlying clinical service, but rather hospitals’ ability to attach facility fees and other hospital-based charges once a practice is folded into a hospital system.
The report concludes that these incentives are a major driver of vertical integration between hospitals and physician practices.
To address those incentives, the report calls site-neutral
Cooper, who co-authored
PPI points to estimates from the Medicare Payment Advisory Commission (MedPAC) and other analysts suggesting that aligning payments for a subset of common services could save Medicare billions while removing a key financial motive for hospitals to acquire freestanding practices.
MedPAC has estimated that aligning payments for selected services could save Medicare $6.0 billion in a single year.
The report also cites congressional budget estimates indicating that comprehensive site-neutral payment reforms could save patients more than $10 billion per year in premiums and cost sharing and reduce federal Medicare spending by about $210 billion between 2026 and 2035.
Alongside payment reform, PPI recommends stronger federal and state antitrust enforcement, reconsideration of state certificate-of-need and certificate-of-public-advantage laws that can shield hospital mergers, and policies that support physician autonomy and innovation in rural care delivery.
For office-based specialists and independent clinics, the PPI report lands amid a separate fight over how Medicare pays for complex procedures performed outside the hospital.
OBFA has been urging the Centers for Medicare & Medicaid Services (CMS) and Congress to overhaul the Medicare Physician Fee Schedule (MPFS), pointing to CMS data showing that reimbursement for at least 195 office-based interventional services does not cover even direct costs, let alone physician’s work.
After years of repeated cuts to those services, OBFA praised a proposal in the 2026 MPFS as an important shift. The group supported CMS’ plan to update the indirect practice expense methodology, describing the change as the first meaningful improvement for office-based providers in years and a lifeline for independent practices that have struggled to stay open.
In its new statement on the PPI report, OBFA ties that payment debate directly to consolidation pressures. The group argues that if Medicare continues to underpay for office-based procedures while allowing higher hospital outpatient rates for the same services, more independent practices will be pushed toward selling to hospitals or closing outright.
“Office-based facilities are a cornerstone of affordable, patient-centered care — but they’re under pressure like never before,” Tahara said. “We urge policymakers at all levels to act now to support payment policies and competitive practices that keep health care accessible, affordable and rooted in community practice.”
The PPI report argues that payment policy, antitrust enforcement and local market concentration are converging to shape whether small, community-based clinics can remain independent.
OBFA, in response, echoes that view by linking Medicare’s payment structure and site-of-service differentials to the financial pressures that lead practices to sell or shut their doors.
Together, it’s clear that upcoming debates over site-neutral payments, the 2026 MPFS and competition policy are decisions that will influence the future of independent practices across the U.S.
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