Independent practice on the road to extinction: Why the next generation won't own the stethoscope, let alone the building

For most of the 20th century, the American physician was, almost by definition, a small-business owner. The shingle out front bore the doctor’s name, the ledger was the doctor’s, and the patient panel — for better and worse — belonged to the person delivering the care. That model is now on a demographic clock, and the alarm is ringing.

Four decades ago, the clear majority of U.S. physicians held an ownership stake in their practice. Today, ownership is in the minority. The overwhelming majority of American physicians now draw a paycheck from a hospital, a health system, or a corporate entity — private equity firms and insurers among them — leaving most practices under nonphysician ownership, according to a 2026 report from the Physicians Advocacy Institute and Avalere Health.

But all of that describes what has already happened. What makes independence an endangered species — not merely a shrinking one — is what the pipeline is telling us.

The pipeline has already decided

By 2019, the great majority of residents (91%) said they would prefer to be an employee of a hospital, medical group or other facility than to be in independent private practice. This is not a temporary preference tied to any one crisis or economic moment. It is a structural shift in what a new physician wants, believes possible and is financially able to attempt. Four forces make it durable.

Force one: debt that rules out entrepreneurship

Medical graduates now leave school with substantial loan debt. Interest accrues throughout a three- to five-year residency, pushing balances higher. A 32-year-old finishing residency with such debt, no savings and a family waiting to settle somewhere is not in a position to sign a lease, guarantee a line of credit, buy an electronic health record system, hire staff and negotiate payer contracts. A guaranteed salary with a sign-on bonus, loan repayment and benefits on Day 1 is not one option among many. For most graduates, it is the only workable one.

Force two: no one taught them how

Ask a graduating resident to manage decompensated heart failure, and they are exquisitely trained. Ask them to read a payer contract, model a fee schedule against overhead or negotiate a lease, and the training is essentially zero. Their mentors are, with few exceptions, not in private practice themselves. Most residents will tell you plainly they were never trained in business and are not eager to run one — a rational response, because you cannot choose a business model you have never seen operating.

Force three: an administrative load small practices can’t carry

Residents' preference for employment likely reflects a rational reading of the economics: Inadequate reimbursement, high infrastructure costs and heavy regulatory demands all make independent practice a riskier path. For anyone who has practiced over the past two decades, the pattern is familiar. Electronic record mandates, payment-reform statutes and their reporting regimes, escalating prior authorization, risk-adjustment audits, quality measurement, credentialing across a long roster of payers and the Health Insurance Portability and Accountability Act’s privacy obligations are defensible in isolation but crushing in aggregate.

Meanwhile, inflation-adjusted Medicare physician payments have fallen, whereas labor, rent, malpractice and technology costs have moved hard the other way. Independent practice has become a business in which the payer sets the price, the government sets the paperwork and the physician absorbs the margin compression.

Force four: the buyers have money, leverage and reasons

Corporate entities — private equity, insurer-affiliated groups, retail health, pharmacy chains — now own more physician practices than hospitals and health systems do, a threshold crossed only recently. Which type of buyer leads may shift from year to year, but the pattern holds. The economics of scale — site-of-service payment differentials, negotiated commercial rates a small practice can never command, referral capture, risk contracting — let institutional acquirers pay a multiple no independent buyer can match. The offer to a retiring solo physician looking for a succession plan is no longer “sell to your junior partner and finance the buy-in over eight years.” Often, there is no junior partner, and the outside check clears at close.

What this means for specialists

The same forces have reached specialty medicine, and in some segments, they arrived faster. Independent ownership has fallen sharply even in fields long thought insulated by procedural revenue, and much of the erosion traces specifically to hospital acquisition.

Hematology-oncology illustrates the mechanism clearly. Roughly 6 in 10 medical oncologists are now aligned with hospitals or academic centers. The driving force here is not clinical. It is pharmacy. Discounted drug purchasing under the 340B Drug Pricing Program lets a hospital acquire a community cancer practice, keep the same physician treating the same patient in the same chair and capture a dramatically larger spread on the identical infusion — a spread no independent practice can access. The 340B Drug Pricing Program requires manufacturers to sell outpatient drugs at deep discounts to qualifying safety-net hospitals, which may then bill payers at full rates. The resulting spread was intended to fund care for vulnerable patients; in practice, it also rewards eligible hospitals for buying up drug-intensive specialty practices. The clinical work does not change. Only the billing entity does.

The results are visible. Hundreds of community cancer clinics have closed, merged or been absorbed, and the shift of care into hospital outpatient departments has raised costs for patients and payers without a corresponding improvement in the care delivered. Patients who once received chemotherapy 15 minutes from home now drive to a regional campus, pay a facility fee for the privilege and are told this represents integration.

A generation of trained specialists is now credentialed by institutions that both compete for the market and define what normal practice looks like. The graduate who has never seen an independent cancer center operate is unlikely to build one. That is not a side effect of consolidation. It is how consolidation makes itself permanent.

The high-earning proceduralists are working through the same sequence, a few years behind. They were the last stronghold of the partnership-track model, in which lean early years were traded for eventual ownership of surgery centers, imaging and real estate. That model still exists in pockets, but it is being outbid, outmaneuvered on payer contracting and gradually rolled up.

What this means for rural America

The rural picture is not a slower version of the urban trend. It is a categorically different problem. From 2019 to 2024, the number of independent rural physicians fell by 43%, and the number of independent rural practices fell by 42%. Independence has eroded fastest where the margin for error was thinnest, and the consequence runs deeper than a change of letterhead. When a rural practice is absorbed by a distant health system, the decision about whether that site will still be open in five years gets made in a boardroom hundreds of miles away, by people who will never drive past the empty building.

The access cliff

Serious physician shortages are widely projected, most acutely in primary care. Layer on a generation that will not, in meaningful numbers, ever open a practice, and the arithmetic is not subtle: a shrinking supply of physicians, concentrated in fewer and larger organizations, serving an aging population. The consequence is not merely that patients will be seen by employees rather than owners. It is that the sites of care will be chosen by capital allocators optimizing panel size, payer mix and reimbursement. Once the physician becomes an employee, the physician-patient relationship remains only to the extent that it fits the owner’s operating model.

Can anything be done?

Most individual policy levers are too small to reverse a trend of this magnitude. Several would meaningfully slow it.

Site-neutral Medicare payment: This is the essential structural reform. As long as the same service pays substantially more when billed through a hospital-owned site than an independent physician office, hospitals and other acquirers will continue to outbid independent primary care and specialty practices. Equalizing payment for equivalent care would remove one of consolidation’s most powerful incentives.

340B reform: Reforming the 340B Drug Pricing Program is particularly consequential for infusion-dependent specialties. The program was designed to help safety-net providers serve vulnerable patients, but its hospital outpatient drug discounts can create a powerful acquisition incentive when profitable drug administration shifts from an independent office to a hospital-owned site.

Business training in residency and fellowship: Coding, contracting, overhead modeling and payer negotiation belong in a required rotation, not a lunchtime elective. Physicians cannot choose a path they have never seen.

Payment reform that favors small practices: Total-cost-of-care models, shared savings, capitated primary care and direct primary care all let a small practice capture value from managing a population rather than grinding through volume. They need to be simpler and more generous to small independents.

Antitrust scrutiny of vertical roll-ups: Consistent national enforcement against hospital and payer acquisitions, along with limits on the noncompete agreements that trap employed physicians, would change the roll-up calculus.

Succession vehicles: Retiring independents need buyers who are not private equity. Cooperative and physician-network purchase structures, with tax treatment designed to keep practices physician-owned across generations, would give exiting owners an alternative to the highest bidder.

The bottom line

The demographics of who owns American medicine have already turned. The independent practice is not being killed by a single villain. It is being ended by an entirely rational set of individual choices, made under a payment system, a training system and a capital market that no longer support it. The irony is that policy makers say they want patient-centered care while building a market in which the patient’s doctor is increasingly an employee of a balance sheet.

Absent deliberate intervention, the physician-owned practice will follow the independent pharmacy and the independent hardware store: persistent as a memory, present as a niche and functionally extinct as a national delivery system within one more physician generation. The independent practice may be reduced to a health care museum exhibit: “Here, children, is where your doctor once made clinical decisions without checking with a corporate operating committee.”

Robert Resnik, M.D., MBA, is a board-certified internal medicine physician practicing in Cary, North Carolina. He earned his medical degree from Eastern Virginia Medical School and completed his residency at East Carolina University. He also holds an MBA from Duke University.