The downward spiral of independent primary care: Why the math no longer works

Independent primary care is being crushed between rising costs, flat revenue and a competitive landscape that now favors scale over autonomy. The result is a business model that looks increasingly untenable for small, physician‑owned practices in the near term.

Independent primary care is entering a period where structural headwinds could push many practices to sell, consolidate or close rather than remain truly independent. Independent primary care is being pulled in two opposite directions: the underlying economics are deteriorating, yet new affiliation models are emerging that preserve the label of “independent” while eroding true autonomy. That tension is exactly why independent primary care could fail in the near term. There is a reality: Small practices no longer have the scale or capital to absorb risk, manage complex contracts and invest in the technology required for today’s payment models.

The math doesn’t add up

The basic math of running a practice has shifted. Operating expenses for staffing, benefits, technology, rent and regulatory compliance have risen dramatically over the past two decades, yet reimbursement has grown only modestly in comparison. The outlook isn’t improving: Projections show practice costs continuing to climb each year, while payment updates lag behind and often fail to keep pace with inflation.

Under a predominantly fee-for-service structure, every fixed cost increase demands more visits just to break even. At the same time, patients are facing higher deductibles and greater cost sharing, which means more balances falling to patients, more bad debt and slower collections. For a small office without a large revenue‑cycle operation, that combination — higher costs and less reliable cash flow — puts constant pressure on margins and owner income. Small practices lack sophisticated revenue cycle infrastructure, so denials, underpayments and patient nonpayment hit their bottom line harder.

A 2026 American Medical Association study found that the costs of running a medical practice rose 63% between 2001 and 2026, while Medicare physician payments grew only 10% over the same period, creating a massive structural gap between expenses and revenue. As the Medicare Economic Index projects practice costs to rise another 2.2% per year on average, that gap is likely to widen, not close, over the next several years.

Payers and large health systems are rapidly scaling low- or no-cost virtual primary care offerings, often marketed as “free” telehealth or app-based access bundled with insurance benefits. These offerings siphon off straightforward, low-acuity visits — the very encounters that historically subsidized more complex, less profitable care in independent offices. As stand‑alone practices struggle to make the numbers work, more physicians are choosing employment or quasi‑employment. Over the past decade, the share of doctors working for or tightly aligned with large systems has climbed dramatically, reflecting a steady migration away from true independence. The draw is clear: Larger entities offer better contracting leverage, centralized technology, and the infrastructure needed to manage value‑based payment and regulatory complexity.

Investments to remain independent or erode independence?

A growing middle ground has emerged in the form of “enablement” platforms that bolt on contracting, analytics and operational support while allowing doctors to retain ownership of their practices. On paper, this preserves independence. In reality, strategy, data and payer relationships increasingly sit with the platform, and individual practices become dependent on that infrastructure to survive. Over time, local control over economics and direction erodes, even if the corporate structure remains physician‑owned.

Financial stress is also drawing independent groups toward private investment and management companies that take over nonclinical operations. These arrangements promise capital, administrative support and access to scale necessary for risk‑bearing contracts. For many practices, they can feel like the only alternative to outright sale to a hospital or insurer.

But private capital brings its own risks. Investors expect returns within defined time frames, which can drive cost‑cutting, consolidation or strategic shifts that are misaligned with community‑based primary care. Once a practice is embedded in a highly leveraged or investor‑controlled platform, its freedom to prioritize long‑term patient relationships over near‑term financial metrics diminishes. The practice may remain “independent” in branding or legal form while losing meaningful control over its destiny. Retail, insurer-owned and corporate-owned primary care groups can operate at scale, cross-subsidize services and accept more aggressive value-based contracts than a solo or small group practice.

Health care at home and hospitals

As more patients get accustomed to 24/7 chat, telehealth and integrated pharmacy/benefit designs from large entities, independent practices risk being perceived as less convenient and less accessible, which further erodes visit volume.​ AI symptom checkers, triage tools and remote monitoring platforms now resolve many concerns that once led to in-person visits, particularly minor acute issues. At-home testing for conditions like flu, COVID-19 and respiratory syncytial virus enables patients to diagnose and sometimes treat common illnesses without seeing their primary care physician, reducing demand for acute visits that historically generated reliable revenue.

While these tools could theoretically be integrated into independent practices, doing so requires capital, technical support and workflow redesign that many small offices cannot afford, especially while margins are already compressed. Larger, integrated organizations are better positioned to invest in and monetize these technologies, widening the competitive gap.

Low reimbursement, rising costs and increasing administrative complexity are already driving many primary care physicians into hospital employment or corporate groups to survive. Policy makers are attempting to direct more funding toward primary care and site-neutral payment, but these changes are uneven, slow and often contingent on participation in sophisticated value-based models that small practices may struggle to manage.

Essential, but being replaced

Primary care as a service will remain essential. What is genuinely at risk in the near term is the classic model of locally owned, fully independent primary care practices that control their own economics and infrastructure. The sign on the door may still say “independent,” but under the surface, that model is already being replaced.

As more practices conclude that they need scale to negotiate with payers, manage risk contracts, invest in technology and stabilize income, genuine independent ownership becomes harder to sustain. The likely near-term outcome is continued consolidation: fewer stand-alone independent primary care practices; more physicians employed by payers, health systems and private equity–backed platforms; and a shrinking space where truly independent primary care can economically survive

Keeping independent primary care viable will take deliberate changes in how we pay for and regulate it, not just more “efficiency” at the practice level. The model must move away from pure fee-for-service toward hybrid or prospective payments (per‑member, per‑month for a defined panel plus targeted fee-for-service) so practices have stable income to cover fixed costs and team‑based care.

We need to explicitly raise the share of total health spending going to primary care and rebalance payments between primary and specialty care so that cognitive, longitudinal work is not structurally underpriced. At the same time, design alternative payment models that are sized and paced for small practices (low administrative overhead, right‑sized risk, predictable benchmarks) so you don’t have to sell to participate. In general, policies must reduce consolidation pressure and tilt policy toward independents while correcting reimbursement rules that pay more for the same service in systems that are rewarded for vertical integration and penalize independents. The federal agencies must strengthen antitrust and oversight of acquisitions so payers and private equity can’t buy up primary care with little scrutiny, then use market power to raise prices and narrow networks. Funding must be available to endorse physician‑led enablement platforms (data, analytics, care‑management tools, contracting) where practices keep ownership and governing control.

In short, if policy makers want independent primary care to survive, they need to pay it differently, stop rewarding consolidation, and deliberately give small practices the tools and capital that only large entities currently enjoy.

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.