The technology arms race between independent practices and payers

Running an independent practice in 2026 means fighting on multiple fronts simultaneously: denied claims that don't surface for two weeks, payer contracts that multiply faster than the staff to manage them, staffing shortages that leave one or two people handling prior auth, follow-up calls and after-hours issues, all at once.

The data from Veradigm's 2026 State of Independent Practice report puts numbers to what many physicians already feel: the operating environment keeps getting harder, and the technology most practices are relying on hasn't kept up.

Related content: 4 in 5 independent practices say this is what’s keeping them independent

That gap is at the center of a conversation Medical Economics had with Aaron Ledbetter, M.P.P., M.H.S.A., a solutions and growth strategist at Veradigm with deep roots in value-based care policy and payer contracting. Ledbetter walked us through what the survey findings actually suggest about where independent practices are most exposed — and where he thinks technology is finally, credibly, close to delivering on promises the industry has been making for years.

This interview has been edited for length and clarity.

Veradigm’s 2026 State of Independent Practice report found that 79% of respondents said technology is essential to staying independent, but only 64% are confident in their current tools to deliver on that. What is driving that gap?

I think part of it is just the speed of technological change. The pace is now fast enough that some tools can age out before a practice has fully adopted them. Practices are also trying to keep up with the pace at which payer tools are advancing, so it almost becomes an arms race between the different technological features both sides are deploying.

The other piece is the complexity of payer contracts. Keeping up with those and keeping all the terms straight across a growing book of payers is its own administrative workload. You can see that in the survey itself. As practices grow from solo physicians to two-physician groups and then up into the 40-plus range, they unlock a whole new set of administrative complexities. A lot of that is tied to the growing number of payer contracts they have and to making sure they are meeting the terms across all of them. That, to me, is a big reason only 64% say they are confident in their current tools.

Twenty-six percent of practices reached serious acquisition negotiations before deciding to stay independent. What is getting them to the table, and what is ultimately pulling them back?

I think what gets them there is strain. It is the administrative complexity. It is the operational complexity. And it is financial strain. A lot of these practices are having trouble protecting revenue because of lagging data, lagging claims information and tools that are not as real-time as they need them to be if they want to operationalize fixes when a claim gets denied or something else goes wrong.

What pulls them back is their desire to keep practicing medicine in the way they believe is best for their patients and their community. I think there is an inherent resolve of, “We can figure this out. We can come back together. We can explore additional tools. We can work with our current vendors to modernize the technology we need to stay independent.” You can see that even in the way people are thinking about AI and new tools. There is a sense that these changes could materially affect their ability to remain independent over the next two or three years.

Forty percent of practices do not learn about a denied claim for one to two weeks. Why has that problem not been solved, and what would fixing it realistically look like?

I think it is a symptom of a lagging operating model. The work is so fragmented and so manual. Detection, root cause analysis and resolution all sit across different people and different systems. And you can see that in the survey too: 58% of practices run a hybrid revenue cycle split between internal staff and outside vendors, which has its own back-end complexity.

Those systems do not always work well together. I think everyone involved is trying to improve that, but realistically, fixing it means moving detection earlier and making sure the data is more near real-time rather than showing up a week or two later in the form of a denied claim. That is really the core of it.

Denial drivers are scattered across the whole revenue cycle — eligibility, coding, documentation, prior authorization, payer policy. How do you even begin to approach a problem that fragmented?

It has to be a coordinated approach across the full revenue cycle rather than aiming at one stage in isolation. If you focus on only one stage, there are going to be effects elsewhere that you may not anticipate.

The common thread underneath all of it is not one single workflow. It is a lack of early visibility and too many manual handoffs. Eligibility errors, missing data and coding mismatches often trace back to information that either was not captured, was captured incorrectly or was not surfaced early enough. So whatever solution gets developed has to look at the full revenue cycle picture and all the people and systems involved.

Larger and smaller practices are feeling pressure differently: bigger financial volatility on one end, disproportionate administrative burden on the other. Are those fundamentally different problems?

I think they are different expressions of the same underlying problem. The margin for error has shrunk. That is true for independent practices and probably true for employed practices too. So the diagnosis is shared, even if the symptom looks different.

For larger practices, it shows up more as financial volatility. In our survey, 82% reported increased financial pressure, and 60% called that increase significant. What seems to drive that is payer relationships and more complex workflows. Scale does not necessarily insulate them. It can actually expose them to more complexity because they have more payer contracts and more administrative layers.

For solo practices, it is more of a people issue. You may have one or two people handling prior auth, follow-up and after-hours issues. If one person is out, the practice can really feel it. So there too, the answer still comes back to technology. The tools need to reduce burden both during clinic hours and after.

Eighty-eight percent of respondents said AI and automation could meaningfully improve efficiency. Physicians have heard promises like that before. What is actually different this time?

I think they are right to be skeptical. Health care has heard a lot of promises about technology fixing problems. And honestly, some technologies have helped, but now we are also at the point where the sheer number of applications out there is probably creating app fatigue. Not all of them work well together.

What feels different now is that some of the solutions coming online — ambient documentation, automation of repetitive administrative work like prior auth, reporting and denial follow-up — can actually happen in the background of workflows rather than adding another step to them.

I think electronic health records, in particular, are going to move from being a system of record, where they simply capture what happened, to a system of work, where they help with coding, claims and prior auth in real time. That would be a game changer for independent physicians and, frankly, for the industry more broadly.

Nearly half of respondents cited administrative requirements as the top barrier to value-based care participation, ahead of clinical complexity and financial risk. A lot of that is a payer design problem. What can technology realistically do about it?

I think that is exactly where the EHR as a system of work comes into play. It can help flag which patients are in which value-based care arrangements. It can help practices understand the complexity of the arrangements they are in. And honestly, their vendors should be helping them do that too.

One thing I learned working in an ACO and negotiating these contracts is that they are all slightly different. It is very difficult to track those differences, and you almost need a small army of people to do it well. So practically, technology needs to automate more of the quality-measure tracking across contracts, reduce the need for manual abstraction and give practices real-time visibility into care gaps before the patient comes in.

The providers are doing this work already. They are just not always getting credit for it. The system needs to help them capture that credit so they can get paid for closing quality gaps, reducing total cost of care and earning shared savings. I think we are moving toward that pretty quickly.

Physicians ranked as the hardest position to both recruit and retain. If a practice cannot solve its staffing problem, how much does the technology conversation actually matter? And what role could technology play?

We are seeing this across health care. Physicians are hard to recruit, but so are medical assistants, nurses, physician assistants and nurse practitioners. It is a very competitive labor market.

For independent provider organizations, physicians also have the option of going into employed settings, where there is a guaranteed paycheck. What independent practices can offer is the ability to practice medicine in a way they believe is best for their patients. But to stay competitive, they need to automate as much of the administrative burden as possible.

If a physician is choosing between a place where documentation, prior auth and denial follow-up are all still manual, and a place where those tasks are automated, that absolutely affects recruiting and retention. More automation means better work-life balance, and that becomes a competitive advantage for independent practices.

The white paper describes independence as an operating model that has to be actively managed. For small practices without dedicated operations teams, what does that look like day to day?

I think it means the clinical and administrative sides — if the practice even has a separate administrative side — have to be working from the same information in real time instead of discovering misalignment months later, when it has already caused friction or revenue problems.

For small practices, the realistic answer is usually not hiring more people. It is choosing technology that surfaces the right signals automatically at the right time — days instead of weeks later — so that the operating discipline becomes part of the system they are using rather than another administrative task landing on the physician or a very small staff.

I also think you are going to see more independent provider associations or similar structures, where practices band together. That gives them the ability to combine resources, share some administrative support and negotiate better with vendors and payers. I would expect to see more of that over time.

Is there anything else you would want physicians and practice leaders to keep in mind?

The biggest takeaway is how interconnected all these challenges are. A lot of them can be addressed by technology that makes workflows more efficient and more optimized.

For a long time in health care, we have tended to throw people at problems that were already very manual. That often just added more complexity, more administrative burden and more barriers. I think we are now at a point where technology is moving fast enough that it can look across the whole system of work and make it more efficient. That would reduce a lot of the pain points practices are feeling, free up providers to spend more time with patients and help administrators succeed in value-based care and fee-for-service arrangements alike.

People have been saying for years that automation was going to change health care, and there has always been a little truth to that. But it does feel different now. It feels like we are at an inflection point where AI can actually become a meaningful driver of change in the day-to-day life of independent practices.