Physician practices are being swept up in a wave of consolidation that could reshape how patients access care – and how providers like ambulatory surgery centers (ASCs) fit into the picture.
A new report from the Government Accountability Office (GAO) warns that deals involving hospitals, insurers and private equity are steadily reducing the share of independent physician practices, pushing more services into higher-cost settings and giving large organizations more negotiating power.
The report underscores the potential consequences for health spending, competition and access.
“Physicians have become increasingly consolidated as the share of physicians in practices owned by other entities has increased over time,” GAO wrote, noting that at least 47% of physicians were employed by or affiliated with hospital systems in 2024.
That’s up from less than 30% in 2012.
GAO is a watchdog entity tasked with investigating topics and reporting back to Congress.
Driving higher costs
GAO’s review of more than 100 studies confirms what health care sector executives have long observed: Independent physician practices are becoming rarer, replaced by corporate owners with leverage to command higher prices.
The share of doctors in private practice fell from 60% in 2012 to 42% in 2024, according to the American Medical Association. Meanwhile, ownership by corporate entities, including insurers and private equity, rose from 15% in 2019 to 23% in 2024.
Hospital acquisitions were a primary driver.
Studies show that when hospitals buy physician groups, services migrate to hospital-affiliated outpatient departments where payments are higher. One analysis found Medicare spending on colonoscopies, for example, rose by $3,851 per year for each gastroenterologist who consolidated with a hospital between 2012 and 2015.
“The study’s authors attributed this increase to an increase in facility fees following consolidation and physician throughput,” GAO wrote in the report.
Another reported $40 million in additional spending on imaging and $33 million on lab tests after primary care doctors joined hospital systems, largely because of higher facility fees.
Commercial insurers also paid more.
GAO cited research showing office visit prices climbed 17% after physicians joined hospitals, while inpatient prices rose 3% to 5%.
Private equity investments displayed similar patterns. A 2023 study of 10 specialties found commercial spending increased between 4% and 16% after acquisitions, with the steepest hikes in gastroenterology and obstetrics.
“Private equity investment in physician practices can enable practices to secure better rates from insurers due to the increased bargaining power they attain after being acquired,” the report noted.
Unclear benefits for patients and risks for ASCs
Despite higher costs, consolidation has shown little evidence of quality gains.
GAO found that “this type of consolidation generally resulted in no changes in the quality of care” when hospitals acquired physician practices.
Some studies even reported modest declines, such as lower medication adherence and higher complication rates after certain procedures.
On access, the evidence is cloudier. Hospitals argue acquisitions preserve struggling practices, especially in rural markets, but physician groups told GAO patients often face longer wait times and narrower referral networks once practices are absorbed.
For ASCs, the findings reinforce long-running concerns about referral patterns and competitive dynamics.
Hospitals that acquire physician groups may direct cases to their own outpatient departments, where reimbursement is higher, instead of independent surgery centers. Insurers that buy practices may do the same, steering patients into affiliated networks and potentially squeezing ASCs out of contracts.
Yet the report also points to potential openings.
With employers alarmed by rising prices, some are experimenting with direct contracting to bypass hospitals and insurers, potentially giving ASCs a chance to demonstrate their value as lower-cost surgical providers.
