The Silent Collapse of Independent Practice Is Policy by Design

The American Medical Association’s latest findings on physician practice characteristics do not suggest a gradual drift away from private practice. They document a deliberate dismantling. In 2012, roughly 60 percent of physicians worked in private practice. Today, that figure stands at just 42.2 percent. This is not professional attrition. It is systemic extraction.

Physicians are not abandoning independence because they’ve lost interest in autonomy. They are being economically pushed out by a policy framework that undercuts solo and small-group viability while rewarding consolidation under health systems, insurers, and private equity. According to the AMA, the leading driver of practice sell-offs is “inadequate payment rates,” closely followed by costly operational requirements and administrative overload. This is the slow disintegration of independent practice, engineered through reimbursement design and regulatory saturation.

One of the primary culprits is the Medicare Physician Fee Schedule. The AMA reports that when adjusted for inflation in practice costs, Medicare physician payments have declined by 33 percent over the past 25 years. That is not just a policy oversight. It is a structural failure. Small practices are caught between fixed-rate reimbursements and rising operational costs—rent, staffing, malpractice premiums, EHRs, and now mandatory cybersecurity investments. Large integrated systems can weather those shocks. Independent practices cannot.

This reality is further compounded by the direction of federal value-based care models. Participation in programs like MIPS and the Medicare Shared Savings Program requires infrastructure—data analytics, compliance personnel, reporting software—that small practices cannot afford without outside capital. Predictably, this means consolidation becomes the only viable route. For many physicians, it’s either be acquired or burn out.

Private equity’s expanding footprint in physician practice ownership should raise concern, not curiosity. The playbook is well-established: maximize revenue through billing optimization, reduce staffing, streamline referrals to in-network partners, and flip the asset. The care delivery implications of this model are often secondary. When the dominant pathways for sustaining a practice involve relinquishing clinical control to profit-maximizing third parties, the loss is not just economic—it’s professional and ethical.

The implications for patient care are equally profound. Independent physicians have historically served as the connective tissue in fragmented systems, particularly in rural and underserved areas. They offer continuity, lower-cost settings, and clinical judgment unfiltered by system revenue goals. Their disappearance narrows access and reshapes care around institutional convenience rather than patient need.

If policymakers are serious about preserving independent medical practice, they will need to move quickly and decisively. That starts with:

• Rebasing Medicare payments to reflect actual practice costs and ending the downward spiral of inflation-adjusted payment erosion.

• Creating scaled regulatory tracks for reporting programs like MIPS, with simplified participation paths for small and solo providers.

• Investing in technical support to help independent practices adopt and maintain health IT infrastructure.

• Accelerating site-neutral payment reform to eliminate the artificial reimbursement advantage held by hospital-acquired practices for the same outpatient services.

Each of these reforms has been proposed before. What’s missing is urgency. Federal policy cannot continue to treat the collapse of physician-owned practice as an inevitable market evolution. It is the result of deliberate decisions—some made by Congress, others by CMS—and it will only reverse through equally deliberate correction.

The window for action is narrowing. Private practice isn’t slipping. It is being stripped for parts. The question is whether federal policy will own its role in the dismantling, or stand aside and let it finish.