GAO's new report highlights growing physician consolidation and its detrimental impact on patients, employers, insurers, and federal programs like Medicare and Medicaid.
Physician consolidation has accelerated over the past decade, resulting in increased spending and prices, according to a new Government Accountability Office (GAO) report.
The analysis, which examined published studies and stakeholder perspectives on physician consolidation involving hospitals, insurers, corporate entities, and private equity, found that physician independence continues to shrink as hospitals, payers, and investors expand their ownership.
At least 47% of physicians were employed by or affiliated with hospitals in 2024, compared to under 30% in 2012, according to a study by the American Medical Association cited by GAO. Private equity firms owned an estimated 6.5% of physicians, while corporate entity employment rose from 15% in 2019 to 23% in 2024, various studies revealed.
“Stakeholders that represent physicians told us that maintaining a private practice has become increasingly difficult, as certain practice expenses have increased faster than revenues,” the researchers wrote. “With greater consolidation, remaining independent practices may face additional challenges, such as reduced ability to negotiate contracts and payments with insurers or to receive referrals from other physicians.”
GAO uncovered that consolidation most often leads to higher spending and prices, particularly when hospitals acquire physician practices. Shifting services from physician offices to hospital outpatient departments drives up Medicare payments, while commercial prices for office visits jumped by double digits in some markets after hospital acquisitions.
The evidence is less clear on quality and access. Studies generally show little to no improvement in quality after consolidation, with some reporting modest declines. GAO found no rigorous research establishing effects on patient access, though stakeholders disagreed on whether consolidation protects or limits it.
For private equity, data is limited, but early studies indicate higher prices in certain specialties following acquisitions. Related to quality, recent research published in Annals of Internal Medicine found that emergency department deaths increased by 13% at hospitals following private equity acquisition.
The GAO report also noted gaps in regulatory oversight. Many physician acquisitions fall below federal reporting thresholds, leaving regulators without a full picture of consolidation activity.
Overall, GAO concluded that while the financial consequences of physician consolidation are better documented, the impact on patient care remains uncertain. As such, policymakers and industry leaders may need to address areas of concern as consolidation continues to reshape the healthcare landscape.
Jay Asser is the CEO editor for HealthLeaders.
KEY TAKEAWAYS
Nearly half of physicians were employed by or affiliated with hospitals in 2024, up from less than 30% in 2012, GAO’s research found.
Consolidation most often drives higher spending and prices, especially when hospitals acquire physician practices.
Evidence on quality and access is limited, though stakeholders warn consolidation may reduce competition and weaken independent practices.