For the first time, fewer than one in five physicians in the United States practices in a setting they own. That number is now 18%. Twenty years ago, independent practice was the default. Today it is the exception.
A new report from the Physicians Advocacy Institute and Avalere Health tracks eight years of consolidation data from 2018 through 2026. The findings are straightforward: physician-owned practices have fallen by 48.5% since 2018. Just 36.1% of all practices remain physician-owned. The rest are now controlled by hospitals or corporate entities.
The financial reasons physicians cite for leaving independent practice are familiar. Reimbursement pressure. Rising operational costs. Administrative burden. Prior authorization. Billing complexity. Revenue cycle overhead that keeps growing without producing proportionally more revenue. For specialty practices, those pressures are sharper. Orthopedic, pain management, behavioral health, and cardiology practices bill some of the most complex, denial-prone codes in medicine. Doing that well takes infrastructure a lot of small independent groups simply do not have.
Key Takeaways
- Only 18% of physicians still practice in physician-owned settings in 2026
- Physician-owned practices declined 48.5% since 2018 — just 36.1% of practices remain physician-owned
- The Midwest has the highest consolidation rate: 72.7% of practices are now owned by hospitals or corporate entities
- The South has the highest share of corporate-employed physicians at over 25%
- Corporate-owned practices in the South grew 199.5% since 2018 — the steepest rise of any region
- Revenue cycle complexity — prior auth, payer denials, coding overhead — is a leading driver of consolidation
- Specialty practices in orthopedics, pain management, behavioral health, and cardiology face the highest administrative burden
Why Are Physicians Leaving Independent Practice at Such a High Rate?
The data shows consolidation happening fast and consistently across every region of the country. But the reasons physicians point to have not changed much over the years. Financial pressure is at the top of the list.
Reimbursement rates from Medicare and commercial payers have not kept pace with the cost of running a practice. Supplies, staffing, software, compliance — all of it costs more than it did five years ago. On the revenue side, prior authorization denials have climbed steadily. A practice that used to approve and collect on most of its claims now spends hours a week fighting for payment it was already owed.
The administrative load is especially heavy for specialty practices. An orthopedic practice billing joint replacements, an ASC managing multi-payer surgical cases, a behavioral health group submitting time-based psychotherapy codes — these are not simple claims. They require precise documentation, correct modifier use, and fast appeal workflows when denials hit. A lot of independent practices are trying to manage that with a small billing team that is already stretched thin.
When the overhead becomes unmanageable, selling to a hospital or a private equity-backed group starts to look like a solution. The physician gives up ownership. But the billing, credentialing, prior auth, and collections problems do not always go away. They just belong to someone else.
Which Regions Are Losing Independent Physicians the Fastest?
The PAI and Avalere Health report breaks the consolidation trend down by region. The numbers are different in each area, but the direction is the same everywhere.
The Midwest has crossed a significant threshold. Nearly three out of four practices — 72.7% — are now owned by hospitals or corporate entities. That is the highest rate of any region. Corporate-owned practices in the Midwest grew 137.1% since 2018. That kind of change reshapes the entire physician landscape in states like Ohio, Michigan, Illinois, and Indiana.
The South has seen the most dramatic corporate growth. Corporate-owned practices there grew 199.5% since 2018. The South also has the highest share of corporate-employed physicians nationally, at more than 25%. Texas, Florida, Georgia, and North Carolina are states where private equity consolidation has been especially aggressive in specialty care.
The Northeast saw hospital-employed physicians climb 90.8% and corporate-owned practices jump 152.3%. The West is moving fastest right now — hospital and corporate-owned practice ownership grew at an 11.3% rate over just the last two years, the steepest recent growth of any region.
Across all regions, independent practice is holding on in pockets. Certain markets, certain specialties, certain practice sizes still make independence work. But the structural pressures are the same everywhere. The practices surviving do so because they figured out how to run the business side efficiently.
What Role Does Revenue Cycle Play in Practice Consolidation?
Revenue cycle problems do not always show up as a single crisis. They accumulate. Denial rates creep up. Staff time on prior auth requests grows. Underpayments go unchallenged because there is no bandwidth to appeal. Aging accounts receivable stretches. Cash flow tightens.
For an independent specialty practice, those problems compound faster than they do for a large system with a full revenue cycle department. A two-physician orthopedic group does not have a team dedicated to payer contract analysis, coding audits, and denial management. They have one or two billing staff doing the work of five.
The AMA’s most recent prior authorization survey found that physician practices complete an average of 39 prior authorization requests per physician per week. Staff spend 13 hours a week on those requests alone. That is almost half of a full-time billing employee consumed by a single administrative function. When that burden lands on a small independent practice, the math gets hard quickly.
Practices that solve their revenue cycle problems do not feel that same pressure to sell. They collect more of what they bill. They appeal denials and win. They catch underpayments before they become a pattern. The financial case for staying independent holds when the back-end operations actually work.
What Can Independent Specialty Practices Do to Protect Their Revenue?
The practices that are managing independence well right now share a few consistent characteristics. They treat revenue cycle as a strategic function, not just a billing task. They audit their denial patterns regularly and track which payers are the worst offenders. They have a real prior authorization workflow — not just someone submitting requests whenever they have time.
Outsourcing parts of the revenue cycle is increasingly common among independent groups that want to stay independent. Credentialing, billing, and denial management done by a specialized team costs less than the revenue left on the table by an overworked in-house staff. That trade is worth examining for most specialty practices.
The harder truth is that revenue cycle problems are invisible until they are not. A practice can appear financially stable while quietly losing five to ten percent of collectible revenue to unchallenged denials and missed follow-up. By the time the problem is obvious, the options have narrowed.
Staying independent in 2026 is absolutely still possible. The practices doing it successfully are the ones that stopped treating revenue cycle as an afterthought.
What This Means for Your Practice
If your practice is in the 18% still operating independently, you already know the pressures are real. The consolidation data tells you the environment is not getting easier. But it also tells you that the practices choosing to stay independent are doing so deliberately and with the right operational support behind them.
Revenue cycle is not the only reason physicians leave independent practice. But it is one of the most fixable. Practices that build a clean billing operation, appeal denials consistently, and stay on top of payer rule changes hold onto more of their revenue. That changes the financial calculus for staying independent.
Frequently Asked Questions
How many physicians are still in independent practice in 2026?
According to the 2026 Physicians Advocacy Institute and Avalere Health report, only 18% of physicians now practice in physician-owned settings. Just 36.1% of all physician practices remain physician-owned, down 48.5% from 2018.
Which region has the highest rate of practice consolidation?
The Midwest leads all regions with 72.7% of practices now owned by hospitals or corporate entities. The South has seen the steepest corporate growth, with corporate-owned practices climbing 199.5% since 2018.
Is revenue cycle management really a factor in physicians selling their practices?
Yes. Billing complexity, prior authorization burden, and denial management overhead are consistently cited as top financial stressors for independent practices. The AMA’s 2025 prior authorization survey found practices spend 13 hours per week per physician just on prior auth alone. For small independent groups, that overhead is often unsustainable without dedicated support.
Can independent specialty practices compete with large hospital systems on revenue cycle?
Yes, with the right support. Independent practices that use specialized revenue cycle management partners are often able to match or exceed the collection rates of larger systems. The key is having expert billing, denial management, and prior auth workflows in place rather than relying on overextended in-house staff.
What should an independent practice do if their denial rates are rising?
Start by identifying which payers and which procedure codes are generating the most denials. Run a 90-day denial analysis. Look at appeal rates and win rates. If prior authorization is a major driver, review whether the current submission process is meeting each payer’s documentation requirements. If the volume is too high to manage internally, a specialized RCM partner can absorb that work and recover revenue that is currently being left behind.
Ready to protect your practice’s independence?
Cosentus helps specialty practices stay independent by solving the revenue cycle problems that push physicians toward consolidation. Billing, prior auth, denial management, and credentialing — all of it.
Talk to our team at cosentus.com/contact
