Physician practice structure in 2025: What’s changed (and what hasn't)—and what we’re watching moving forward

Later this week, we'll be convening live for this month's Board Briefing webinar to talk about the current state of the physician landscape (you can register for the session by clicking the image below). Our discussion will cover the latest trends in the physician market, including shifts in ownership, the reimbursement landscape, and a first look at which challenges medical group leaders have flagged for us as top priorities this year. In today's post, we're going to share a preview of that discussion by overviewing physician practice structure in 2025. We'll share what has (and hasn’t) changed in recent years, and what we’re going to be keeping an eye on for the future.

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Click the image below to join us on Thursday, May 22nd at 1 PM ET and hear our take on the state of the physician landscape.

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What hasn't (really) changed in the last 10 years

1. The shift from independence to ownership and/or employment.

Let's start with the obvious: the past decade-plus has seen a continued shift toward physician employment. Small, independent practices have given way to large, multispecialty groups that are owned by hospitals, health systems, and other corporate entities, such as private equity firms and insurers.

As well-established as this trend has become, it's easy to take your eye off the exact numbers, and the market has recently tipped past some notable milestones: as of 2024, more than three quarters of physicians are employed, and over half of all practices are owned.

Unsurprisingly, this shift toward employment and ownership has driven a shift in practice size and type. Between 2012 and 2022, there was an 8% increase in large practices (those with 50 or more physicians) and a 21% increase in multi-specialty groups.

2. The motivations behind the growth in employment and ownership (for either the buyers or the sellers).

The motivations of physicians for seeking employment/ownership are simple and clear—physicians continue to seek greater resourcing and stability; namely:

• Administrative support: E.g., support for billing and compliance.

• Negotiating leverage: Scale makes it possible to negotiate more favorable rates with insurers.

• Better access to technology: Bigger groups likely have more resources to invest in technology as a productivity and engagement lever.

• Support for value-based care (VBC) initiatives: Larger groups are better equipped to manage population health, coordinate care, and meet performance metrics. (The rise of VBC is also one of the reasons why we’ve seen an increase in multi-specialty groups.)

The past few years have only solidified these motivations. Employment and ownership accelerated in the aftermath of the pandemic, which made it even more difficult “go it alone” amid widespread workforce shortages, increasingly-fraught payer relationships, and ever-complex regulatory requirements—not to mention mounting financial pressures. This last piece is not poised to let up anytime soon: 92% of medical group leaders reported higher operating costs in 2024 compared to 2023 and groups continue face financial uncertainty in the face of potential Medicaid cuts and tightening MA reimbursement. The preference for employment is also especially acute among younger physicians entering the workforce, which has further reinforced the trend toward employment.

On the buy side, the motivations behind physician acquisition (to build relationships with physicians and influence the flow of revenue) also haven’t shifted much in the last ten years, although they do of course vary by owner:

• Hospitals/Health systems: Strengthen referral networks, increase outpatient revenue, and better coordinate care across the system.

• Insurers: Diversify revenue streams, control more of the care pathway, and feed growth to other business lines (insurance, PBM, etc.).

• Private equity: Drive efficiency, maximize profit, and quickly achieve a financial return.

What has changed, at least in the last 2-3 years

1. There are now more corporate-owned practices than hospital-owned practices (but hospitals still reign supreme when it comes to employment).

As of 2024, there were more corporate-owned practices than hospital-owned practices, with 30% of practices owned by corporate entities. (Importantly, health systems still employ more physicians than corporate entities. This might seem contradictory at first glance, but it makes sense considering health systems normally have fewer, but larger, groups in a limited geography while corporate entities tend to have smaller practices across a wider geographic area. Hospital-based specialists also tend to be particularly inclined to seek employment—part of the reason hospital-owned groups tend to be significantly larger).

Still, the rapid growth of corporate-backed acquisitions over the past few years has narrowed the gap between corporate and health system owners. The percent of corporate-owned practices grew by 11% in just two years, from 2022 to 2024, surpassing the pace of health system acquisitions by a notable margin.

There are a couple of reasons the market has tipped in this direction. First, corporate entities such as health plans and private equity firms didn't face the same margin pressures as hospitals and health systems during and immediately following the pandemic (although, of course, the financial outlook for plans has deteriorated notably in more recent months—more on that a bit later), giving them the financial flexibility to be acquisitive even amidst broader economic headwinds. Corporate buyers have also faced fewer regulatory hurdles than hospitals. Most acquisitions of physician practices by PE firms and insurers fall below the federal antitrust reporting threshold (in 2025, the threshold is $126.4B, up from $119.5B in 2024), while hospital acquisitions tend to be larger and more likely to trigger antitrust review because of their highly-localized nature.

Prior to the beginning of their financial woes in mid-2024, insurers had been particularly proactive in their efforts to deepen their foothold in the physician space. It’s difficult to track exactly how many physicians are aligned with insurers, but UnitedHealth Group alone has made a significant dent in the market: in 2023, Optum reported that it has nearly 90,000 employed or affiliated physicians—about 10% of all practicing U.S. physicians. As recently as this March, despite increasing financial headwinds, Optum acquired Oklahoma-based FlexCare Infusion, a portfolio of several companies primarily focused on ambulatory infusion and that operates over 30 clinic locations across six states. Big moves by Optum have prompted every other national insurer to make similar acquisitions (to mixed results), as we've covered extensively in our series on vertical conglomerates.

2. The pace of corporate acquisition has also started to slow.

The pace of corporate acquisition grew steadily throughout the late 2010s, and accelerated in the immediate wake of the pandemic, but has slowed in the past couple of years, especially among PE firms. 2024 saw the lowest physician deal volume in six years.

This slowdown has occurred alongside growing backlash against the “corporatization of medicine,” with critics lamenting that it puts physician autonomy at risk and pointing toward evidence that corporate-owned practices increase overall costs and hurt quality of care. PE firms have been particularly susceptible to this backlash, attracting more regulatory scrutiny in recent years. As of May 2025, at least six states have proposed checks on PE-backed acquisitions. At the federal level, the Biden administration also took a more aggressive approach toward the role of PE in healthcare, pushing stronger regulatory enforcement of PE-led deals and lower reporting thresholds for transactions. All of this increased scrutiny may have played into the PE slowdown—although we would also note that economic uncertainty and a dwindling number of attractive targets within the "usual suspect" specialties played at least as important a role as public/regulatory scrutiny.

Two open questions we have about physician practice structure in 2025

1. Will the Trump administration reinvigorate PE acquisition of physician practices? 

Many—including investors themselves—have speculated that the Trump administration may reverse the Biden administration’s crackdown on PE-backed deals. While it's quickly become clear that the second Trump administration is not afraid to depart from the actions from "Trump 1.0", we have seen a similar emphasis on deregulation between the current administration and that one; for example, Trump signed an Executive Order in requiring agencies to repeal ten existing rules and regulations whenever a new one is instated. And as I touched on earlier, the antitrust reporting threshold increased from $119M to $124M in early 2025, meaning fewer acquisitions will need to be reported.

This is also an area where perception is at least as important as reality—even a general sentiment among investors that this administration is likely to be more pro-business and commerce could be sufficient to reinvigorate dealmaking activity, at least in the near term.

2. Will the big vertical conglomerates slow down?

We think we're likely to see the pace of acquisition by insurers—most notably UnitedHealth Group—slow down as they grapple with substantial financial headwinds and growing public and regulatory scrutiny. While no clear regulatory framework for cracking down on vertical M&A has emerged, UHG is currently under investigation by the Department of Justice over whether its physician acquisitions could be having anticompetitive effects.

The heavy dealmaking activity within this sector in recent years also presents a simple numbers problem for would-be buyers: there are only so many independent practices left (less than 25%). And insurers, potentially even more so than PE firms and health systems, tend to focus their acquisition efforts on a fairly niche part of the market. Optum has typically targeted risk-bearing groups with strong value-based care competencies, particularly in the MA space. It’s not clear whether insurers will see enough value to move beyond this archetype.

Parting thoughts: Corporate structures have shifted (and strategic motivations may vary)—but the definition of high performance hasn’t changed.

With all the changes in corporate structure we've seen in recent years, you might ask yourself: How has the nature of a high performing medical group shifted as a result?

We posed this question directly to a handful of medical group leaders and the answer was clear. The core components of high performance (at the medical group level) remain evergreen. And they are remarkably consistent across different types of groups, regardless of owner.

That said, prioritization absolutely does shift year-to-year—whether due to shifting business performance, policy changes, or the emergence of new clinical or technological innovations. Here's what medical group leaders told us they're prioritizing for 2025 (and why).

• Access/productivity: How can groups continue to grow in the face of tightening reimbursement, capacity constraints, and pent up demand?

• Workforce: How can groups craft effective Employee Value Propositions that speak to a workforce that spans generations with very different (and quickly evolving) wants and needs?

• AI: What is the right approach to embed AI into practice operations for efficiency and productivity improvement?

We’ll cover these priorities in more depth in our up upcoming webinar, “The state of the physician landscape”, on Thursday, May 22 at 1pm EST. Register here to join us!