Washington, D.C. — As Americans face skyrocketing healthcare costs, the American Economic Liberties Project released a new report, Out of Practice: How Capital Costs and Corporate Power Are Destroying Independent Medicine, examining how local, physician-owned medical practices have been replaced by Big Healthcare conglomerates and Wall Street investors.

“Independent physician practices aren’t disappearing because they deliver worse care. They’re being squeezed out by a system that makes capital more expensive, reimbursements more unequal, and survival increasingly dependent on selling out to corporate owners,” said Olivia Webb Kosloff, Senior Fellow at Economic Liberties and lead author of the report. “Decades of policy choices have tilted the playing field toward Big Healthcare and Wall Street, turning what should be community-based care into a financial asset class.”

“The data show this isn’t just about consolidation, it’s about the financial architecture of the healthcare system making independence nearly impossible to sustain,” added Alice Qin, co-author of the report. “Without structural reforms to credit access, reimbursement, and corporate control, the economics will continue to push physicians out of ownership and into increasingly concentrated systems.”

In the early 1980s, more than three-fourths of US physicians owned their practices. By 2024, that share had dropped to barely a third. Between 2019 and 2024, more than 40% of independent practices in rural areas either closed or were acquired. 

The shift began with the “managed care revolution” of the 1990s, when policymakers responded to high healthcare costs by prioritizing top-down care management.The Affordable Care Act extended these incentives, embedding consolidation into the structure of the modern healthcare system. During the 2010s, private equity also drove acquisitions into hyperdrive. In 2012, there were 75 private equity deals to acquire physician practices, by 2021 there were several hundred.

Financial constraints also pushed physicians away from ownership. Rising medical student debt prevented young physicians from saving enough to make down payments on their own practices. The merger-induced decline of community banks, and the loss of the favorable small business loans, raised credit costs for prospective owners. The pandemic slashed patient volume and revenue. Subsequent interest rate hikes made financing even more expensive. The administrative costs of being independent have also risen, driven by electronic health record system adoptions, extensive prior authorization reviews, and  arduous documentation and compliance requirements.

Big Healthcare conglomerates have weaponized their market power. Following shocks like COVID-19 and the 2024 Change Healthcare hack, financially vulnerable practices have turned to financing offered by Big Healthcare. Those tools often act as predatory gateways to acquisition. Conglomerates also impose unsustainably low reimbursement rates on independent practices, which they are forced to accept or risk losing patients. UnitedHealthcare, for example, reimburses Optum-affiliated physicians 17 percent more on average than independent providers, and 61 percent more in markets where Optum has a large share. 

The paper offers a comprehensive solution set for policymakers to finally tackle the consolidation and high costs destroying local, private practices:

• Congress should expand SBA funding to support a dedicated loan program for independent physician practices while strengthening community banks and bank merger enforcement to ensure fair, non-predatory access to capital, including in emergencies.
• Congress should standardize health care reimbursement rates by region and cap price growth, or pursue interim measures like site-neutral payments, to reduce consolidation incentives and level the playing field for independent providers.
• Federal and state policymakers should strengthen and enforce corporate practice of medicine laws by closing loopholes exploited by MSOs and establishing a nationwide ban to prevent corporate interference in clinical care.
• Policymakers should require structural separation between insurers and payment platforms to curb the unfair advantages created by vertical integration across payors, PBMs, and provider networks.
• Congress should close the industrial loan company loophole to subject firms like Optum to full banking regulation and eliminate shadow banking advantages.
• Congress should streamline medical education and expand student loan relief to reduce unnecessary training costs and financial barriers to starting and sustaining independent medical practices. 

Read the full report here.

Read the executive summary of the report here.

Read the brief “​​UnitedHealth Group Is a Bank: How Policymakers Can Protect Independent Physician Practices from Becoming Loan Shark Bait,” here.

Learn more about Economic Liberties here.