Consolidation on the rise

For the report, GAO analyzed pre-existing studies and consulted with 14 stakeholders, including doctors, hospitals, health insurers, private equity firms, and retail companies. GAO also cited data from the American Medical Association (AMA) and interviewed HHS officials.

Overall, GAO found that physician consolidation has increased substantially as other entities acquire physician practices. Currently, research shows that at least 47% of physicians were employed by or affiliated with hospital systems in 2024, up from less than 30% in 2012. Private equity ownership or investment in physician practices has also grown in the last few years, growing from 4.5% in 2022 to 6.5% in 2024.

As other entities acquire physician practices, fewer doctors are working in independent or private practices. According to AMA, the share of physicians in private practice has dropped from 60% in 2012 to 42% in 2024.

What's driving physician consolidation?

For many physicians, consolidation is less about choice and more about survival. For example, doctors' groups told GAO that the cost of owning medical equipment, which is necessary for private practice, has exceeded what they earn from treating patients — pushing them more toward consolidation.

The financial strain is compounded by the realities of workforce demographics and payment models. 

What are the implications of consolidation?

Researchers have found that consolidation comes with trade-offs. According to the GAO, "[s]tudies indicate that physician consolidation with hospital systems can lead to increased spending and prices."

For example, an analysis found that total spending per Medicare patient increased by 5% for select elective surgeries from 2010 to 2015, in part due to replacing doctor's office visits with hospital outpatient visits, which are ultimately costlier. Facility fees, especially for services like chemotherapy, echocardiography, cardiac imaging, and office visits, have also increased as hospitals acquire more physician practices.

However, GAO noted that physician consolidation with hospital systems did not change or decrease the quality of care provided.

Currently, research on the effects of physician consolidation has largely focused on hospitals, with GAO saying that the impact of physician consolidation "with health insurers, other corporate entities, or private equity firms on spending, prices, and quality were less clear or unknown."

The question, GAO warned, is whether increased consolidation ultimately helps patients or drives higher costs: "While consolidation has the potential to improve efficiency, it also has the potential to impede competition and contribute to increased costs to patients, employers, health insurers, and federal health care programs."