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Historically, the farming and agriculture industry was viewed as both indispensable and resilient, weathering economic cycles and generational shifts. However, as industrialization advanced and global supply chains evolved, many independent farms failed to recognize and respond to the changing landscape. Those that did not adapt or consolidate were eventually displaced by larger, more technologically advanced operations.

Will Disruption Lead to Extinction?

Today, the healthcare sector (specifically the physician practice component) faces a similarly disruptive environment. Private practice physicians face mounting financial challenges that threaten their stability and ability to provide high-quality care. Shrinking reimbursements, escalating operational costs, limited negotiating power with payers, and the increasing consolidation of patient populations under large health plans health systems are pushing many physicians to reevaluate the viability of independent practice. At the same time, the pace of technological advancement demands significant capital expenditures simply to remain competitive and compliant.

Here’s a snapshot by the numbers:

• CMS continues cutting Medicare physician pay, with a 3.4% fee schedule reduction in 2023, a 2.8% cut in 2024 and over 3% in 2025.  
  
• Practice inflation hit a 23-year high of 4.5% in 2023, grew to almost 5% in 2024 and is expected to surpass 8% in 2025. 
  
• As specialty platforms and large health systems acquire more physician practices, now being at over 60% of all physicians, independent physicians continue to lose negotiating power for reimbursement levels.
  

Physicians who hesitate to act continue to notice that they are working harder and treating more patients each year, while watching their take home pay decrease.   The math is simple:  they are losing their referral networks, facing reduced reimbursements, and grappling with increasing operational costs, challenges that together significantly impact the net income for independent practitioners. And the problem is only projected to worsen. 

Sustainability By Association with Larger Organizations

Independent physician practices must acknowledge a critical truth: long-term sustainability increasingly depends on being part of a larger, well-resourced organization. Joining a broader group not only helps absorb financial pressures and reduce overhead, but also provides access to the infrastructure and innovation necessary to thrive in the modern healthcare landscape.

With some of today’s hybrid consolidation models, keeping physician independence and physician leadership is becoming an achievable goal.  By combining the MSO structure with models incorporating actual physician leadership, some of the newer platform groups are achieving the best of both worlds. 

Not “If,” But “When”

It’s a complicated landscape and changing every day.  The only thing for sure is that “keeping your head in the sand” is a losing proposition.  It doesn’t seem to be a question of “IF” anymore, rather its just a question of “WHEN.”  

To find out more about your options or to hear more about some of the hybrid models, click below and complete the contact form:

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Robert Goettling has over thirty years of experience in the healthcare industry. He primarily focuses on the transactional aspects of physician practices, ambulatory surgery centers (ASCs), physician joint venture projects with health systems, private equity firms, and strategic buyers throughout the United States. Since 2007, Mr. Goettling has led The Bloom Organization’s transaction services team. He is a licensed investment banker and securities principal. Mr. Goettling has been instrumental to The Bloom Organization’s mergers and acquisitions advisory group, which has become the leading physicians sell-side advisory firm closing over $10 billion in transactions.

Robert C. Goettling

Principal, The Bloom Organization, LLC

Optima Onyx Tower | 1010 S. Federal Highway, Suite 2804 | Hallandale Beach, FL 33009

Office: 305.974.0700 | Cell: 312.446.8885 | Email: rgoettling@bloomllc.com