The Shrinking Independent Physician Practice And What It Signals For Distributors

Physician practice consolidation is making system-level, value-based selling essential for distributors.

The structure of the physician office market is shifting rapidly, with consolidation prevalent. In 2025, there were 521 physician practice acquisitions, a 3% increase over the prior year, with activity concentrated in specialties such as dental, eye care, dermatology, and orthopedics. Private equity-backed groups led nearly half of these transactions.¹

At the same time, the number of small practices continues to decline. The share of physicians working in practices with less than five providers dropped from 40% in 2014 to just 29% in 2024. Physicians cite several motivations for consolidation: stronger negotiating leverage with payers (71%), access to costly resources (65%), and the ability to manage administrative and regulatory complexity (64%).²

These pressures are reshaping the economics of independent care delivery and ownership trends reinforce this shift. Physician ownership of practices has fallen sharply—from 58% in 2020 to 36% in 2026—while hospital and corporate ownership continues to rise. Hospitals now account for over 30% of ownership, with corporate entities, including insurers and private equity firms, close behind.³

Share Of Physicians Working In Larger Practices Increases

Physicians By Practice Size

Source: AMA. Physician Practice Characteristics in 2024: Private Practices Account For Less Than Half of Physicians in Most Specialties. November, 2025

For healthcare distributors, these changes have meaningful implications. Larger, consolidated practices often centralize purchasing decisions, favor standardized product formularies, and negotiate more aggressively on price. This can compress margins but also create opportunities for higher-volume, system-wide contracts.

Equally important, distributors must adapt to a more complex buyer landscape. Decision-making is increasingly influenced by non-clinical stakeholders such as management service organizations and corporate procurement teams. This shift requires a focus on value-based selling, data integration, and service differentiation.

Physician-Owned Practices Fell 22 Points As Corporate Ownership Nearly Doubled From 2020 To 2026

Ownership of U.S. Physician Practices

Source: Physician Advocacy Institute. Avalere Health. The Rapid Expansion Of Hospital And Corporate Control Over Physician Practices And Employment 2018-2026.