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A recent study published in JAMA on the consolidation of Primary Care Practices (PCPs) combines practice affiliation data from 2009 to 2022, with commercial payor data that is now required under the Transparency in Coverage (“TiC”) final rule to provide novel insights on corporate affiliation in primary care.
There is much to be gleaned from the study, but here are some of my biggest takeaways:
In 2009, roughly 25% of PCPs were affiliated with a hospital. That figure nearly doubled over the following decade, but has remained relatively flat since, hovering around 48% as of 2022.
While most private equity (PE) activity has historically focused on a handful of specialties (ex., dermatology, ophthalmology, GI, etc.), PE firms have started to acquire PCPs, at least in some markets and are now affiliated with approximately 1.5% of Primary Care physicians.
In aggregate, the negotiated reimbursement rates for hospital affiliated practices and PE affiliated practices were nearly 11% and 8% higher, respectively, compared to independent practices. These figures were much higher in many states.
It is important to note that much of this study was performed using CPT level data and prior to some of the more recent value-based care (VBC) initiatives by CMS and commercial payors, seeking to transform reimbursement for primary care services. My colleague, David Walline, recently wrote a blog post exploring some of these VBC models.
Furthermore, while the study does not specifically look at variations in rates based on practice size, it is clear that larger groups are much more successful in negotiating higher rates with insurers. And it stands to reason that smaller groups, especially independent providers, will be at an even bigger disadvantage when it comes to negotiating rates and/or ability to participate in some of these new payment models.
As noted, it appears that many physicians seeking affiliation, especially with hospitals, have already done so. The question is how much longer the 50% choosing to remain independent can continue to do so in the face of rising costs, lower relative reimbursement, and capital investment in the technology needed to participate in value-based care.
As further consolidation is almost guaranteed in the coming years, smaller groups and/or independent providers will need to consolidate in order to increase economies of scale. Doing so will allow them to negotiate better payor contracts and create expense synergies, both resulting in stronger financial results.
At Root Valuation, we strive to stay on top of the constantly evolving healthcare landscape. If you have any questions about how the consolidation of PCPs may affect your organization, please contact Mark Spurlin at mspurlin@rootvaluation.com or book a meeting directly.
Reference: Singh Y, Radhakrishnan N, Adler L, Whaley C. Growth of Private Equity and Hospital Consolidation in Primary Care and Price Implications. JAMA Health Forum. 2025;6(1):e244935. doi:10.1001/jamahealthforum.2024.4935