Nearly half of US physicians now work for large systems: GAO links consolidation to higher costs

Editor's Note

Physician independence continues to decline as hospitals, insurers, and private equity firms expand their ownership of medical practices, according to a US Government Accountability Office (GAO) report published on September 22. The report found that 47% of physicians were employed by or affiliated with hospital systems in 2024, up from less than 30% in 2012. About 6.5% worked in private equity owned practices, a small but growing segment that varied by specialty and region.

The GAO’s review of studies published between 2021 and 2025 concluded that consolidation among physicians has accelerated, driven largely by hospital acquisitions but increasingly involving insurers and corporate entities. Private equity investment remains concentrated in specific specialties such as dermatology, radiology, and gastroenterology. The GAO report also noted insurer-operated physician practices, such as those owned by UnitedHealth Group’s Optum and CVS Health’s Oak Street Health, are expanding, particularly in markets with high Medicare Advantage enrollment.

According to the report, studies consistently link hospital–physician consolidation with higher healthcare spending and prices, though effects on quality and access remain unclear. Medicare spending increased in several analyses as services shifted to more expensive hospital outpatient settings, where facility fees apply. One study cited found total Medicare spending per patient rose 5% for certain elective surgeries after consolidation. Other studies showed commercial insurance prices for office visits rose 17% and hospital prices increased 3%–5% following acquisitions.

Despite rising costs, most studies found no measurable improvement in quality. Some reported modest declines in patient outcomes, including lower medication adherence and slightly higher complication rates after certain procedures. The GAO noted evidence linking consolidation with improved care coordination or patient experience was limited and inconsistent.

Evidence on consolidation by insurers and corporate entities remains sparse. Early findings suggest insurer acquisitions may influence documentation and pricing strategies more than care quality. For private equity, the GAO found some evidence of commercial price increases of up to 16% in certain specialties but no significant changes in Medicare spending. Research on access to care was notably absent across all ownership models.

Stakeholders interviewed by the GAO offered mixed views. Hospitals said acquisitions can preserve access and improve coordination, while physician groups warned that reduced competition may drive up costs and restrict referral options. The GAO concluded that although consolidation can bring administrative efficiencies, its financial impacts outweigh proven clinical benefits, leaving major questions about competition, affordability, and patient choice.