A new report from the Progressive Policy Institute warns that hospitals' continued consolidation of independent physician practices is contributing to rising health care costs and limiting patient access, particularly in rural areas.

A review of multiple studies cited in the report, entitled Fixing a Broken System, shows hospital acquisitions are associated with average price increases of 14%, with some markets experiencing increases up to 33%. Nearly half of these increases stem from reimbursement policies that favor hospital-owned facilities, which can bill higher facility fees for procedures formerly delivered in office settings.

The report found that between 2019 and 2023, the share of physician practices owned by hospitals and large corporate entities rose from 39% to 59%. During the same period, the percentage of physicians employed by those entities grew from 62% to 78%.
Independent practices, which often provide more affordable, community-based care, are in sharp decline. The study highlighted steep drops in ownership across nine clinical specialties, with general surgery and oncology seeing reductions of up to 42%.

Rural communities are facing the most significant impact, with a 34% decline in independent practice ownership, compared to 22% in urban areas.

“Independent, office-based care provides high-quality, patient-preferred services at lower cost and closer to home,” said Dr. Bob Tahara, health policy chair of the Office-Based Facility Association (OBFA). “This study underscores what many of us already see in the field: as hospitals consolidate physician practices, patients lose choice, community providers struggle to survive, and the cost of care rises.”

The 2026 Medicare Physician Fee Schedule includes provisions aimed at supporting independent, office-based providers. OBFA is urging lawmakers to expand on those steps by restructuring payment policies to better support physician work and separate reimbursement for office-based practice expenses.

“Office-based facilities are a cornerstone of affordable, patient-centered care — but they’re under pressure like never before,” said Tahara.

U.S. Healthcare Homepage