Physician Practices NAICS 621111

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Industry Summary
The 197,700 physician practices in the US consist of primary care and specialty practices. Primary care physicians are responsible for monitoring an individual’s overall medical care, performing physical exams, and treating minor illnesses. Primary care practices include general and family practices, internal medicine, pediatrics, and obstetrics/gynecology. Specialty practices focus on a particular area of medical care and may also perform surgeries to treat problems. Specialists include allergists, cardiologists, dermatologists, gastroenterologists, general surgeons, ophthalmologists, orthopedists, psychiatrists, and radiologists.
Lower Reimbursement Rates
Physician practices are highly dependent on reimbursements from private insurance companies, Medicare, and Medicaid.
Adapting to Changing Standards
Practices must ensure their billing software is ready for new billing codes and claim submission requirements, or they face disruptions in their cash flow, aka revenue flow.
Recent Developments
Aug 1, 2025 - Practice Acquisition By Hospitals Increases
- Hospitals are buying small physician practices and that is driving up the price of care, according to the National Bureau of Economic Research (NBEA). About 42.2% of physicians worked in private practices (a practice that was wholly-owned by physicians) in 2024, down from 60% in 2012, according to the American Medical Association's Physician Practice Benchmark Survey. Health systems see opportunities to achieve more clinical integration and expand referral networks by acquiring independent physician practices. The acquisitions aren't limited to hospitals: Private equity, insurers, and businesses like Amazon are also acquiring medical practices from doctors facing declining reimbursement and high overhead costs.
- Federal legislators ignored a request by a group of medical societies and physician groups to change the Senate proposal for the 2026 Medicare Physician Fee Schedule to match one that was passed in the US House of Representatives version of the One Big Beautiful Bill reconciliation legislation. The 75 groups and societies said that the Medicare Payment provision in the House-passed One Big Beautiful Bill represents a "critical step" toward stabilizing the Medicare Physician Fee Schedule. The Senate passed its version of the reconciliation legislation on July 1 without adjusting its 2026 Medicare Physician Fee Schedule proposal. The legislation signed into law by President Trump included the unmodified Senate proposal which, like the US House version, contains a one-year 2.5% increase in the Medicare Physician Fee Schedule conversion factor for 2026. Medicare physician payments have decreased 33% since 2001 when adjusted for inflation, according to Healthcare Finance, with visible consequences, including the loss of independent physicians and practices in rural areas. The Senate version of the bill also includes steeper cuts to Medicaid than the projected $715 billion in the House version of the bill that passed in May.
- There were 3,943 physician practice management (PPM) transactions in which private equity firms (PE) were involved during the past 10 years, according to Pitchbook. PEs focus on acquiring a sizable practice or a platform investment in the physician practice segment and then use this corporate foundation to expand through add-on acquisitions. The demand from PE remains robust, according to Pitchbook, resulting in a wave of outreach to physician practice owners nationwide.
- Physician practice employment and average wages for nonsupervisory employees increased slightly during the first five months of 2025, according to the US Bureau of Labor Statistics (BLS). Revenue for physician offices increased 9.3% year over year and 3.9% quarter over quarter in the fourth quarter of 2024, according to the US Census Bureau. The Producer Price Index for physician practices increased 1.59% year over year in June, according to the BLS.
Industry Revenue
Physician Practices

Industry Structure
Industry size & Structure
The typical physician practice has a single location, 22 employees, and about $4.4 million in annual revenue.
- There are over 197,000 physician practices in the US with about $591 billion in revenue and over 2.9 million employees.
- There are over 443,500 physicians working in private practices.
- Over one billion visits are made annually to physician practices.
- There are two types of physicians - MD (Medical Doctor) and DO (Doctor of Osteopathic Medicine). Both are qualified to perform all types of treatment, including surgery, but DOs emphasize the body's musculoskeletal system, preventive medicine and holistic care.
- Education and training requirements for physicians include 4 years of undergraduate school, 4 years of medical school, and 3 to 8 years of internship and residency. There are 143 accredited medical schools in the US for MD degrees and 41 accredited schools for DO degrees.
- To practice medicine in the US, all physicians must pass either the United States Medical Licensing Exam (USMLE) for MDs or the Comprehensive Osteopathic Medical Licensing Exam (COMLEX) for DOs.
Industry Forecast
Industry Forecast
Physician Practices Industry Growth

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