Physician Practices
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 197,000 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.
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.
Lower Reimbursement Rates
Physician practices are highly dependent on reimbursements from private insurance companies, Medicare, and Medicaid.
Industry size & Structure
The typical physician practice has a single location, 14 employees, and about $3 million in annual revenue.
- There are over 197,000 physician practices in the US with about $591 billion in revenue and over 2.8 million employees.
- There are over 443,437 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
Physician Practices Industry Growth
Recent Developments
Apr 1, 2025 - Medicare Reimbursement Lags Increasing Costs
- Medicare reimbursement to physician practices is not keeping up with the cost of operating practices, according to the American Medical Association (AMA). Medicare payments to physician practices increased 7% since 2001 but the cost of running a medical practice increased 59% from 2001 through 2024, according to the AMA. Medicare physician payment has dropped 33% since 2001 after adjusting for practice-cost inflation, according to the AMA.
- Private equity exits from physician practices lead to higher physician turnover two years later, according to a study published in JAMA Health Forum. Physicians employed in private equity-owned practices in which the owners exited between 2016 and 2018 were 16.5 percentage points less likely to be working at the same practice two years after the exit. This is compared to a matched set of physicians in similarly sized practices, in the same specialty, and located in the same market whose practice did not experience a private equity exit during the same period. Researchers said that this represents a 27.5% reduction in retention given the 60% mean rate of staying in the control group. They also stated that the increase in physician turnover two years after an exit occurred even after most practices were purchased by another private equity firm, which typically offers financial incentives to stay.
- Many physicians are joining new professional organizations created to oppose corporate influence in US medicine, according to The Wall Street Journal. Some groups work with lawmakers on legislation intended to limit private equity’s influence in healthcare. Others aim to educate peers about private equity’s impact on their profession. Nearly $1 trillion has been invested in the healthcare sector by buyout firms since 2012, according to The Wall Street Journal. Most analyses focus on how private-equity ownership affects patients but it has also imapcted physicians. Many are angry about losing autonomy and feel that Wall Street investors are standing between them and patients, according to Vicki Norton, an emergency doctor in Florida and the president-elect of the roughly 8,000-member American Academy of Emergency Medicine. The American Medical Association, the nation’s largest doctors’ organization, hasn’t taken a position on private equity in healthcare but it opposes the corporate practice of medicine and in 2022 passed a resolution against private equity’s involvement in medical training.
- Physician practice employment and average wages for nonsupervisory employees increased slightly during 2024, according to the US Bureau of Labor Statistics (BLS). Revenue for physician offices increased 8.7% year over year and 5.4% quarter over quarter in the second quarter of 2024, according to the US Census Bureau. Physician practice prices increased slightly during 2024, according to the BLS.
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