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
Jul 13, 2024 - Prices Increase
- Physician practice prices increased slightly during the first five months of 2024, according to the US Bureau of Labor Statistics (BLS). Revenue for physician offices increased 11.3% year over year and 5.2% quarter over quarter in the fourth quarter of 2023, according to the US Census Bureau. Physician practice employment and average wages for nonsupervisory employees increased slightly during the first five months of 2024, according to the BLS.
- Physician practice ownership by corporations, including health insurers, private equity firms, and large pharmacy chains, reached 30.1% as of January 2024, according to the Physician Advocacy Institute (PAI). It marks the first time that ownership by hospitals and health systems (28.4%) has been surpassed, according to the PAI. Corporations owned about 17% of US medical practices in early 2020 while hospitals and health systems owned about 25%.
- More than half of private equity-acquired dermatology, ophthalmology, and gastroenterology practices underwent an exit within three years of acquisition, according to a study published in Health Affairs Scholar. Most practices are resold to other private equity firms. There were 807 private equity acquisitions in the three specialties between 2016 and 2020. Just over half (51.6%) of these practices experienced an exit of the original private equity investor in which some or all assets were sold to a secondary buyer. Among the 417 practices that underwent an exit, 97.8% experienced a secondary buyout where the practice was resold to another private equity firm. Just 2.2% of practices that underwent an exit were sold to a secondary buyer that was a strategic corporate acquirer. Around 43% of practices remained owned by the initial private equity investor for three to seven years following initial investment, while 5.7% of practices had temporarily or permanently closed.
- The Centers for Medicare & Medicaid Services approved a 3.37% payment cut for physician services in 2024. Other Medicare providers, including hospitals providing inpatient and outpatient services, long-term-care facilities, same-day surgery centers, and hospices, received 3.1% to 3.3% increases, according to the American Medical Association (AMA). The AMA and more than 120 other national medical organizations and state medical societies have called on Congress to reverse the Medicare physician pay cuts that took effect on January 1.
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