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
Sep 3, 2024 - M&A Activity Slows
- Global merger and acquisition (M&A) activity decreased 15% year over year during the second quarter of 2024, according to GlobalData. Physician practices are among the industries being impacted, as states are ramping up scrutiny of health transactions, according to StatNews. Oregon is at the forefront of the push for more scrutiny with some of the strongest health care market oversight laws in the nation, according to StatNews, but state legislatures in Illinois, Minnesota, and New York also have approved oversight programs. Five more states: Vermont, Washington, Pennsylvania, Indiana, and New Mexico, are looking at legislation to start or expand their own programs. A combination of high interest rates, current valuations, and political uncertainty is also impacting M&A activity, according to GlobalData, but a rebound may begin before the end of the year. "Prospects of rate cuts in certain markets and an overall improving global growth outlook could drive increased activity," said Priya Toppo, Analyst at GlobalData's Thematic Intelligence. "However, mega deals will continue to face significant challenges, especially in the US, where antitrust concerns are a key focus for regulators.”
- Legislation introduced in the US Congress would require increased transparency for private equity investment in health care services companies like hospitals, dialysis centers, and physician groups. The Health Over Wealth Act would require PE-owned practices to publicly report their debt load, executive pay, lobbying activities, healthcare costs, and service reductions. The biggest change would be expanded powers for the Department of Health and Human Services (HHS): Private equity firms would need to "obtain a license" from HHS to invest, either directly or indirectly, in a health care services firm. Were a firm to fail to qualify for such a license, it could be forced to divest existing portfolio companies. HHS also could prohibit any deal, even from licensees, while it conducts a study into the impact of private equity on health care. HHS also could block any sale-leaseback transaction that it believes "would lead to a long-term weakened financial status of the health care entity or place the public health at risk." 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%.
- 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.
- Physician practice employment and average wages for nonsupervisory employees increased slightly during the first six 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 prices increased slightly during the first six months of 2024, according to the BLS.
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