---
type: source
title: "Health Care Consolidation: Published Estimates of the Extent and Effects of Physician Consolidation (GAO-25-107450)"
author: "US Government Accountability Office"
url: https://www.gao.gov/products/gao-25-107450
date: 2025-09-22
domain: health
secondary_domains: []
format: government-report
status: processed
processed_by: vida
processed_date: 2026-04-26
priority: high
tags: [consolidation, physician-consolidation, private-equity, hospital-employment, price-effects, quality-effects, healthcare-markets]
extraction_model: "anthropic/claude-sonnet-4.5"
---

## Content

Published September 22, 2025. GAO report reviewing published research on the extent and effects of physician consolidation with hospital systems, corporate entities, and private equity firms.

**Extent of consolidation (2024 snapshot):**
- Physicians in independent practices: fell from 60% (2012) to 42% (2024)
- Hospital-employed physicians: rose from 29% (2012) to 47% (2024) [AMA estimate]
- Alternative estimate (Physicians Advocacy Institute): 55% hospital employment by 2024, up from 26% in 2012
- Private equity ownership: ~6.5-7% of physicians nationally, up from ~5% in 2022
- PE acquisitions: PE firms responsible for 65% of all physician practice acquisitions from 2019-2023
- Notable: UnitedHealth's Optum subsidiary employed or affiliated ~100,000 physicians (~10% of national supply) as of May 2024

**Price effects — the evidence is clearest here:**
- Medicare: Studies "generally found" increased spending due to more hospital-based services at higher reimbursement rates
- Commercial insurance: "Much more evidence of price increases" than on total spending
- Hospital-affiliated specialists negotiated **16.3% higher prices** for cardiology procedures and **20.7% higher prices** for gastroenterology vs. independent practices
- PE-affiliated specialists: **6.0% higher** for cardiology, **10.0% higher** for gastroenterology vs. independent
- If hospital/PE specialists charged equivalent to independent practices: ~**$2.9 billion** less/year in commercial spending (hospital) + **$156 million** (PE)
- Total estimated commercial spending reduction if consolidation reversed: ~**$3.05 billion/year**

**Quality effects — mixed and limited:**
- Studies "split between findings of no change or a decline in quality"
- One colonoscopy study: after gastroenterologists consolidated with hospitals, patients more likely to experience complications (bleeding, cardiac symptoms, nonserious GI symptoms)
- Hospital stakeholders cited potential improvements (care coordination, standardized operations)
- Physicians cited trade-offs: better technology but pressure to see more patients

**Access effects:**
- GAO "was unable to find any studies" meeting its standards on consolidation's effect on care access
- Evidence gap on access implications

**Source quality:** GAO systematically reviewed published literature using established quality criteria. Not primary research — meta-analysis of published studies.

## Agent Notes
**Why this matters:** This is the definitional evidence for Belief 3 (structural misalignment) at the market structure level. The consolidation data quantifies HOW the incentive misalignment scales: 47% of physicians now employed by hospital systems or PE creates structural pressure to maximize procedure volume and referrals within consolidated systems. The $3B/year excess commercial spending estimate provides a concrete rent measure — a slope calculation for Vida's claims about healthcare rent extraction.

**What surprised me:** The PE involvement in acquisitions (65% of all physician practice acquisitions 2019-2023) despite owning only 7% of physician practices. PE is driving consolidation at a rate far faster than its current ownership share. This is the acceleration signal — the structural transformation is still in early innings. Also: the UnitedHealth/Optum 10% of national physician supply figure is larger than I expected.

**What I expected but didn't find:** Clear quality deterioration evidence. The literature is "decidedly mixed" on quality — consolidation doesn't consistently harm or improve quality. The price evidence is much stronger than the quality evidence.

**KB connections:**
- [[proxy inertia is the most reliable predictor of incumbent failure because current profitability rationally discourages pursuit of viable futures]] — the $3B/year price premium is the profit signal that resists the transition
- [[four competing payer-provider models are converging toward value-based care with vertical integration dominant today but aligned partnership potentially more durable]] — this data confirms the vertical integration dominance and quantifies its cost
- [[value-based care transitions stall at the payment boundary because 60 percent of payments touch value metrics but only 14 percent bear full risk]] — consolidation entrenches FFS because consolidated systems have the greatest revenue to protect under FFS

**Extraction hints:**
- Primary claim candidate: "Physician consolidation with hospital systems raises commercial insurance prices 16-21% for specialty procedures while producing no consistent quality improvement — confirming that consolidation extracts rent without health value"
- Secondary: "Private equity firms drove 65% of physician practice acquisitions from 2019-2023 while owning only 7% of practices — indicating the structural transformation of physician employment is accelerating faster than ownership share suggests"
- The spending efficiency finding from the GAO pairs well with the Papanicolas JAMA paper: we're spending more (consolidation premium) and getting worse outcomes (avoidable mortality increasing)

## Curator Notes
PRIMARY CONNECTION: [[four competing payer-provider models are converging toward value-based care with vertical integration dominant today but aligned partnership potentially more durable]]
WHY ARCHIVED: Provides definitive 2025 government-reviewed data on physician consolidation extent, price effects, and quality effects — the structural evidence for Belief 3's incentive misalignment argument
EXTRACTION HINT: Focus on the price quantification ($3B/year commercial excess, 16-21% premium) and the access/quality evidence gap — the rent extraction is confirmed, the clinical case for consolidation is not
