LUGPA Policy Update - GAO Report on Physician Consolidation (GAO-25-107450)

October 2025

The U.S. Government Accountability Office (GAO) released a new report in September 2025 (GAO-25-107450), mandated by House Report 117-403, examining the scope and effects of physician consolidation. The report highlights the growing trend of physician practices merging with or being acquired by hospital systems, insurers, and corporate entities. It explores the consequences for healthcare spending, prices, quality, and access.

This Policy Update summarizes key findings most relevant to urology and independent practices, with an emphasis on how consolidation may affect costs and care delivery.

Physician Alignment and Employment Trends

Physician alignment with hospital systems and corporate entities has expanded dramatically over the past decade, reshaping the practice of medicine. Driven by economic pressures, regulatory changes, and ongoing healthcare consolidation, this trend marks a significant shift away from independent private practice toward employment or affiliation with hospitals, academic institutions, insurers, and management service organizations (MSOs).

Hospital and Institutional Employment

• In 2024, 47% of U.S. physicians were employed by or affiliated with hospitals, up from less than 30% in 2012.
• Hospital ownership of physician practices also grew, with hospitals owning 28% of practices in 2024.
• Overall, 55% of physicians were affiliated with hospitals (Physicians Advocacy Institute, 2024).

Urology-Specific Trends

• Among urologists, employment rose from 49% in 2014 to 65% in 2022, with many joining academic medical centers and private hospitals (American Urological Association, 2024).

Implications

The shift toward hospital and corporate employment has wide-ranging consequences:

• Autonomy: Physicians may face reduced independence in clinical and business decision-making.
• Care Models: Consolidation may standardize practices but risks limiting flexibility in patient-centered care.
• Costs: Integration with hospitals and insurers can drive up healthcare costs
• Specialty Impact: For urology, the erosion of private practice raises concerns about access, innovation, and long-term physician satisfaction.

Effects of Consolidation

Spending and Prices

The GAO finds strong evidence that consolidation drives higher spending and prices.

• Medicare: Costs rise when services shift into higher-cost hospital settings. One study found gastroenterology colonoscopy costs increased by $3,851 annually per physician post-consolidation.
• Insurers: Limited data suggest insurer consolidation may increase Medicare Advantage payments through enhanced diagnostic coding.

Quality of Care

Quality outcomes are mixed. Studies of hospital consolidation show no improvement or slight declines, particularly in managing chronic conditions. For example, one study reported higher post-colonoscopy complication rates after hospital acquisitions.

Access to Care

Evidence on access is limited:

• Hospitals claim consolidation maintains rural access and improves care coordination.
• Physicians report restricted referral networks and reduced same-day appointment availability.

Implications for LUGPA Members

For urology, consolidation presents both challenges and limited opportunities.

• Challenges: Hospital and corporate ownership increase competitive pressure on independent practices. Rising Medicare spending tied to consolidation may further strain reimbursement.
• Opportunities: MSOs may offer a path to preserve independence while providing support services. However, concerns remain over higher costs and uncertain quality effects linked to hospital ownership.

LUGPA Advocacy and Recommendations

LUGPA is committed to preserving independent urology practices and ensuring patient access to high-quality, affordable care. We continue to advocate for:

• Site-Neutral Payments: Aligning Medicare and commercial payments across sites of care, as recommended by MedPAC and GAO, to eliminate hospital-driven cost disparities.
• Ownership Transparency: Strengthening CMS PECOS reporting to better track physician ownership and consolidation trends.
• Robust Antitrust Enforcement: Supporting FTC and DOJ oversight of anticompetitive hospital and private equity roll-ups.
• Further Research: Advancing studies on how consolidation affects quality and access, particularly in urology.

LUGPA will remain actively engaged with policymakers to ensure independent practices remain competitive and patients retain choice in their urologic care.