Grow your practice without growing your costs

How to reduce overhead costs while scaling business operations

Preparing to grow a medical practice should be a cause for celebration, not concern. Yet, for many independent practice leaders, expanding services, adding locations, or bringing on new clinicians can feel like a risky gamble rather than a strategic win.

Recent data shows that private practices continue to decline as a share of physician employment — with only 42.2% of the nation’s approximately 760,000 physicians working in independent practices in 2024, down from 60.1% in 2012.¹ However, the path to sustainable growth for independent practices remains challenging. Although 2026 brings some relief with Medicare payment increases, fundamental operational pressures such as inadequate payment rates, costly resources, and regulatory burdens continue to threaten practice independence and, in some cases, intensify.

The core challenge is clear: How do you scale business operations without dramatically increasing staff overhead? Without the right infrastructure, growth can quickly lead to inconsistent workflows, communication breakdowns, and ballooning administrative costs — the opposite of what successful expansion should achieve.

Technology, particularly scalable AI architecture within EHRs and cloud-based solutions, offers a path forward. By centralizing operations, standardizing workflows, and leveraging virtual support services, independent practices can grow efficiently while maintaining the control, quality, and patient focus that define their success. The challenges are real, but they're not insurmountable. The practices that master scalable operations today will be the ones thriving tomorrow.

Operational challenges in healthcare: Mixed signals for independent practices

The healthcare landscape in 2026 reveals contradictory trends that independent practices must navigate thoughtfully. Here’s what practice leaders need to know:

1. Reimbursement relief arrives: After decades of Medicare payment cuts and freezes, 2026 brings welcome relief with up to a 3.77% increase in Medicare physician payments.² This marks a significant departure from chronic underfunding that has squeezed practice margins for years. For many, this increase represents the first meaningful reimbursement boost in their careers, reversing a long trend of stagnant or declining payments despite rising healthcare costs and complexity.³ This change offers a critical opportunity to improve practice sustainability and patient care amid ongoing challenges in the healthcare system.
2. But consolidation continues: Despite this positive development, the broader trend toward consolidation shows no signs of slowing. As of 2024, approximately 34.5% of physicians were employed by hospital-owned practices, up from 23.4% in 2012. Meanwhile, 42.2% of physicians worked in private practices in 2024, down 18 percentage points from 60.1% in 2012. (The remaining physicians are employed in other settings, including direct hospital employment at 12%, private equity-owned practices at 6.5%, and government or university employment.)¹ Health systems continue to aggressively recruit physicians through attractive salary packages and benefits that many independent practices struggle to match.
3. Independence endures: The fact that close to half of physicians still work outside hospital-owned systems despite decades of consolidation pressure is significant. Many physicians still value the autonomy, patient relationships, and clinical decision-making freedom that independent practice provides.
4. New models emerge: Management Service Organizations (MSOs) and hybrid ownership models are emerging as middle-ground solutions, offering operational support to independent practices while enabling them to preserve physician autonomy. These alternatives demonstrate that independence and operational efficiency aren’t mutually exclusive.

Scaling business operations: Mounting operational pressures

While the 2026 Medicare payment increase offers some breathing room, it doesn’t address the fundamental operational challenges that make practice management increasingly difficult. Three key pressures persist:

• Administrative complexity keeps growing. Prior authorization demands have become more complex and time-consuming, with staff tied up navigating insurance company requirements. Claims payment delays stretch cash flow thin, forcing practices to wait for their own revenue. Some insurers have even proposed automatically reducing payments by downgrading procedure codes in specific circumstances, which would force practices to spend countless hours on appeals.⁴
• Payment disparities create unfair competition. Insurance companies continue to pay hospitals significantly more than independent practices for the same services. One report found that hospitals receive median commercial insurance payments at approximately 245% of Medicare rates for certain outpatient procedures, with rates varying widely by service. In contrast, independent practices typically receive lower reimbursement rates.⁵
• Resource strain hits smaller practices hardest. Every new regulation, administrative requirement, and system update affects smaller practices disproportionately. While large health systems can spread compliance costs across hundreds of providers, independent practices must absorb the same fixed costs with far fewer resources.

How to choose a product suite: Scalable technology as a strategic response

Independent practices don’t need to match hospital systems dollar-for-dollar to compete effectively. Instead, they can leverage technology to do more with existing resources while positioning for sustainable growth.

Automation reduces administrative burden

Prior authorization processing that once required hours of staff time can be automated, reducing delays and freeing clinical staff for patient care. Claims management systems identify and resolve billing issues before they become denials. Patient scheduling and communication platforms help reduce phone tag and no-shows through automated reminders and self-service options.

Data analytics enable smarter decisions

Real-time dashboards give independent practices the same financial insights that big health systems have: which payers are most profitable, which procedures generate revenue, and how cash flow is trending. This level of financial intelligence allows practices to make data-driven decisions about everything from staffing to service line expansion.

Cloud-based systems enable growth without overhead

The traditional model requires adding staff for every increment of growth. Technology-enabled practices can handle increased patient volumes, expand service offerings, or add locations without linear cost increases. Cloud-based systems eliminate the need for on-site IT infrastructure. Integrated platforms reduce vendor complexity. Automated workflows ensure that growth doesn’t compromise quality.

Scalable EHR solutions: The path forward

The challenges facing independent practices are real, but they’re not insurmountable. Scalable EHRs and AI-powered technology offer a path to scale operations efficiently while maintaining the control, quality, and patient focus that define successful independent practice.

Are you ready to scale your independent practice? Learn how athenaOne® can support your goals and help reduce overhead costs while overcoming operational challenges in healthcare.