62,535 SF | $16,000,000 *
1135 Broad Street, Clifton, NJ
Buyer: Redina Development
63,000 SF | $12,500,000*
855 Valley Road, Clifton, NJ
Buyer: 855 Valley Road Holdings, LLC
Seller: Bliss Valley Associates, LLC
9,061 SF | 160 Summit Avenue, Montvale, NJ
7,287 SF | 140 Route 17 N, Paramus, NJ*
5,599 SF | 10 Forest Avenue, Paramus, NJ*
*NAI Hanson Transactions
According to research conducted by Avalere for the Physicians
Advocacy Institute (PAI), hospital systems and corporate entities
such as health insurers and private equity firms employ nearly
70% of U.S. physicians.
The data examined a two-year period between January 1, 2019,
and January 1, 2021. It found that the trend of physician practice
acquisition — and physician hiring — accelerated during the
pandemic. In fact, hospitals and corporate entities acquired
nearly 21,000 physician practices during this time.
Additional key findings uncovered by the research during this
• A 32% increase in physician practice acquisitions and
employment among health insurers and private equity firms.
• Nearly 50% of the country’s medical practices are now owned
by corporate entities, health systems, and hospitals.
• Hospital ownership of practices increased 6%-11%.
• Corporate ownership of practices grew between 44%-59%.
Another research company projects that by 2033, the country
will see a shortage of between 54,100 and 139,000 physicians
with demand increasing at a much higher rate than supply.
The primary factors affecting this shortage? Population growth
and aging (and retiring) physicians. The COVID pandemic also
impacted the number of doctors in the field, with 8% closing
their practices since 2020 and 72% seeing decreased incomes
during that time.
A need to maintain up-to-date on the newest technology coupled
with shrinking reimbursement margins has led many physicians
to sell their practices. The AMA found that in 2020, fewer than half of patient care physicians worked in a 100% physician-owned
practice. It’s been a trend for hospitals and health systems to
acquire more physician practices — a strategy that increases the
type of specialized care they can provide while growing market
In general, insurer and government payer policies favor larger
health systems over privately owned physician practices, putting
those practices at a significant disadvantage. In addition to
decreased income courtesy of reduced reimbursement for various
specialties, privately owned practices have faced reimbursement
penalties generated by:
• Failure to maintain reporting.
• Inability to maintain minimum quality goals.
Other challenges include younger physicians graduating with
massive student debt who seek financial stability and a work-life balance. Increased patient expectations for more convenience,
new technology for procedures, appointment scheduling
appointments, virtual communication, telemedicine, and access
to rapid test results have also contributed to the higher number
of physicians opting to sell their practices and work for a hospital
Nontraditional organizations — insurers, private equity firms,
Medicare Advantage-focused providers, even Amazon (for a
short while) — have increased their investments in physician
practices. In addition to providing the traditional benefits like
access to capital, contracting leverage, fewer administrative
burdens, and practice management services, these industry
players have other benefits, too. Those benefits may include
greater opportunities to innovate and influence new technology
and models of care — or potential equity payouts.
Transactions and consolidation via private equity aren’t new. In
the 1990s, physician practice management companies (PPMCs)
exploded. The industry recognized the value of consolidating to
more effectively achieve economies of scale — while attaining a
size necessary for negotiating managed care contracts. PPMCs
acquired multi-specialty and single groups offering doctors a
solution for remaining independent of hospitals. At one point,
more than 39 publicly traded PPMCs existed, but by 2002, eight
of the 10 largest PPMCs had declared bankruptcy.
Today’s second generation of PPMCs has ramped up from a
mere 10% of physician medical group deals generated by
private equity firms in 2014 to over 70% done in 2020. With
the amount of private equity capital available for investment
at nearly $2 trillion globally, experts estimate the growth will continue. These private equity
firms have stretched beyond
general medicine to include
medical specialties such as
and urology. These specialties
generate additional revenue from:
• Ambulatory surgery centers
• Durable medical equipment
• Medical imaging
• Physical therapy
Private equity groups aren’t the
only non-traditional organizations acquiring physician groups.
So are insurance companies, large employers, and Medicare
Advantage providers. And in some cases, independent physicians
are forming or joining independent physician associations (IPA). A
McKinsey & Company survey found that 79% of small independent
practices and 67% of large independent practices wanted to
remain autonomous — and joining an IPA makes that autonomy
possible. Owned by a network of physician practices, IPAs are
large enough to make it possible for physicians to negotiate more
favorable managed care contracts and reduce overhead.
The shortage of physicians is only going to increase — even as
demand for their services also increases. It appears that for now,
physicians have recognized the value of partnering with other
organizations to better control costs while maintaining a high
standard of patient care.
Teterboro, NJ | 201 488 5800
Parsippany, NJ | 973 463 1011