WASHINGTON, DC — The Office-Based Facility Association (OBFA) today reacted to a new Government Accountability Office (GAO) report that validates long-standing concerns about the accelerating consolidation of physician practices and its impact on healthcare costs and patient access.

The GAO report confirms that at least 47 percent of physician offices are now consolidated with hospital systems, a dramatic increase from less than 30 percent in 2012. This trend aligns with the AMA’s recent analysis showing an 18% decrease in private practice since 2012 and corresponding increases in hospital-owned practices.

"This GAO report confirms what we've been warning about for years – the systematic dismantling of independent medical practice is driving up healthcare costs without delivering better patient outcomes," said Dr. Bob Tahara, OBFA Board member. "When independent physicians are forced to abandon private practice due to inadequate reimbursement and excessive bureaucratic demands, patients ultimately pay the price through higher facility fees and reduced access."

The GAO report's findings mirror issues OBFA has highlighted:

• Rising Healthcare Costs: The audit shows that when physicians consolidate with hospital systems, Medicare costs increase

• No Quality Improvements: Despite higher spending, the report found no evidence that consolidation improved quality of care

• Financial Pressures: Doctors cited the rising cost of medical equipment exceeding patient treatment income as a primary driver of consolidation

The findings that the cost of medical equipment and supplies exceed income corroborates OBFA findings that ongoing Medicare Physician Fee Schedule (PFS) cuts have made it financially unsustainable for many specialists to maintain independent practices. As OBFA recently reported, CMS data show that for at least 300 office-based services under the PFS, reimbursement no longer covers even direct costs, including supplies and equipment.

The consolidation trend documented in the GAO report compounds OBFA's concerns about expanding specialty deserts. Recent data from PAI shows rural areas lost nearly 2,500 physicians during 2019-2024, with independent physicians declining by 43%. A 2025 JAMA study found that 44% of rural Medicare patients must travel an hour or more to access surgical care.

"The GAO report confirms what our member physicians experience daily – when office-based procedures become financially unsustainable due to reimbursement cuts, patients are forced into hospital settings where they face longer wait times and the healthcare system incurs greater costs," said Dr. Tahara, an OBFA member physician.

Earlier this month, the Office-Based Facility Association (OBFA) submitted a comprehensive comment letter to the Centers for Medicare & Medicaid Services (CMS) on the proposed rule for the CY 2026 Physician Fee Schedule and is applauding a new Medicare proposal that is a meaningful first step in helping to undo years of harmful payment cuts to independent doctors’ offices. Ultimately, OBFA believes all practice expense should be removed from the Medicare Physician Fee Schedule and be paid similar to other “technical only” fee schedules such as the Hospital Outpatient / Ambulatory Surgical Center Prospective Payment System.