Four Trends Shaping Modern Health Care Models for Private Practices 

Updated on May 6, 2023
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The health care industry has seen significant change over the last few years and practices have been forced to reassess how they provide care and run their business. As private health care practices evolve, there are four trends transforming today’s health care landscape, and how providers can capitalize on these changes to advance their business. 

Labor challenges within the health care industry 

Like many industries impacted by the pandemic, the health care industry has a shortage of skilled providers. In the Advisory Board’s 2022 State of the Industry report, the top concern for hospital CEOs was personnel shortages, with 32% of Registered Nurses reporting they are likely to leave their current position providing direct patient care. Physician groups also reported retention concerns for non-physician care team members, especially medical assistants and front desk staff. 

COVID-19 caused health care providers to reevaluate their workplace models to better adapt to changes in staffing availability and shifting work-life balance preferences. More and more private practice employees and physicians are less inclined to opt for an overnight shift and are pushing for a consistent 9-5 schedule to better accommodate their lives outside of work. 

This shift away from 24/7 care models, along with the increased cost and shortage of labor, makes the traditional model of care more challenging to maintain. Private practices must come to a resolution point with their providers to find a balance that helps them achieve a work-life balance, while still maintaining a level of care that meets the needs of patients.  

Increasing shift towards a senior-focused, risk-based provider model

Private practices have an opportunity to move from a traditional fee-for-service model to a risk-based reimbursement model, in which private insurance companies and/or a Medicare partner transfers financial risk for patients’ care to providers. In traditional fee-for-service model models, providers receive a per visit fee from the insurer, and the insurer retains any profit that is remaining from the premium dollars that was contributed by or on behalf of the patient. Insurers determine which services to cover and manage the network of hospitals and physicians that the patient is permitted to utilize. 

In this new emerging risk-based payment model, the providers are receiving the premium dollars directly from either Medicare or private insurance companies. This is also referred to as capitation, whereby the provider receives a fixed monthly payment per patient per month and then is fully responsible for the cost of delivering care. There are many different types of risk-based arrangements; in general, the provider keeps any savings at the end of the year, but is also “at risk” if the cost of care exceeds the monthly premium dollars. By shifting economic accountability to the providers, there is a direct incentive for health care providers to manage the cost of care more tightly because they now get to keep the savings.

CVS’ Oak Street Health acquisition is an example of this emerging model. What were once two separate industries is now a hybrid insurance company and health care provider. To ensure long term profitability in primary care, providers must start migrating their practices toward risk-based models. Think of it as moving from a “per click” revenue to a “subscription” revenue model, much like how Netflix has embraced in the entertainment sector. When physicians can benefit from steady recurring revenues, they can make more investments in their practices and engage in more holistic management of their patients since they can rely on a steady income stream. This kind of business model migration can significantly benefit patients’ long-term health by reducing care costs and improving outcomes.

Early adopters of risk-based models are focused largely on senior populations since the reimbursement for seniors is largely managed by the government and represents the lowest hanging fruit in terms of potential savings. Senior populations are responsible for three times the cost when compared to other consumers, accounting for $1.2 trillion of health care spending over the last few years, according to the Advisory Board’s State of the Industry Report. Value based care opportunities in the senior population will only continue to expand in the future with higher percentages of the general population’s aging.

Our team at Ziegler is a leader in advising risk-based physician groups on private equity investments.  Our recent work includes Trivalley Medical Group on an investment with Webster Equity; Perlman Clinic on an investment from FFL Partners; and Rancho Family on an investment from LightBay Capital.

Vertical integration of health care services

Health care models are increasingly less siloed, with systems consolidating across disparate industries to drive holistic care management and value onsite. Health care models are increasingly combining physicians on onsite care with pharmacy, surgical centers, outpatient labs, and more to create a “one-stop-shop.” Primary care has moved to that of convenience, where consumers are looking to receive the care they need with little hassle. Examples of this include United Health’s Optum care division that is now the largest employer of physicians in the US with 70,000 affiliated physicians. In addition, Walgreens investment in VillageMD represents a powerful combination of nearly 9,000 retail pharmacies with primary and urgent care.  

This vertical integration continues to drive changes in the health care industry and will likely continue in near future. The more practices can include services beyond their usual realm of care, the more they will attract patients who are seeking a well-rounded, simple care model. 

Continued rise of consumerism

There is an increase in retail players getting into health care, like seen in Amazon acquiring OneMedical.  Amazon has the potential to massively disrupt the health care market since they touch roughly 60% of US households, or 200 million Americans, are Amazon Prime subscribers. This deal will add 188 medical clinics in 29 markets, significantly expanding the reach to new consumers. This reinforces how patients are looking for convenience in their health care with readily available access, rather than seeing the same provider at each visit. 

With all the change we have experienced in the health care industry over the last few years, it can be difficult to keep up with what both health care providers and patients are looking for. That said, by distilling the rapidly changing market to a few, manageable updates, private practices will be better equipped to grow their business to meet today’s health care landscape. 

Our team at Ziegler is committed to advising health care services with financing solutions to set our clients up for success. For more information about how Ziegler can advise your practice, visit

About Ziegler

Ziegler is a privately held, national boutique investment bank, capital markets and proprietary investments firm. It has a unique focus on healthcare, senior living and education sectors, as well as general municipal and structured finance. Headquartered in Chicago with regional and branch offices throughout the U.S., Ziegler provides its clients with capital raising, strategic advisory services, fixed income sales, underwriting and trading as well as Ziegler Credit, Surveillance and Analytics. To learn more, visit

Andrew Colbert
Andy Colbert

Andy Colbert is a senior managing director and founding member of Ziegler's Healthcare Investment Banking practice. He specializes in advising physician groups on strategic and financing alternatives including merger and acquisitions, joint ventures, PSAs, capital raising transactions, private equity investments and partnership development. He has been engaged in over 50 transformative physician transactions totaling over $5 billion in value; including sell-side and buy-side representation, strategic partnerships, public equity financings, private placements, joint ventures, leveraged buyouts and fairness opinions.