Growing Faster Than the Business Behind It
For independent specialty groups, the most perilous period is often not decline but growth. The clinical enterprise can scale in months; the infrastructure that sustains it rarely keeps pace.
The prevailing account of independent medicine is one of decline: shrinking margins, consolidation, physicians selling because they can no longer sustain the business. That account is accurate, but it is incomplete. Some of the most consequential strain I have seen in specialty practice arises not in groups that are struggling, but in groups that are succeeding.
A multi-location specialty group that adds surgeons, opens a new site, takes on hospital call coverage and increases procedural volume is, by any clinical measure, thriving. Yet each of those decisions places new demands on billing, compensation, technology, reporting and contracting. The clinical enterprise can expand within a quarter. The administrative capacity required to support it is typically built over years, and frequently rests on the same small team that supported the practice when it was half the size.
The result is a particular kind of fragility: a practice whose clinical reputation is rising while its operating foundation quietly weakens.
Why growth, not decline, is the real test
The cost environment leaves little margin for operational error. In a June 2026 poll by the Medical Group Management Association (MGMA), 84% of medical groups reported higher operating costs than a year earlier, with an average increase of roughly 11%. Labor was the leading driver, and growth-related investment in new services, hiring and technology appeared among the others.
Growth compounds that pressure because it changes the nature of the work, not merely its volume. A five-physician group can run on institutional memory and a capable office manager. A twenty-physician group across several sites cannot. Too often, the expansion is absorbed by a single individual who is simultaneously responsible for human resources, payroll, information technology, vendor contracts and the revenue cycle. When that person is stretched, the practice is stretched with them, and the first signs tend to appear in the financial statements months after the underlying problem began.
Where the strain appears first
In my experience, the fault lines are consistent across specialties.
The revenue cycle
Charges accumulate unbilled during a staffing gap or a system transition, denials go unworked, and accounts receivable age quietly. Physicians frequently learn of the problem only when distributions decline, by which point the recovery effort is larger and slower than prevention would have been.
Physician compensation
As a group adds employed physicians, shareholders and call obligations, the compensation model grows more complex. Productivity formulas based on work relative value units (wRVUs), call stipends and quality incentives must remain competitive enough to recruit, and defensible under the Stark Law, the Anti-Kickback Statute and fair market value standards. Yet an April 2026 MGMA poll found that a quarter of practices had not updated their compensation plans in three years or more. Because Medicare’s 2026 fee schedule changes how work RVUs are valued, a plan tied to wRVUs can shift materially even if no one in the practice has touched it.
Technology transitions
A new electronic health record is often treated as an IT project. It is an operating project. A study of 30 ambulatory practices in the Journal of the American Medical Informatics Association found productivity losses that persisted for up to two years after implementation, even as revenue held up. Groups that manage a go-live on top of normal operations, without dedicated oversight, tend to absorb that cost in the revenue cycle and in physician time.
Information across sites
A multi-location group needs to know how each site performs: schedule fill rates, provider productivity, payer mix, cost per visit. Without consistent data by location, decisions about where to invest, recruit or retrench rest on intuition.
Institutional relationships
Hospital partnerships, referral networks and payer contracts require active management. An independent group negotiating alone has limited leverage, and joint contracting among independent practices is possible only through structures that satisfy federal antitrust requirements, typically meaningful financial or clinical integration. Relationships left to informal goodwill tend to erode precisely when the practice most needs them.
A practice that grows without building the business beneath it is, in effect, borrowing against its future.
The case for building it in-house
There is a serious argument for keeping all of this inside the practice. An in-house chief operating officer, controller or revenue cycle director brings direct accountability, institutional knowledge and cultural alignment. For larger groups with the scale to support a full leadership team, that may well be the right answer.
The difficulty lies in the economics and the depth required. Experienced operations leaders are scarce and costly, and labor is already the largest source of cost growth. More importantly, the functions described above call for different specialists: a compensation analyst, a credentialing and contracting lead, an implementation manager, a revenue cycle team. Few independent groups can employ each of them at full capacity, and a practice that concentrates every function in one or two senior hires has not removed its single point of failure. It has simply made it more expensive.
A better sequence for growth
The practices that grow well tend to follow a similar discipline.
Diagnose before building.
Establish a baseline before adding capacity: charge lag, denial rate, accounts receivable over 90 days, compensation plan compliance and site-level productivity. Growth decisions made without that baseline are made blind.
Stage support against milestones.
Bring in the capabilities the practice needs most first, measure the results, and extend support only as it proves its value. Infrastructure should be earned in stages, not installed all at once.
Outsource capacity, not authority.
Whether support comes from new hires, consultants or a management services organization, physicians should retain the decisions that shape clinical care, compensation and the practice’s future. Capacity can be delegated. Governance should not be.
Treat every transition as an operating project.
An EHR migration, a new site or a new service line deserves its own plan, staffing and success measures, rather than being layered onto a team already at capacity.
Manage by location.
Review performance site by site, so that investment follows evidence rather than instinct.
A practice that grows without building the business beneath it is, in effect, borrowing against its future. The objective is not to slow clinical growth, which is usually the best evidence that a group is serving its patients and its community well. It is to ensure that the infrastructure scales at the same pace, so that growth remains a source of strength rather than the origin of the strain.
This article is general information, not legal, compliance or financial advice. Practices reviewing compensation arrangements or joint contracting structures should consult qualified health care counsel.
Laurie Gallagher
Laurie Gallagher is Executive Director of Coordinated Health Solutions LLC, a physician-aligned management services organization in Newport Beach, California, and Executive Director of Newport Orthopedic Institute. She previously built and led a 41-clinician multi-specialty group as Director of Ambulatory Operations at Martin Luther King, Jr. Community Hospital, and held operations roles at Torrance Memorial Physician Network and St. Jude Medical Center. Her work spans clinic launches, physician recruitment and contracting, IPA negotiations and EHR implementations. chsmso.org