Ironically, the government drove a lot of this.
https://www.ama-assn.org/pract...
While the top reason was getting paid:
"In fact, almost 80% of physicians indicated that the need to negotiate higher payment rates with payers was a âoevery importantâ (46.1%) or âoeimportantâ (33.4%) reason why their practice was sold to or acquired by a hospital or health system."
The second reason was administrative/regulatory requirements:
"Managing payersâ(TM) regulatory and administrative requirements was the second most-cited reason. More than 71% of physicians said it was either very important (36.2%) or important (35.2%)."
Basically put... if you're a small practice, you spend more of your overhead for administrative staff or administrative outsourcing. One of these requirements emerged out of government efforts to encourage/require the use of EMRs:
https://www.ncbi.nlm.nih.gov/p...
"One panelist summed it up by stating that âoethe EHR will allow fewer patients to be seen per day and that will decrease revenue.â Several panelists stated that their practice had already seen a decrease, and some cited a significant decrease, with the reason being increased data entry time compared with traditional dictation. At no point in the study did any panelist state that their practice saw an increase in volume."
"...Panelists were worried that there would be an increased number of small practice closures due to cost concerns as well as the increased burdens placed on physicians. One panelist noted a recent decision to close their practice and move to a hospital system because they felt their small practice was no longer viable. Others mentioned colleagues who had retired or joined another practice or hospital to avoid the complications and cost of the EHR. Small practice closure was a concern for some who felt not enough was known about future cost increases and reductions in patient volumes to fully understand how viable small practices would remain..."
It makes sense - if you install a system that requires an IT department in order to do your work, and it causes you additional overhead such that your profitability is reduced, consolidation is one possible outcome.