Independent practices pay 25–40% more for the same insurance coverage as hospital systems. That gap is not inefficiency. It is engineered economic pressure designed to drive consolidation.
Independent physician practices are not failing because physicians are bad at business. They are failing because the cost structure of independence is artificially inflated and the benefits of scale are gated behind ownership surrender.
A small practice might pay $500 per employee per month for benefits. A Fortune 500 company pays $350 for the same plan. The difference is not loyalty, negotiation, or value. It is scale.
This principle applies to everything a medical practice purchases: employee health benefits, malpractice insurance, property coverage, workers compensation, cyber liability, administrative services, and dozens of other operational necessities.
The independent practice is not doing anything wrong. They are simply small. And the system is designed to make small expensive.
The annual penalty a typical 50-employee independent practice pays compared to its hospital-employed counterparts. Same coverage. Same carriers. Different price.
It is the equivalent of loaning someone $1.6 million a year with no interest, no equity, and no upside—just for the privilege of being insured.
Consider a typical independent medical facility with 50 employees. Their annual insurance and benefits expenditure reveals a structural disadvantage that compounds every year.
| Expense Category | Independent | MedMerge |
|---|---|---|
| Employee Health Benefits | $750,000 | $525,000 |
| Medical Malpractice | $400,000 | $280,000 |
| Property & Casualty | $200,000 | $140,000 |
| Workers Compensation | $100,000 | $70,000 |
| Cyber, D&O, EPLI, Other | $150,000 | $105,000 |
| Total Annual Spend | $1,600,000 | $1,120,000 |
Based on typical independent practice vs. large-group purchasing economics. Actual savings vary by specialty, geography, and claims history.
Private equity solves the economics by killing the independence. Hospital systems solve it by absorbing you. MedMerge solves it by building the infrastructure that makes ownership optional and independence viable.
MedMerge becomes the employer of record for staff at participating facilities. Small practices are treated as a single large group for benefits and insurance. The purchasing power gap closes instantly.
Instead of 600 practices buying individually, one entity representing thousands of employees negotiates with carriers. You get hospital-system rates without hospital-system ownership.
Practices contribute to their own insurance vehicle. They retain underwriting profit. They invest the float. They turn an expense into an asset. The premium becomes a partial investment, not a pure cost.
When you pay an insurance premium, that money enters a pool. The carrier pays claims, covers expenses, and keeps the profit. But there is a fourth dynamic most people never consider: the float.
The float is the pool of premium dollars sitting between collection and claim payment. While it waits, the carrier invests it. Warren Buffett built Berkshire Hathaway on this principle. Every practice that pays premiums is funding someone else’s float.
MedMerge redirects the float back to the physicians who created it.
Include employee benefits, malpractice, P&C, workers comp, and all other lines.
PE owns the goose. MedMerge owns the grain silo. The goose can go wherever it wants. It still eats here.
No new entrant can match MedMerge rates without MedMerge scale. Each new facility makes rates better for everyone. The economics compound.
Building a captive requires actuarial credibility, reinsurer relationships, and surplus reserves. This takes years, not capital.
Leaving costs over $1 million in year one: rate reversion, forfeited surplus, infrastructure rebuild, and operational disruption.
Captive surplus compounds year over year. Operational learning tightens with every facility. Every quarter that passes, the cost of catching us goes up.
MedMerge is not building a business. MedMerge is building infrastructure. Businesses get acquired, optimized, and flipped. Infrastructure becomes essential. It embeds. It compounds. It endures.
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