Physician practice bankruptcies are surging. What’s behind the trend?

For years, the conversation around healthcare bankruptcies has centered on hospitals. But there’s another trend quietly gaining momentum: physician practices themselves are increasingly running out of financial runway.

While the largest health systems often dominate headlines, the financial pressures facing smaller practices may ultimately have a more direct impact on patients' access to care.

It’s not just a hospital problem anymore

The overall number of healthcare Chapter 11 filings has actually declined from the post-pandemic peak. But this masks an important reality.

Financial distress is increasingly concentrated among middle-market organizations. That is, those with enough overhead to feel every reimbursement cut and staffing increase, but without the balance sheets or negotiating power of large health systems. Physician practices fall squarely into that category.^[]

For many practices, none of these pressures alone is catastrophic, but together they can create a cash-flow crisis.

“There is the actual financial difficulties of managing that, and then there’s the kind of psychological element of, is this ever going to get better? The longer this drags out, the more likely more practices will shut down,” Wayne Winegarden, PhD, told Medical Economics.^[]

Why doctors should care—even if their own practice is healthy

Research from the National Bureau of Economic Research suggests that provider bankruptcies can increase healthcare staff turnover, worsen operational performance, and ultimately affect patient care.^[]

For physicians, the downstream effects may include:

• Difficulty recruiting and retaining staff

• Reduced investment in new equipment or technology

• Delayed vendor payments

• Lower morale

• Disruptions in continuity of care

• Greater pressure to increase visit volume

Patients may notice longer wait times, fewer available specialists, or abrupt practice closures.

Could things get worse?

Yes, potentially. Although healthcare bankruptcies declined in 2025, several headwinds remain. 

Potential reductions in Medicaid funding, continued payer pressure, rising insurance premiums, workforce shortages, and inflation could all disproportionately affect physician practices with thin operating margins.^[]

What physicians can do now

Even practices that appear financially stable may benefit from a closer look at their balance sheets.

Addressing these issues early is generally far easier than attempting a turnaround once liquidity has evaporated.