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Editor's Note: Take a look at our featured best practice, Manufacturing Strategy: Make vs. Buy (25-slide PowerPoint presentation). Internal manufacturing of a product versus procurement from external supplier sources is a difficult decision requiring careful and thorough assessment of multiple elements. The assessment includes organization's core competencies, business strategy, manufacturing strategy, internal capacity, [read more]
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Every independent practice owner eventually hits the same wall. The schedule is full, margins feel thin, and the office manager is quietly doing four jobs. The reflex is to hire another person. The smarter question, and the heart of any make vs. buy decision, is which of those jobs the practice should be doing at all.
TL;DR: Independent medical practices should keep direct control of anything that shapes clinical quality, the patient relationship, and the practice’s reputation. They should buy commodity functions where a specialist has scale the practice can’t match, such as billing, IT security, payroll, and specimen or records transport. Marketing sits in between: physicians own the clinical voice, and outside specialists handle production and distribution.
Private practice is shrinking, and the economics explain why. According to the AMA’s Physician Practice Benchmark Survey, 42.2% of physicians worked in private practice in 2024, down from 60.1% in 2012. Owners who sold cited inadequate payment rates, costly resources, and burdensome administrative requirements as the reasons.
Costs haven’t eased since. A June 2026 MGMA Stat poll found most medical groups reporting higher operating costs than a year earlier, with wages, benefits, and staffing as the main drivers.
Hospital systems and private equity platforms absorb that pressure through scale. They buy billing, IT, and logistics across dozens of sites and spread the overhead thin. A practice with three physicians can’t match that by building every function internally. It can come close by buying selectively, and that turns sourcing strategy from an accounting exercise into a survival skill.
Selective is the word that matters. Buy the wrong things and the practice gives away the very qualities that make patients choose it over the hospital clinic down the road.
Classic make or buy analysis weighs cost, capability, and control. Healthcare adds patient safety and regulatory exposure to that list, so the framework needs a slight adjustment. Run every function in your practice through four questions.
Here’s how common practice functions tend to score:
| Function | Differentiates the practice? | Outside advantage? | Failure risk | Typical verdict |
|---|---|---|---|---|
| Clinical care and protocols | High | None | Severe | Keep |
| Front desk and patient communication | High | Low | Moderate | Keep |
| Payer contracting strategy | High | Moderate (advisory) | High | Keep, with advisors |
| Billing, coding, and RCM | Low | High | High | Buy |
| IT and cybersecurity | Low | High | Severe | Buy |
| Payroll and benefits admin | Low | High | Moderate | Buy |
| Specimen, records, and supply transport | Low | High | High | Buy |
| Content and patient acquisition | Moderate | High | Low | Hybrid |
Notice the pattern. Patients feel the functions at the top of the table directly. They never see the ones in the middle, yet those functions break expensively when a stretched staff member runs them on the side.
Why do patients pick an independent practice over a large system? Usually because they trust a specific doctor and they like how the office treats them. Anything that protects that trust stays inside.
Clinical judgment comes first, and it goes beyond the obvious. Care protocols, referral relationships, and decisions about which services to add all express the practice’s clinical identity. Consultants can inform them. Physicians should own them.
The front desk belongs on this list too, even though it looks like an easy cost to cut. Remote call centers answer phones cheaply, but they rarely know that Mrs. Alvarez needs extra time to get a ride to her appointment. That first point of contact shapes patient retention more than most owners realize, and it’s the hardest thing to rebuild once a vendor has flattened it.
Payer strategy rounds out the core. Handing claims submission to a billing company makes sense. Deciding which insurers to contract with, how to price cash pay services, and when to walk away from a bad contract is strategy, and strategy sits with the owners.
The functions in this group share three traits: patients never see them, they demand specialized knowledge, and a mistake costs real money or creates real liability. That combination favors a specialist almost every time.
Billing rules change constantly, and denials pile up when nobody owns the follow-through. A dedicated RCM firm tracks payer rule changes across hundreds of clients, which no single biller can match. The practice still needs one person internally who reads the monthly reports and questions the numbers, because handing off the work shouldn’t mean handing off the understanding.
Small practices make attractive targets precisely because attackers expect weak defenses. A managed IT provider brings monitoring, patching, backups, and incident response that would cost far more to build from scratch. Make sure the contract includes a Business Associate Agreement and spells out who does what during a breach.
Picture a Tuesday afternoon with a STAT blood draw, a box of patient files headed to a specialist, and a vaccine shipment that needs to stay cold. Many practices cover this with a staff member’s car and a cooler, which pulls that person away from patients and puts protected health information in an unmonitored vehicle. Reference labs often run their own pickup routes, but those schedules rarely flex for urgent runs, records, or equipment. Contracting a medical delivery service whose drivers carry spill kits, sign for every handoff, and train on HIPAA and OSHA rules turns an improvised errand into a documented process the practice can audit.
Marketing breaks the clean keep or buy split, and that’s where many practices get it wrong in both directions. Some hand everything to an agency and end up with generic blog posts, no physician would sign. Others try to do it all themselves and publish twice before the effort dies.
The model that holds up splits the work by expertise. Physicians’ own clinical accuracy, point of view, and final review. Outside specialists handle keyword research, production, video, local search, and publishing cadence. Patients now research symptoms, treatments, and providers long before they call, and practical guidance on content marketing for medical practitioners builds on exactly that split, pairing physician review with the formats and search practices that put a clinic’s answers in front of patients during that research.
The vendor management test here is simple. If you couldn’t put your name on what the agency publishes, the arrangement has drifted too far toward buy.
Mistakes in this area rarely come from outsourcing itself. They come from outsourcing carelessly.
Each of these traces back to the same root cause: treating outsourcing as a way to stop thinking about a function rather than a different way to manage it.
Start with a list of every recurring task in the practice and who does it today. Most owners find at least two functions that belong to nobody in particular and get done badly as a result. Score each one against the four questions, then pick a single function with low patient visibility and high failure risk as the first candidate to buy.
Move one function at a time. Run the vendor in parallel for a month where you can, define the service levels before you sign, and keep one internal owner accountable for each relationship. After a year, revisit the full list. Payer mixes, staff, and vendor markets all change, and a decision that made sense at one size may not make sense at the next.
The independent practices that survive consolidation won’t be the ones that do everything themselves. They’ll be the ones who know exactly what to own. For leaders who want a structured starting point, Flevy’s library of operating model and outsourcing strategy frameworks gives you ready-made templates to run this kind of review with your partners.
Billing and revenue cycle management usually come first. They demand specialized knowledge, patients never see them, and a strong vendor often pays for itself through better collections and faster denial resolution.
Often more so than for a larger group. A solo physician can’t justify full-time specialists in billing, IT, or logistics, so buying those functions frees the physician and staff to focus on patients.
Yes. Under HIPAA, any vendor that creates, receives, stores, or transmits protected health information on the practice’s behalf needs a signed BAA before work begins.
Review vendor performance quarterly and the overall make or buy mix once a year. Contract renewals, a new location, or a change in payer mix should also trigger a fresh look.
You can download in-depth presentations on Make or Buy and 100s of management topics from the FlevyPro Library. FlevyPro is trusted and utilized by 1000s of management consultants and corporate executives.
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