The healthcare landscape is constantly evolving, and for independent practices, navigating the financial aspects of running a successful business is more crucial than ever. As 2024 draws to a close, we conducted a detailed survey on Independent Practice Financing to better understand how these clinics are managing—and at times thriving—in an uncertain economic climate. Below, we present our key findings, along with insights on how practices can strategically plan for 2025 and beyond.
A Resilient Foundation
One of the most striking findings from our survey is how many independent practices have flourished without taking on traditional bank loans. This underscores two essential truths:
- Strong Financial Management
Many practices have built healthy financial foundations—using conservative growth strategies, reinvesting profits, or leveraging partner contributions rather than debt. - Need for Alternative Financing
Despite this resilience, limited access to capital can also hamper growth. Particularly for practices aiming to expand services or adopt new technology, securing flexible financing remains a hurdle.
From our broader industry research, this trend echoes the fact that smaller, physician-owned clinics often rely heavily on retained earnings or partner capital rather than complicated debt structures. According to a 2024 study by the Medical Group Management Association (MGMA), over 60% of independent practices rank “financial stability” as their top concern in the year ahead—solidifying the importance of tailored financing solutions.
Strategic Investments: Equipment and Facility Upgrades
For the clinics that have taken out loans or secured financing, the focus has been on strategic, high-impact investments. Two main categories stand out:
- Equipment Upgrades
Practices allocate funds toward purchasing modern technology (such as updated imaging devices or telehealth systems) to enhance patient care, boost efficiency, and potentially increase profitability. - Facility Expansions
By expanding their physical footprint, clinics can accommodate growing patient volumes, offer new services, or improve patient experiences—key differentiators in an increasingly competitive market.
When used wisely, these investments can generate solid returns. Updated equipment reduces maintenance costs, improves diagnostic accuracy, and can attract new patients, while a larger or renovated facility often leads to higher patient satisfaction.
Loan History & Challenges: High Interest Rates and Collateral
Despite the strategic value of loans, our survey confirmed that securing financing can be daunting. High interest rates—driven partly by Federal Reserve policy changes—remain a top deterrent, particularly for practices accustomed to cautious budgeting. In addition, personal collateral requirements emerged as a major sticking point, with many practice owners wary of risking personal assets to secure a loan.
Key Financing Obstacles
- High-Interest Rates: Even a small increase in APR can translate into significant additional costs over the life of a loan.
- Personal Collateral: Traditional lenders often require guarantees, causing many independent physicians to hesitate.
Given these hurdles, it’s no surprise that a sizable share of practices have steered clear of debt entirely or delayed borrowing until absolutely necessary.
Information Sources & Decision Factors
In evaluating financing options, practices overwhelmingly rely on local banks and healthcare consultants. Local banking relationships often offer the advantage of familiarity and trust, while consultants can tailor advice to the unique regulatory and operational environment of healthcare. That said, many independent practices also express interest in exploring alternative lending platforms, particularly those that specialize in healthcare, as they may better understand the nuances of reimbursement, compliance, and patient-volume fluctuations.
What Practices Consider Most
- Interest Rates & Fees
- Repayment Terms & Flexibility
- Total Cost of Capital
- Speed & Ease of Approval
Thrivory: A Unique Alternative
Traditional loans, even those labeled as “alternative lending,” often carry restrictive terms—high interest rates, personal guarantees, and sometimes a pledge of all business assets. This is where Thrivory comes in as an appealing alternative:
- Lower Barriers to Approval: Thrivory is designed to make financing more accessible without demanding onerous collateral obligations.
- Competitive Rates: By focusing on independent practices and understanding their revenue streams, Thrivory can often offer more attractive terms.
- Cash Flow Support: Thrivory structures repayment in a way that aligns with a practice’s financial realities, providing greater flexibility.
As a result, practices can obtain the capital they need—whether for equipment investments, facility expansions, or operational improvements—while mitigating the risks often associated with traditional bank loans.
Practice Structure & Long-Term Outlook
Our survey also revealed that 70.4% of respondents are physician-owned practices, with the rest divided between those owned by health systems/hospitals and those affiliated with corporate multi-group structures. Notably, the vast majority of respondents reported operating for more than five years—a testament to their stability and resilience in a rapidly changing healthcare marketplace.
Yet, with an uncertain reimbursement landscape, ongoing regulatory shifts, and potential further interest rate hikes, the question remains: How can independent practices maintain their edge in 2025?
- Conservative Borrowing with Clear ROI
Carefully model out potential earnings and patient volume before taking on debt. - Tech-Focused Upgrades
Telehealth, cybersecurity measures, and robust EHR systems will remain competitive advantages. - Strategic Partnerships
Collaborations or selective affiliations can help spread costs, share expertise, and mitigate financial risks.
Key Takeaways
- Financial Strength & Resilience: A substantial number of independent practices operate without relying on traditional loans—highlighting prudent financial management but also underscoring potential growth constraints.
- Strategic Loan Utilization: When borrowing, clinics focus on high-impact projects that can amplify patient care and revenue, such as equipment or facility expansions.
- Overcoming Challenges: Addressing steep interest rates, collateral requirements, and complex loan terms remains an industry-wide priority.
- Thrivory’s Value: By offering alternative financing solutions without the typical drawbacks of personal guarantees and sky-high interest, Thrivory equips practices to secure the funding they need for continued growth and modernization.
Looking Ahead to 2025
In an environment marked by economic shifts and regulatory changes, financial agility will be key for independent practices. Thoughtful borrowing—backed by thorough ROI assessments—can empower clinics to invest in technology, expand their facilities, and deliver superior patient experiences. However, caution is warranted, given the potential for continued interest rate volatility and ongoing cost pressures.
Many experts predict an increased push for tech-focused transformations in the next year, including telehealth expansions and enhanced data security systems. Securing timely and flexible funding for these improvements can offer a crucial competitive advantage—whether that means attracting new patients, streamlining operations, or complying with evolving regulations.
Conclusion: Thriving in an Evolving Financial Landscape
The data from our 2024 survey illustrates a sector in transition—balancing the opportunities that come with modernization against the realities of tightened lending conditions. Yet, with careful financial planning and access to the right financing tools, independent practices can continue to deliver top-tier patient care while maintaining robust financial health.
Interested in learning more about how Thrivory can help your practice overcome traditional lending obstacles?
Our team specializes in healthcare financing and is ready to guide you through every step of your growth journey. We hope these insights support you as you navigate the ever-evolving financial landscape—so your practice can thrive well into 2025 and beyond.
For more information on how Thrivory can help your healthcare practice thrive, contact us today