The historical model of local pediatric practice was straightforward: A physician built a practice, cared for generations of families, and eventually passed ownership to younger physicians as retirement approached. That model sustained local pediatrics for decades. Today, however, the foundation that supported it has shifted. For many practices, the traditional path to succession is no longer viable, forcing physicians to consider new ways to preserve the practices they’ve spent their careers building.

The American Medical Association found that the percentage of physicians under age 45 who were practice owners declined from 44.3 percent in 2012 to 31.7 percent in 2022. Across all physicians, the percentage working in wholly physician-owned private practices fell from 60.1 percent in 2012 to 42.2 percent in 2024.

There are fewer physicians today who want to own and manage a practice while navigating the increasingly complex demands of patients, payers, regulators, technology, and the business of health care. Many younger physicians are beginning their careers in employed models rather than traditional ownership positions, leaving current physician owners with increasingly difficult succession planning decisions. A Medical Group Management Association poll found that only 33 percent of medical groups had a formal leadership succession plan in 2026, while 60 percent did not.

Given those demographic trends, it is not surprising that many of the practices reaching out to discuss partnerships are looking for a glide path to retirement that preserves the legacy they’ve built in their communities. Others are seeking partnerships because the economics of running a local pediatric practice have become increasingly difficult. Rising operating costs, growing administrative complexity, and stagnant reimbursement have made it harder to invest in the people, technology, and clinical capabilities needed to thrive. While every practice’s situation is different, the common goal is the same: preserving trusted, community-based pediatric care for future generations.

Pediatrics faces unique financial challenges because it relies primarily on Medicaid rather than Medicare. Medicaid covers nearly half of all children in the United States, with approximately 35.6 million children enrolled in Medicaid or the Children’s Health Insurance Program. Yet Medicaid reimbursement remains substantially lower than Medicare in most states, even as pediatric practices are expected to provide timely, high-quality care, often in rural and underserved communities where Medicaid represents the majority of patients.

The traditional fee-for-service model alone is becoming increasingly difficult to sustain in pediatrics. Practices need new approaches that align with managed Medicaid and value-based care while embracing innovative clinical models that improve care coordination, support population health, and deliver better outcomes for children. These models also create a more sustainable financial foundation for practices serving large Medicaid populations.

At the same time, running a pediatric practice has become much more complicated. In addition to caring for patients, physicians are expected to manage electronic health records, cybersecurity, payer contracting, prior authorizations, credentialing, compliance, rising labor costs, clinician recruitment, and increasingly complex technology.

The practices that will thrive in the future will be those that continue to innovate, both clinically and operationally. New models of care, stronger care coordination, population health initiatives, and thoughtful investments in technology all have the potential to improve outcomes for children while creating a more sustainable practice. Those two goals are no longer separate. Better care for children and a stronger practice increasingly go together.

One option for helping practices sustain and thrive is management services organizations, or MSOs, but the models vary widely. Some focus primarily on increasing volume or shifting the payer mix toward commercially insured patients. Others are designed to help local pediatric practices remain rooted in their communities by providing the operational support, practice management expertise, and clinical infrastructure needed to succeed in today’s health care environment.

The best partnerships do more than take administrative work off the physician’s plate. They help create the structure needed to improve outcomes for children while building a more sustainable future for the practice.

In recent years, I’ve seen more practices seek support in navigating administrative complexity, financial pressures, and the technology needed to improve patient access. By creating greater efficiency behind the scenes, we can give physicians more time and capacity to focus on what matters most: delivering high-quality care to children and families.

Every partnership deserves careful evaluation. Physicians should consider whether a prospective partner’s governance, incentives, operational expertise, and long-term commitment align with the interests of physicians, patients, families, and the communities they serve.

Local pediatric practices remain an important and trusted part of our communities. The question is not whether practices remain physician-owned or choose to partner with others. The question is whether they will have the clinical, operational, and financial capabilities needed to continue serving children for the next generation.

The best partnership models preserve what matters most: local relationships, physician leadership, and the legacy these practices have built in their communities. If we get that right, we can preserve not just community pediatric practices, but the trusted relationships they have built with families for generations.

Paul Hain is a board-certified pediatrician and chief medical officer of Playground Pediatrics, a physician-led pediatric primary care services provider focused on supporting the long-term future of community pediatric practices. He is a longtime pediatric leader dedicated to improving outcomes and access to care for the youngest patients. He shares updates on LinkedIn.