Are Private Dermatology Practices at Risk for Extinction? A New Survey Sheds Light

Nearly half of US dermatologist-owners review their practice finances only occasionally, while two-thirds report feeling pressure to see more patients than is clinically ideal, according to a national survey examining today's independent dermatology landscape.¹

The findings highlight both the challenges and opportunities facing dermatologists in private practice. While patient demand remains strong, physicians are increasingly balancing administrative responsibilities, staffing shortages, reimbursement pressures, and the growing influence of AI in both clinical care and practice operations.

In a recent video interview, Ashwin Krishnan, chief executive officer (CEO) and co-founder of Clarity RCM, discussed the findings and what they may mean for the future of independent dermatology. 

Krishnan’s perspective is shaped not only by leading a dermatology-focused revenue cycle management company, but also by helping his wife- a practicing dermatologist- and independent practice owner-navigate the business side of medicine. That experience ultimately inspired the founding of Clarity RCM. 

“My wife didn’t go to medical school to learn about business,” Krishnan said. 

The survey of 156 US dermatologist-owners, conducted in partnership with market research firm PureSpectrum, found that 46% of respondents review practice financials only occasionally or rely primarily on administrators or billing teams to monitor financial performance. Additionally, 44% estimated losing 6% or more of annual revenue because of coding errors and claim denials, while 86% of independent dermatologists reported being approached by a private equity firm² or consolidator regarding a potential acquisition.

Additional findings reinforce the dual themes of challenge and opportunity across the specialty. Nearly two-thirds (67%) of respondents reported feeling pressure to see more patients than is clinically ideal, reflecting the increasing demands many dermatologists face in balancing patient access with high-quality care. At the same time, 88% said they are already using AI³ to improve practice efficiency. Every dermatologist surveyed also reported patients arriving with diagnoses or treatment ideas influenced by social media, and 93% said patients present AI-generated diagnoses or treatment recommendations at least several times each week.

For many dermatologists, the findings may feel familiar: balancing growing patient demand while trying to preserve time for patient care, manage an increasingly complex practice, and adapt to new technologies that are rapidly changing both medicine and patient expectations.

Beyond Patient Care: Exploring Operational Complexity 

For Krishnan, the survey illustrates a broader reality facing today's independent dermatologists.

"Practice owners are negotiating with vendors, they're the head of HR, they're managing cybersecurity, they're making purchasing decisions—they're running a small enterprise while seeing patients all day," Krishnan said. "I think it really just speaks to the operational complexity of the modern-day practice."

The operational pressures identified in the survey may also help explain why more independent dermatologists are considering selling their practices. As the report noted, "For the first time, most American physicians no longer work in a practice owned by physicians. Independence is no longer the default in medicine. It is the exception—and a shrinking one."¹

According to the survey, 86% of independent practice owners have been approached by a private equity firm or consolidator, and nearly half say selling their practice within the next 5 years is at least somewhat likely. While some practice owners choose to sell after decades of building their practices to realize the value of their investment, others—particularly younger physicians—are motivated by a desire to return their focus to patient care.

Krishnan said he has seen more than a dozen client practices transition to private equity ownership. Beyond liquidity, he pointed to declining reimbursement, evolving payer requirements, staffing shortages, and inflation as major contributors to the trend.

"It's really about that optionality, which is driving practice owners to potentially consider a sale," Krishnan said.

Financial Visibility, Not Delegation, Drives Better Decisions

Although delegation remains an essential part of running a successful practice, Krishnan emphasized that financial visibility cannot be outsourced. 

"You can't delegate the visibility, and just being able to see what the high-level drivers are of your practice is super important," he said.

Many dermatologists gauge how their practice is performing by looking at everyday indicators—a full waiting room, a busy clinic schedule, or a healthy bank balance, Krishnan said. While those signs can be reassuring, they do not always reflect the underlying financial health of a practice.

Rather than attempting a complete operational overhaul, Krishnan recommends starting small.

"Just have a simple dashboard of key performance indicators (KPIs) that you want to track on a month-over-month basis," he said. "This could be as simple as the number of encounters, what was my overall procedure mix, what was my denial rate."

"Having the visibility into what is actually driving your practice, rather than managing the practice based on feel, is really what separates the practices that thrive from the ones that don't," Krishnan said.

Roman Bronfenbrenner, MD, who also discussed the survey findings, said the results resonated with his own experience as an independent practice owner.

"We get caught up in the day-to-day of patient care, dealing with staff issues... you're human resources, you're the hiring manager," Bronfenbrenner said. "But none of that would be possible if we can't keep our lights on. I'm surprised that such a small number actually review [their financials] on a frequent basis."

AI Presents Both Opportunities and Challenges

Nearly three-quarters of survey respondents reported seeing more patients than they did one year ago, and 67% said they feel pressure to see more patients than is clinically ideal. As patient demand continues to grow, many dermatologists are turning to AI to help reduce administrative burden and improve practice efficiency.

For Krishnan, the goal isn't replacing clinicians—it's helping them spend less time on administrative work and more time caring for patients.

Despite those pressures, Krishnan remains optimistic about the future of dermatology, citing continued patient demand, increasing skin cancer awareness, and growing adoption of AI tools to improve efficiency. He said AI is already helping practices streamline administrative work and expects those capabilities to continue expanding.

Bronfenbrenner echoed that optimism, describing AI as a valuable tool for reducing administrative burden while cautioning that patient-generated AI diagnoses still require careful clinical interpretation.

He recalled treating a patient who arrived after an AI platform suggested eczema, only for the patient to ultimately be diagnosed with shingles—illustrating both AI's growing influence and the continued need for physician evaluation.

"If you're a dermatologist and you don't use AI, you're going to get swept behind," Bronfenbrenner said. "You're going to spend a ton of time on administrative tasks and things that you can now quickly and easily do with AI."

At the same time, Krishnan noted that physicians are increasingly encountering patients who arrive with AI-generated diagnoses or treatment recommendations, adding another layer to already busy clinical encounters.

Reasons for Optimism

Despite the operational challenges highlighted in the survey, Krishnan said he remains optimistic about the future of independent dermatology. He pointed to sustained patient demand, growing skin cancer awareness, and continued advances in AI and practice management tools that can help physicians spend less time managing their practice and more time caring for patients.

The Clarity RCM 2026 State of Dermatology survey was conducted in March 2026 and included 156 U.S. dermatologists with an ownership or equity stake in their practices, representing independent and private equity-backed organizations across urban, suburban, and rural settings.

"The demand for dermatology is extraordinarily healthy and the complexity in running a modern-day practice is at an all-time high," Krishnan said. "It's really just about building the operational rigor to meet that demand."

References

1. Clarity RCM. 2026 State of Dermatology Report. Conducted in collaboration with PureSpectrum. Published June 30, 2026. Accessed July 2026. https://report.clarityrcm.com/
2. The Dermatology Industry Landscape: Unpacking Mergers and Acquisitions and Other Economic Movements. Dermatology Times. Accessed July 2026. https://www.dermatologytimes.com/view/the-dermatology-industry-landscape-unpacking-mergers-and-acquisitions-and-other-economic-movements
3. Adapting to the Age of AI in Clinical Dermatology. Dermatology Times. Accessed July 2026. https://www.dermatologytimes.com/view/adapting-to-the-age-of-ai-in-clinical-dermatology