Group health insurance for physician practices is one of the most important — and complex — benefit decisions a medical group will make. Whether you operate a small private practice, a multi-specialty clinic, or a growing physician-owned organization, your health insurance strategy directly impacts recruitment, retention, operating costs, and long-term sustainability.

At Diversified Insurance Brokers, we work with physician practices nationwide to design group health plans that balance cost control, provider access, regulatory compliance, and employee satisfaction. From fully insured PPO plans to level-funded and self-insured structures, we help medical groups evaluate every option available — and implement the strategy that fits both today’s needs and tomorrow’s growth.

Why Group Health Insurance Is Different for Physician Practices

Physician practices face a unique set of challenges when it comes to group health insurance. Unlike many other small or mid-sized businesses, medical groups often employ a highly compensated workforce, have varied ownership structures, and operate under tight reimbursement margins that make uncontrolled benefit costs unsustainable.

In addition, many physician practices employ a mix of physicians, mid-level providers, administrative staff, and support personnel — all with different benefit expectations and utilization patterns. Designing a one-size-fits-all health plan often leads to overspending, dissatisfaction, or both.

This is why physician practices benefit from a customized group health insurance strategy rather than a generic small-business plan.

Common Challenges Physician Practices Face with Health Insurance

Most medical groups come to us after experiencing one or more of the following issues:

Annual premium increases that exceed revenue growth are one of the most common problems. Fully insured plans frequently increase 10%–20% per year, often without transparency or explanation. Over time, these increases force practices to either absorb higher costs or shift expenses onto employees.

Another major concern is limited carrier flexibility. Many physician practices assume they are “too small” to access advanced plan designs, when in reality, alternatives such as level-funded and self-funded plans may be available with as few as 5–10 employees.

Finally, recruitment and retention pressure continues to rise. Competitive group health insurance is no longer optional — it’s a core part of attracting physicians, nurses, and experienced staff in a tight labor market.

Group Health Insurance Options for Physician Practices

Physician practices generally have three primary group health insurance structures to consider. Each has advantages depending on practice size, claims history, cash flow, and risk tolerance.

Fully Insured Group Health Plans

Fully insured plans are the most familiar option. The practice pays a fixed monthly premium to an insurance carrier, and the carrier assumes all claims risk. These plans are simple to administer and predictable from a budgeting standpoint.

However, fully insured plans often offer the least transparency and the least control over long-term cost increases. Premiums are based on pooled risk and trend assumptions rather than your practice’s actual claims experience.

Fully insured coverage may still make sense for very small practices or groups that prioritize simplicity over cost optimization.

Learn more about traditional coverage on our Group Medical Insurance page.

Level-Funded Health Plans

Level-funded plans combine features of fully insured and self-insured coverage. The practice pays a fixed monthly amount, but that payment is partially based on expected claims rather than pooled averages.

If claims are lower than expected, the practice may receive a refund at the end of the plan year. If claims are higher, stop-loss insurance limits exposure.

Many physician practices find level-funded plans attractive because they provide cost savings, improved transparency, and predictable monthly payments without full self-insurance risk.

You can explore this structure further on our Self-Funded vs Level-Funded Group Health page.

Self-Funded Group Health Plans

Self-funded plans allow physician practices to pay claims directly while using stop-loss insurance to protect against catastrophic losses. These plans offer the highest level of control, customization, and long-term savings potential.

Self-funding is particularly attractive for physician practices because medical professionals often have better health literacy, higher engagement, and more predictable utilization patterns than the general population.

Self-funded plans also allow practices to customize networks, pharmacy strategies, and cost-sharing in ways that fully insured plans cannot.

Learn more about advanced designs on our Pros and Cons of Self-Funded Group Health page.

How Practice Size Impacts Health Insurance Strategy

Solo and small group practices often assume they lack leverage in the health insurance market. In reality, even practices with as few as two employees may qualify for group coverage options that outperform individual policies.

Mid-sized practices typically benefit most from level-funded or partially self-funded plans, where claims stability and cash flow allow for meaningful savings.

Larger physician groups and multi-location practices often move toward fully customized self-funded arrangements with tailored stop-loss coverage, network strategies, and wellness initiatives.

Recruitment, Retention, and Physician Benefits

Group health insurance is a cornerstone of physician recruitment and retention. Competitive benefits signal stability, professionalism, and long-term commitment to employees.

In many cases, practices that invest in smarter plan design — rather than simply richer benefits — are able to offer better coverage at a lower total cost.

Physician practices that align health insurance with broader benefit strategies often see improvements in employee satisfaction, reduced turnover, and stronger practice culture.

Why Physician Practices Work with Diversified Insurance Brokers

Diversified Insurance Brokers is an independent, fiduciary insurance agency licensed in all 50 states. We work with physician practices nationwide to design health insurance strategies that evolve with the practice.

We are not tied to any single carrier or platform. That independence allows us to compare fully insured, level-funded, and self-funded options objectively — and recommend what actually makes sense.

Our role is not just to place coverage, but to help practices understand their options, manage risk, and plan for long-term sustainability.