Did you know that each person has about 10K taste buds that help detect sweet, salty, sour, bitter, and umami flavors? As we age, the number of taste buds gradually declines, and the remaining ones become less sensitive. That’s why many older adults find themselves reaching for the salt shaker — stronger flavors help compensate for changes in taste perception. The US population is aging rapidly, driven mostly by the large baby boomer generation and longer life expectancy. The number of adults over 65 years old is projected to increase from 58MM in 2022 to roughly 82MM by 2050, meaning nearly one in four Americans will be 65 or older by mid-century. This shift is reshaping everything from the workforce to healthcare demand and social services, as older adults become a larger share of the population while younger age groups grow more slowly.A Growing IndustryTo meet rising healthcare needs, the number of physicians in the US increased by 22% over the past decade, reaching approximately 760K in 2022. While physician employment by hospitals grew faster, private medical practices also expanded and remain the most common practice setting. In 2020, there were more than 224K physician offices nationwide, nearly three-quarters of which employ fewer than 50 people, underscoring the continued prevalence of small and mid-sized practices.Reflecting growing demand for accessible primary care, community health centers are also expanding rapidly. Today, these centers serve one in 10 Americans through roughly 1.3K organizations operating more than 15K service sites across the country.Dental practices continue to thrive as well, with more than 200K dentists operating independently or as part of dental service organizations.Healthcare Practices Have Unique Financial NeedsSo, what does this mean for community financial institutions (CFIs)? All these practices typically have a need for specialized financing and advice tailored to their specific requirements.
- Facilities and real estate. From start-up to expansion plans, medical practices often need loans for purchasing, constructing, or renovating clinics and office space.
- Equipment. All these practices rely on the latest equipment to deliver the best possible care. This is often high-value equipment with predictable replacement cycles.
- Technology. To streamline administrative tasks and enhance patient experience, healthcare practices often use a management system that supports digital scheduling, automated reminders, online payments, and more.
- Practice acquisition. An aging provider population and the trend for consolidation are driving technology demand for loans to support partner buy-ins, retirements, and practice sales.
CFIs Are a Strong Fit for This Market
- Relationship-based local expertise. Like CFIs, healthcare practices are often locally owned and deeply embedded in their communities. They are generally built around the expertise and reputation of individual providers, with cash flows shaped by local demand, payer mix, and reimbursement timing. CFIs are well-positioned to assess these nuances through long-standing local relationships, enabling more flexible loan structures to meet all their financing needs. This personalized approach supports providers throughout the life cycle of their practices while fostering long-term, mutually beneficial banking relationships.
- Stable cash flow and low default rates. Healthcare practices generally provide essential, non-discretionary services, contributing to more stable cash flows relative to many other small businesses. For CFIs, this creates a sector that combines credit durability, repeat business, and community impact, making healthcare practices a natural and strategic lending niche for them. In fact, analysis of small business administration loans (SBA) shows that healthcare businesses consistently rank among the lowest-risk borrowers, with default rates hovering around 3%.
Examples of CFIs Targeting This SectorConnecticut-based First County Bank, with $2.3B in assets, has developed a suite of banking products tailored to the specific needs of healthcare professionals, including business loans, customized deposit accounts, and cash management services. The community bank emphasizes that its local market knowledge and healthcare sector expertise make it a strong partner for practices at every stage of their lifecycle — from startups securing facilities and equipment, to established practices pursuing expansion, acquisitions, or succession and partnership buyouts.Genesee Regional Bank (GRB), a New York-based CFI with $1.3B in assets, has developed a successful specialty niche focused on dental and veterinary practices. Nearly 100% of the bank’s business in this segment comes through referrals, reflecting strong relationships within the local healthcare community. In addition to providing loans to support practice acquisitions and growth, GRB has benefited from cross-selling a range of complementary services. “Oftentimes, it starts with, ‘I need X amount of money to buy this practice, and it turns into — on average — three to six bank products,” says David Cushman, vice president and professional practice team leader at GRB.Driven by an aging population and rising demand for medical services, healthcare practices across specialties and ownership models are expanding. These businesses have distinct financing needs — ranging from facilities, equipment, and technology investments to practice acquisitions and ownership transitions — and CFIs are well positioned to meet them. With deep local knowledge and a relationship-based approach to banking, CFIs can target this niche effectively through tailored lending solutions, benefiting from stable, repeat business and relatively low credit risk.
