In the past 10 years, there has been a dramatic shift in physician practice ownership as less than half of doctors now work in private practices, according to a new analysis.
Between 2012 and 2022 the share of physicians working in private practices fell by 13 percentage points from 60.1% to 46.7%.
In contrast, the share of physicians working in hospitals as direct employees or contractors increased from 5.6% to 9.6% in the same 10-year time period and the share of physicians working in practices at least partially owned by a hospital or health system increased from 23.4% to 31.3%, according to a benchmark analysis the American Medical Association.
Four of five physicians flagged the need to better negotiate favorable payment rates with payers as a very important or important reason in the decision to sell their practice to a hospital or health system, the analysis found.
Doctors who participated in the survey also highlighted the need to improve access to costly resources and the need to better manage payers’ regulatory and administrative requirements. Each was flagged by about 70% of physicians as a very important or important reason.
The AMA's biennial analysis of physician practice arrangements found that economic, administrative and regulatory burdens have driven physicians to shift traditional business models for medical practices.
“The AMA analysis shows that the shift away from independent practices is emblematic of the fiscal uncertainty and economic stress many physicians face due to statutory payment cuts in Medicare, rising practice costs, and intrusive administrative burdens,” said AMA President Jesse M. Ehrenfeld, M.D., said in a statement “Practice viability requires fiscal stability, and the AMA’s Recovery Plan for America’s Physicians is explicit in calling for reform to our Medicare payment system that has failed to keep up with the costs of running a medical practice.”
In 2022, 4.5% of physicians worked in a practice owned by a private equity group, similar to the percentage in 2020 when the AMA first added private equity to the analysis.
According to the analysis, there also has been a redistribution of physicians from small to large practices. The share of physicians in small practices (10 or fewer physicians) shrank from 61.4 % to 51.8% between 2012 and 2022. Conversely, the share of physicians in large practices (50 physicians or more) grew from 12.2% to 18.3% in the same 10-year time period.
The shares of physicians in mid-sized practices (those with 11 to 24 and 25 to 49 physicians) remained relatively stable over the last decade.
There have also been changes in practice type. Forty-two percent of physicians worked in single specialty practices and 26.7% in multi-specialty practices in 2022, reflecting a shift of about four percentage points since 2012 from the former practice type to the latter.
Ten years ago, when the AMA conducted its first benchmark survey in 2012, a little more than half (53.2%) of physicians were practice owners and 41.8% were employees.
Between 2012 and 2022 the share of physicians who were self-employed fell by 9 percentage points from 44%. Now, close to half of physicians (49.7%) are now employed.
The change in self-employment for younger physicians was even larger. Between 2012 and 2022 the share of physicians under the age of 45 who were self-employed fell by 13 percentage points from 44.3% to 31.7%. This suggests that a smaller share of each successive class of physicians has started their post-residency career in an ownership position.
According to AMA data, one primary driver for the drop in ownership is the retirement of older physicians (who tend to be owners) and the falling percentage of new physicians who choose (or are able to choose) to be owners.
The data also found that women physicians were less likely to be owners than men in 2022, 35.7% compared to 48.6% and more likely to be employees, 56.9% compared to 45.6%.
As of Jan. 1, 2021, nearly half of all U.S. practices were owned by hospitals or corporate entities while 7 in 10 physicians were employed by these organizations, according to data from the Physicians Advocacy Institute.
Hospitals and corporate entities acquiring independent practices and hiring away physicians were able to ramp up their efforts in 2020 as the COVID-19 pandemic disrupted medical practices.
Between Jan. 1, 2019, and Jan. 1, 2021, hospitals and other corporate entities (e.g., payers or private equity) acquired 20,900 physician practices, per data from the PAI. About half of those increases occurred during the six-month window of July 1, 2020, to Jan. 1, 2021, when 11,300 practices fell under hospital or corporate ownership and 22,700 clinicians departed independent practice, data show.
PAI data indicates that 423,800 physicians—nearly 70% of the U.S. physician workforce—were employed by a hospital or corporate entity as of Jan. 1, 2021.