Number of Physicians Employed by Hospitals Snowballing

January 24, 2012

January 24, 2012 — Hospitals employed some 211,500 physicians in 2010, a 34% increase since 2000, according to the latest survey statistics from the American Hospital Association (AHA), as analyzed by Medscape Medical News.

During that same period, the number of allopathic and osteopathic physicians in patient care and other healthcare roles increased from about 733,000 to 858,000, for only a 17% gain, according to statistical reports from the American Medical Association (AMA) and the American Osteopathic Association (AOA).

The rise in hospital employment for physicians is another sign that medicine is making a concerted turn from cottage industry to big business.

Traditionally, hospitals have hired physicians to lock in admissions and boost the use of hospital-based tests and diagnostic imaging, but the passage of healthcare reform in 2010 gave them new reasons to collect MDs and DOs. The law offers an incentive for hospitals and physicians to team up in the form of accountable care organizations and earn bonuses for more efficient, higher-quality care. Bundled payments that hospitals and physicians share for inpatient care also promote togetherness.

At the same time, droves of physicians are seeking the shelter of a hospital to escape the bad weather of independent practice: long hours, at-risk revenue streams, and government prodding to adopt expensive electronic health record systems, to name a few turn-offs.

Almost 38% of Hospitalists on Medical Staff Are Employees

The rise in hospital-employed physicians parallels an increase in the percentage of institutions that use hospitalists, which was at almost 60% in 2010 compared with half that in 2003, according to the just-published 2012 edition of AHA Hospital Statistics. Hospitals on the East and West Coasts led the way in using these clinicians, with the nation's interior trailing behind.

Table. Hospitals Using Hospitalists in 2010, by Region

Region Percentage of Hospitals Reporting Use of Hospitalists in 2010
New England 84.9%
Mid Atlantic 73.0%
South Atlantic 72.6%
East North Central 64.8%
East South Central 64.9%
West North Central 32.0%
West South Central 49.1%
Mountain 61.1%
Pacific 73.4%

Source: American Hospital Association.

Of hospitalists on hospital medical staffs, 37.9% were hospital employees, according to the AHA. Another 42.2% were under an individual or group contract to provide their services.

"The Cleverest People in the World"

Although some observers view hospital employment as the wave of the future, Uwe Reinhardt, PhD, a healthcare economist at Princeton University in New Jersey, sees it more as a tide: coming in, going out. Dr. Reinhardt calls attention to the 1990s, when hospitals binged on hiring physicians, only to let many of them go when the relationship soured.

"Don't forget, there are cycles," Dr. Reinhardt told Medscape Medical News. "Some years from now, there will be a whole new trend. Physicians working in hospitals will see what is profitable and what is not, and will jump out and establish practices in the profitable things.

"I think physicians are the cleverest people in the world. They'll figure out how to get their buck."

Parsing Out Hospital-Employed Dentists

The figures for hospital-employed physicians cited by the AHA (212,418 in 2010 compared with 158,057 in 2000) requires some massaging because they include dentists. The AHA is unable to break out the number for dentists employed by hospitals, according to Caroline Steinberg, AHA vice president of trend analysis.

However, the American Dental Association has surveyed dentists on their employment status, and it reports that there were 785 hospital-employed dentists in 2000 and 890 in 2009, the last year for which these data are available.

If the number of hospital dentists continued to grow at an annual rate of 1.3%, as it did between 2000 and 2009, then it is reasonable to estimate that there were about 900 such dentists in 2010. Subtracting the number of hospital dentists in 2000 and 2010 from the figures that AHA cites for hospital-employed physicians and dentists yields 157,272 employed physicians in 2000, and roughly 211,500 in 2010. These figures include residents, who represented about 50% of the hospital-physician workforce in 2000 and 46% in 2010.

According to the AMA and AOA, the number of physicians involved in patient care and other healthcare-related responsibilities such as teaching and administration in 2010 was roughly 858,000, with 795,000 of them MDs and 63,000 of them DOs (residents included).

Accordingly, hospitals are employing almost 25% of all active physicians, based on the AHA finding. The 2012 edition of AHA Hospital Statistics puts this ratio at roughly 20%, but Steinberg told Medscape Medical News that the AHA calculation did not use medical society figures for physicians in 2010, including physicians active in healthcare, which she said is a reasonable denominator.

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