For First Time, Under Half of Physicians Own Their Practices

Ken Terry

June 02, 2017

Continuing a long-term decline in physician ownership of practices, the percentage of doctors who owned their practices dipped below half for the first time in 2016, according to an American Medical Association (AMA) survey of 3500 US physicians who provide at least 20 hours of patient care per week and are not employed by the federal government.

In 2016, 47.1% of physicians held equity in their practices compared with 50.8% in 2014 and 53.2% in 2012, the AMA said. In 1983, 76.1% of doctors were practice owners, the association noted.

The other major takeaway of the AMA's biannual practice survey is that hospital acquisitions of practices have largely dried up. "Hospital ownership of physician practices and direct employment of physicians by hospitals…appears to have stalled after 2014," the survey report said. In both 2014 and 2016, it noted, 32.8% of physicians were either directly employed by hospitals or worked in hospital-owned practices. The percentage was 29% in 2012.

In a 2016 Medscape Business of Medicine article, practice management consultants explained that hospitals in many regions had as many practices as they could handle and were concentrating on organizing the ones they owned. At the same time, however, many hospitals and healthcare systems were using methods other than ownership to align independent practices with their market strategies.

The majority of physicians (55.8%) still worked in practices wholly owned by doctors in 2016, the AMA survey shows. This included practice owners as well as employed doctors and independent contractors. Sixty-nine percent of doctors in single-specialty practices said their groups were wholly doctor-owned, vs 36.7% of physicians in multispecialty groups.

Single-specialty groups accounted for 42.8% of doctors in 2016, slightly less than in 2012 (45.5%). Multispecialty groups included 24.6% of doctors, slightly higher than the percentage in 2012 (22.1%). Hospitals directly employed 7.4% of physicians in 2016, up from 5.6% in 2012.

Age, Gender Differences

The slow shift of doctors from single-specialty to multispecialty groups parallels the equally glacial changes in practice size, the AMA survey reveals. Nearly 58% of doctors were in practices of 10 or fewer physicians in 2016 compared with about 61% in 2012.

However, very small practices appear to be declining more rapidly. A 2014 survey by the Physicians Foundation found that just 17% of respondents were in solo practices compared with 25% in 2012. The AMA survey found that in 2016 about 24% of internists and family physicians were soloists.

In 2016, the AMA survey shows, older doctors were much more likely to be practice owners than were younger physicians. Ownership ranged from 27.9% among physicians under the age of 40 to 54.9% among physicians aged 55 years or older. In contrast, young physicians were more than three times as likely as older doctors to be employed by hospitals, the report shows.

Gender also played a major role in practice ownership. In 2016, 36.6% of female physicians had an equity stake in their practice compared with 52.2% of male doctors. The report attributed this difference to two factors: First, the average age of women physicians was lower than that of men, so they were less likely to be owners. Second, women tend to practice in specialties where employment is more prevalent, such as family medicine and pediatrics. Pediatrics had the highest percentage of employed physicians, and surgical specialties had the highest percentage of physicians who were owners.

Overall, hospital ownership was more prevalent in practices that included primary care physicians than those that did not. Nearly a third of primary care doctors in single-specialty groups reported they worked for hospitals compared with 16.5% of nonprimary-care physicians in single-specialty groups. Of physicians in multispecialty groups that included primary care doctors, 45.7% said their groups were owned by hospitals. Only a third of doctors in multispecialty groups that did not include primary care doctors said hospitals owned their practices.

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