3 in 4 US Doctors Are Employed by Hospitals, Corporate Entities: Report

Aine Cryts

April 22, 2022

Marcus Welby, MD, was a fictitious hometown doctor featured in a TV drama with the same name that was shown on ABC from 1969 to 1976. Played by actor Robert Young, Welby treated his patients through their bouts with breast cancer, impotence, and Alzheimer's disease.

Welby likely wouldn't recognize the practice of medicine today, where nearly three quarters (73.9%) of physicians are employed by hospitals, health systems, or corporate entities, according to a recent report sponsored by the Physicians Advocacy Institute and prepared by consulting firm Avalere Health.

"COVID-19 drove physicians to leave private practice for employment at an even more rapid pace than we've seen in recent years, and these trends continued to accelerate in 2021," said Kelly Kenney, chief executive officer of Physicians Advocacy Institute, in an announcement. "This study underscores the fact that physicians across the nation are facing severe burnout and strain. The pressures of the pandemic forced many independent physicians to make difficult decisions to sell their practices, health insurers, or other corporate entities."

Corporate entities are defined in the report as health insurers, private equity firms, and umbrella corporate entities that own multiple physician practices.

"The pandemic has been just brutal...for nurses and physicians who are caring for patients," Kenney told Medscape Medical News. "Between the financial stress that the pandemic certainly had on practices, because they certainly had little revenue for a while, and then also we know that the stress that physicians have felt mentally, you can't overstate that."

More Than Half of Physician Practices Owned by Hospitals, Corporate Entities

The Physicians Advocacy Institute has tracked changes in physician employment consistently since 2012, said Kenney. In 2012, 25% of physicians were employed; that has jumped to nearly 74%, which means the past decade has brought a world of change to the nation's physicians.

"These are essentially small-business people...and they were primarily trained to care for patients," said Kenney, referring to physicians in independent practice. Still, she understands why physicians would seek employment in the face of "the crushing kind of pressure of having to deal with 20 different payers, pay overhead, and keep the lights on [at the practice]."

According to the report, 108,700 physicians left independent practice to enter employment with hospitals or other corporate entities in the 3-year period that ended in 2021. Seventy-six percent of that shift to employed status among physicians has occurred since the start of the COVID-19 pandemic in March 2020.

From a regional perspective, the report found continued growth among employed physicians across all US regions in the last half of 2020. Hospital- or corporate-owned physician practices increased between 28% and 44%, while the percentage of hospital- or corporate-employed physicians increased between 13% and 24%.

Eighty percent of physicians in the Midwest are employed by hospitals or corporations, which leads the rest of the country, per the report. That's followed by the Northeast, the West, and the South. Overall, the number of physicians working for such entities increased in all regions.

The report also revealed that physician employment by corporations such as health insurers and venture capital firms grew from 92,400 in January 2019 to 142,900 in January 2022.

Hospitals and corporate entities acquired 36,200 physician practices (representing 38% growth) between 2019 and 2021, and the majority of these moves occurred since the pandemic's start, according to the report.

Value-Based Care, Venture Capital Firms Driving Change

Kenney pointed to value-based care as driving much of this activity by hospitals. "We all embrace [value-based payment], because we need to get a handle on cost, and we want better quality [but] those trends tend to favor integrated systems and systems that can handle a lot of risk and populations of patients."

Still, the moves by private equity firms and health insurers in this space is relatively new, said Kenney, who added that her organization started tracking this trend 3 years ago. She pointed to a "marked acceleration" in the trend toward employing physicians and the sale of practices in the 18 months following the pandemic's start; non-hospital corporate entities drove that steep increase, she said.

Kenney calls for further study and "guardrails" to respond to "that force in the healthcare system," referring to the acquisition of practices by entities such as private equity firms. "Are these big [healthcare] systems going to continue to see patients in underserved areas, rural areas, and Medicaid patients if it doesn't make sense financially to do so?

"That's what we're teeing up with this research," added Kenney. "We are providing information that starts some conversations around what we might want to think about in terms of policies to ensure that we don't impact patients' access to care."

The Physicians Advocacy Institute represents more than 170,000 physicians and medical students. Avalere Health used the IQVIA OneKey database for the report. The researchers studied the 3-year period from January 1, 2019, to January 1, 2022.

Aine Cryts is a veteran health IT and healthcare writer based out of Boston.

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