Nearly 70% of U.S. physicians are employed by hospitals or corporate entities

Photo: Peter Griffith/Getty Images

The COVID-19 pandemic accelerated the decade-long practice of hospitals and other entities acquiring physician practices, as physicians struggled to maintain private practices, according to a report from the Physicians Advocacy Institute and Avalere Health.

In 2019 and 2020, 48,400 additional physicians left independent practice and became employees of hospitals or other corporate entities. Nearly half that growth occurred after the onset of COVID-19.

At the start of 2021, nearly 70% of U.S. physicians were employed by hospital systems or other corporate entities, such as private equity firms and insurers, leaving just three out of 10 of the nation's physicians practicing in independent medical practices.

Hospitals and other corporate entities acquired 20,900 additional physician practices over the two-year period, resulting in a 25% increase in corporate-owned practices.

Meanwhile, 18,600 additional physicians left independent practice to become hospital employees, with 11,400 from that shift making the move after the onset of COVID-19. In addition, hospitals acquired 3,200 additional physician practices over the two-year period, resulting in an 8% increase in hospital-owned practices.

Corporate entities acquired 17,700 additional physician practices over the two-year period, resulting in a 32% increase in corporate-owned practices, and 29,800 additional physicians left independent practice and became employees of corporate entities: 11,300 of those did so after the onset of COVID-19.

Anticompetitive contracting and payment practices by dominant insurers and hospitals, high administration costs, and regulatory compliance burden and expense are a few of the reasons that commonly lead to physician burnout and the resulting decision to sell their practices, according to the report.

WHY THIS MATTERS

Hospitals and corporate entities continue to acquire physician practices in every region, indicating independent physicians are increasingly becoming a rarity in the U.S., a potential cause for concern, according to the PAI. 

The organization sent an open letter to members of the U.S. Congress on June 28, arguing physicians should retain clinical autonomy to provide high-quality, cost-effective care for their patients. The organization warned this "startling shift towards the corporatization of healthcare" across the country could, if left unchecked, result in an inappropriate incursion into the practice of medicine.

The PAI's letter noted marketplace incentives make physician practices attractive acquisition targets by corporate entities: "Hospitals and large health systems have a vested interest in 'capturing' physicians' patient base to maintain a steady stream of revenue," the letter said. "Unfortunately, the forces driving these trends show no sign of abating."

The PAI also argued for continued support from lawmakers to help private physician practices compete with larger corporate entities and urged Congress to lift the moratorium on physician-owned hospitals that was put into place under the Affordable Care Act.

The ACA placed a number of restrictions on physician-owned hospitals, due to concerns over a conflict of interest in physicians referring patients to hospitals in which they have ownership, or in ordering unnecessary tests.

An American Hospital Association blog said the growth of physician-owned hospitals was restricted for good reasons and that these restrictions enjoy bipartisan support. However, there have been several legislative attempts to overturn the restriction.

THE LARGER TREND

The ongoing trend of increasing physician employment by hospitals and other corporate entities has been spurred in part by years of acquisitions of physician practices, but accelerated following the onset of the pandemic. This shift is part of a greater trend towards consolidation within the healthcare space, which has in turn dramatically reshaped the practice landscape for physicians.

A recent executive order by President Biden targets healthcare consolidation between hospitals, and between insurers.
 
ON THE RECORD
 
"COVID-19 exacerbated financial vulnerabilities of physician practices and forced them to make difficult decisions," Kelly Kenney, CEO of PAI, said in a statement. "The practice acquisition trend has potentially serious implications for competition and health care costs, which have been shown to increase with this type of marketplace consolidation."

Twitter: @dropdeaded209 
Email the writer: nathaneddy@gmail.com