The Evolving Landscape of Medical Practice Ownership: A Decade of Transformation

Over the past decade, the landscape of medical practice ownership in the United States has undergone a remarkable transformation. A new analysis reveals that less than half of doctors now work in private clinics, signifying a significant decline from 60.1% to 46.7% between 2012 and 2022. Physicians working in hospitals as direct employees or contractors have increased from 5.6% to 9.6%, and the percentage of practices partially owned by a hospital or health system has increased from 23.4% to 31.3%, coinciding with the shift.

Several factors have contributed to this seismic shift. One of the primary reasons cited by four out of five physicians for selling their practice to a hospital or health system is the need to negotiate better payer payment rates. The ever-increasing economic, administrative, and regulatory pressures on healthcare providers have made it challenging for private practices to maintain fiscal stability. As a result, physicians seek refuge in larger institutions where they can access expensive resources and benefit from improved payer regulatory and administrative management.

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A crucial aspect of this change has been the impact of the COVID-19 pandemic. In 2020, the pandemic disrupted medical practices, leading to a surge in hospitals and corporations acquiring independent practices and hiring physicians. According to data from the Physicians Advocacy Institute (PAI), between January 1, 2019, and January 1, 2021, hospitals and other corporate entities bought 20,900 physician practices. Additionally, between July 1, 2020, and January 1, 2021, approximately 11,300 practices and 22,700 professionals left independent practice.

The evolving landscape of medical practice ownership has also seen a significant generational shift. Younger physicians, those under 45 years old, have experienced a considerable decrease in self-employment, dropping from 44.3% to 31.7% between 2012 and 2022. This trend highlights that fewer physicians from each generation are opting to begin their post-residency careers as practice owners.

The change also extends to gender disparities. According to AMA data, women physicians are 35.7% less likely than men to own their practices and 56.9% more likely to work for others. These disparities raise important questions about the barriers faced by women in the healthcare industry and the need for more equitable opportunities.

In 2012, over half of physicians were practice owners (53.2%), but by 2022, this number had dropped to 42.2%. The declining percentage of young physicians who can or choose to be owners, along with the retirement of older physician owners, has been a significant factor in this decline.

The changing practice landscape is evident in the types of practices physicians are associated with. In 2022, 42.2% of physicians worked in single-specialty practices, while 26.7% worked in multi-specialty practices, marking a four-point change since 2012.

As the American Medical Association (AMA) acknowledges the need for reform in the Medicare pay system to ensure practice viability, the future of medical practice ownership remains uncertain. While hospitals and corporations own a significant portion of medical practices, smaller and independent practices continue to hold their ground despite the challenges they face.