Practice settings

Hospitals and corporate entities now own nearly half of physician practices, according to analysis

The pace of practice acquisitions by hospitals and corporations increased during the pandemic, the analysis found.

Roughly 48% of all U.S. physician practices are owned by a hospital or corporate entity as of January 2021, according to a recent analysis (PDF) by the Physicians Advocacy Institute and Avalere Health, a health care consulting firm.

The analysis, which examined physician practice ownership and acquisitions from January 2019 to January 2021, found that the COVID-19 pandemic increased the pace at which hospitals and corporate entities bought physician practices. In January 2019, only about 39% of U.S. physician practices were hospital- or corporation-owned, which means there was a 25% increase in the number of hospital/corporation owned practices in two years.

Pandemic accelerates increase

The rate of acquisition increased by 8.5% following the onset of the pandemic, the analysis reported.

Regionally, the increase in acquisitions and physicians becoming employed was most pronounced in the South. However, the Midwest has the highest percentage of hospital- and corporation-owned practices; nearly 60% of practices in the Midwest are owned by hospitals or corporations.

“COVID-19 exacerbated financial vulnerabilities of physician practices and forced them to make difficult decisions,” Kelly Kenney, PAI CEO, said in a statement, according to Fierce Healthcare. “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.”

Rise in employed physicians

In May, the latest American Medical Association Benchmark survey found that employed physicians outnumbered those in private practice for the first time. According to the AMA survey, roughly 49% of physicians were working in a private practice setting in 2020, while about 50% were employed.

The PAI analysis found that nearly 7 in 10 physicians are now employed by a hospital or corporate entity, a 12% increase from two years prior. The discrepancy may be due to the AMA survey and the PAI analysis using different criteria to classify practices as independent.

An AMA policy paper pointed to the increase in practice mergers and acquisitions as well as more new physicians choosing to be employed as contributing factors to the shift toward more physicians becoming employed.

Related reading:

For the first time, less than half of physicians are in private practice, survey finds

What physicians got paid in 2020

3 comments

  1. If physicians and hospitals were paid at the same rate, the hospital/corporations would not be buying practices. Remember, if they are not making money, they would not be investing. Many are unaware there is different reimbursement rates for hospital/clinic entities vs doctor owned clinics. I do not believe such entities manage a clinic better than someone such as a physician who is vested in their own clinic. But if they are paid better, they can make it work by paying the doctor less, using mid levels, and increasing workload. Why else would venture capitalist be interested. What we cannot control is large scale bargaining with insurance companies as well as hospital lobbying power on a national level. Administrators definitely have a different agenda the doctors who care for patients. Not a level playing field. In my 30 years, I have seen fragmentation of care, reduced quality and interference with doctor patient relationships all in the name of profitability.

  2. And the independent physicians are now referred to as “community Physicians”, with the employed physicians in control and implementing corporate policies. Much of this is not in the best interest of patients. I agree with all of Dr Tanners comments, and have experienced loss of income and dismissal from a center that I helped found, after 18 years, without even a thank you. All for increased profits.
    I am a senior doc, and practice because I enjoy it. I am able to manage well because i belong to a very large multispecialty private practice group, which is now expanding to a second state because of quality and successful physician management. This is one way to fight back sucessfully.

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