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.