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Physicians are still ditching independent practice for corporate opportunities

por John R. Fischer, Senior Reporter | July 30, 2021
Business Affairs
Only 30% of U.S. physicians are practicing medicine independently
Close to 70% of U.S. physicians were working for private equity firms, hospitals or other corporate organizations as of the beginning of 2021, according to a report released by the nonprofit Physician Advocacy Institute and consulting firm Avalere.

This means that only 30% are independently practicing medicine across the nation. This decades-long trend has been driven by a number of factors, says the report, PAI-Avalere Health Report on Trends in Physician Employment and Acquisitions of Medical Practices in 2019-2020.

Here are a few of its takeaways:

  • Private equity and similar stakeholders created the sharpest increase (32%) in acquisitions between 2019 and 2020
  • Private equity and similar stakeholders created the sharpest increase (32%) in acquisitions between 2019 and 2020
  • Corporations acquired 20,900 practices during those two years and 48,000 additional doctors left independent practice to work for a hospital or other large entity
  • Consolidation took place in every U.S. region and increased in the second half of 2020. Hospital ownership gains ranged from 6% to 11% depending on geography, while corporate ownership jumped from 44% to 59%. This included solo and single-location small practices, as well as large, multispecialty groups with several entities.

PAI CEO Kelly Kenney says physicians are increasingly selling their practices and going corporate due to high administrative costs, which take away time they have with patients. In addition, they must adhere to challenging regulations, face high expenses and deal with anti-competitive contracting and payment practices from dominant insurers and hospitals.

In a letter to Congress, she warns that the increasing shift toward corporate practices in the U.S. requires strong monitoring and should be guided by policies that protect the physician-patient relationship from corporate bias.

She also added that the moratorium on physician-owned hospitals should be lifted. “Physicians who choose private practice need to be able to sustain those practices and compete in the healthcare marketplace.”

In its 2021 Healthcare Financial Trends Survey, Syntellis Performance Solutions, which provides enterprise performance management software and analytics solutions, found that investing in physician practices may help raise revenue per physician, volume and productivity in the post-COVID-19 world.

Another trend the U.S. is facing is a growing shortage of physicians against growing demand. A report by the Association of the American Medical Colleges in July 2020 projected a shortage of between 54,100 and 139,000 physicians by 2033, affecting both primary and specialty care.

“The study included an estimate of how many providers would be needed at the present time if currently underserved populations had healthcare use patterns similar to populations with fewer barriers to access,” Michael Dill, the AAMC’s director of workforce studies, told HCB News at the time. “Under that hypothetical, current demand for doctors could rise by an additional 74,100 to 145,500 physicians (in 2018).

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