Pandemic’s “rough stretch” made it tough to keep private practice doors open, advocate says
by Jennifer Henderson, Enterprise & Investigative Writer – MedPage Today
April 21, 2022
Nearly three-fourths of U.S. physicians opted for employment with hospitals, health systems, or other corporate entities, such as private equity firms and health insurers in the pandemic era, according to a new report.
In 2021, 73.9% of physicians were hospital- or corporate-employed, up from 69.3% at the start of 2021, 64.5% at the start of 2020, and 62.2% at the start of 2019, according to the nonprofit Physicians Advocacy Institute (PAI) and consulting firm Avalere. That equates to 484,100 employed physicians, up from 423,800, 391,000, and 375,400 at the start of 2021, 2020, and 2019, respectively.
Overall, 108,700 physicians shifted to employment since January 2019, and that growth was split about evenly between hospital employees (58,200) and those within other corporate entities (50,500). Notably, of those physicians, 76% (83,000) did so since the pandemic began.
“We were really taken aback by what happened during the pandemic,” Kelly Kenney, JD, CEO of PAI, told MedPage Today.
At the same time, financial pressures have mounted, and burnout and stress are at an “all-time high,” Kenney said. It has been a “rough stretch” for physicians, and “keeping private practice doors open has been an increasing challenge.”
For some independent physicians, pandemic-induced challenges may have provided the final push to seek employment, or to close or sell the practice, she said.
But Kenney also pointed out that factors that drive physicians away from private practice were in place pre-pandemic, such as the high costs of maintaining a private practice; downward pressure on insurance reimbursement; administrative burden; and business challenges for those who are trained to focus solely on delivering care.
Additionally, as private equity has moved into the marketplace, the ability to obtain capital injections into some practices has been “hard to resist,” she said. Keeping practices up-to-date with electronic health records and other technologies can prove expensive, Kenny stated, and new payment models designed to reward providers for integrated care can seem better suited for those within larger systems.
In 2021, MedPage Today reported other reasons for the decline of the independent practice, along with differing generational perspectives on physician autonomy.
The PAI report, which utilized information from the IQVIA OneKey database, stated that the acquisition of medical practices by hospitals or other corporate entities has also been on the upswing. Hospitals and corporate entities now own over half of physician practices, the report noted, with hospitals owning 26.4%, and corporate entities owning 27.2%. Also, the percentage of corporate-owned practices (private equity firms, health insurers) increased 86% over the past 3 years.
Every region of the country saw steady trends toward increased employment and hospital and corporate ownership. However, PAI highlighted some standouts, such as practices in the southern U.S. seeing a 94% increase in acquisitions by corporate entities. At 63.5%, the Midwest continued to have the highest percentage of physicians employed by hospitals and health systems.
What will be interesting going forward is whether consolidation reaches a point of flattening out, Kenney stated. “We’re getting down to a quarter of physicians,” she said.
Greg Says notes that the trend toward fewer doctors in private practice makes it easier for insurance carriers offering Medicare Advantage plans to improve their provider networks. In turn, this means more in-network providers to choose from for patients enrolled in Medicare Advantage plans.