As Physician Ownership Goes, So Goes the Healthcare Industry

If I compiled a list of my favorite biennial healthcare reports, at the top of the list would be the American Medical Association’s biennial report on physician employment and practice ownership. It’s longitudinal, so you can compare changes over time. It’s credible, as it’s based on essentially the same survey of about the same number of doctors each year. And it’s insightful, as it reflects changes in the healthcare market in response to changes in the economic dynamics of that market.

The AMA’s latest biennial report on physician employment and practice ownership, released earlier this month, does not disappoint. The new report is based on an AMA survey of about 3,500 physicians, and the data is from 2022. The report is the fifth in the series, with the first released in 2013 with data from 2012. So, we can look how physician employment and practice ownership have changed over the past decade. That’s pretty cool if you’re a healthcare journalist.

Enough small talk. Let’s get to the good stuff. Here are five things from the new report that I think say a lot about how the healthcare market has changed and where it’s going:

1. Significantly fewer doctors work in private practices wholly owned by physicians.

The percentage of physicians in private practice continues to decline. Last year, 46.7% of doctors worked in an independent private practice owned entirely by physicians. That’s down from 49.1% in 2020 and a 13.4 percentage point plummet from 60.1% in 2012. Will the percentage stabilize or continue to drop as other types of healthcare organizations buy and operate physician practices with doctors as employees?

2. More doctors work in medical practices owned in whole or in part by hospitals.

The percentage of physicians who work in hospital-owned medical practices continues its inextricable climb. That percentage reached 31.3% in 2022, up from 30.5% in 2021 and up 7.9 percentage points from 23.4% in 2022. I’m betting that upcoming biennial reports will proclaim that hospitals now own more than one-third of all medical practices in the country.

3. Is private equity ownership of physician practices much ado about nothing?

Despite all the wailing and teeth-gnashing over private equity (PE) acquisitions of medical practices and the impact of those acquisitions on cost, quality and access, we’re not seeing it in the AMA numbers. At least not yet. Only 4.5% of physicians worked in practices owned by a PE firm. That’s one click more than the 4.4% in 2020. Will that percentage jump in 2024? It remains to be seen. The AMA didn’t ask about PE ownership in the three earlier biennial surveys.

4. Cash is king when it comes to physician practice acquisitions by hospitals.

Despite all the wailing and teeth-gnashing over regulatory and administrative hassles like quality measure reporting and prior authorization, the top reason by far that physicians sell their practices to hospitals is money. Doctors can make more if a hospital owns their practice. Some 79.5% of physicians said “higher payment” was “important” or “very important” when selling out to a hospital. By comparison, 71.4% and 69% said the same thing about regulatory/administrative requirements and access to costly resources, respectively.

5. Not all doctors want to be employees and work for someone else.

Curiously, the percentage of physicians who work as employees for whoever owns their medical practice dipped slightly to 49.7% last year from 50.2% in 2020. That percentage has been gradually increasing since 2012, when it was 41.8%. Is last year simply a pause in that overall trend? Or is this a sign of a backlash from doctors who don’t want to practice medicine as an employee for a corporate overlord? Money and handcuffs versus less money and freedom? This is a percentage to watch.

Physicians are the means of production in the healthcare industry. Whoever controls the means of production controls the industry. That’s why everyone from hospitals to health insurers to retail pharmacy chains to consumer technology companies wants to own doctors.

Nothing less than the fate of your health depends on it.

Did I say I like the AMA’s biennial report on physician employment and practice ownership? I do.

Thanks for reading.