AMA: Physicians Have Moved from Private to Hospital-Owned Practices

In the last decade, physicians have shifted away from employment opportunities at private practices and are increasingly working at hospital-owned practices, an analysis from the American Medical Association (AMA) found.

The analysis assessed changes in ownership and organization of physician practices using data from 2012 to 2022 from the AMA’s Physician Practice Benchmark Survey.

The most significant change in the last ten years was in practice ownership. Between 2012 and 2022, the share of physicians working in private practices declined by 13 percentage points from 60.1 percent to 46.7 percent. These percentages include physicians with ownership shares in a practice and those employed in or contracted with a practice.

The share of physicians in private practice generally ranged from 41.2 percent among general surgeons to 49.7 percent among radiologists. Two exceptions included 37.0 percent among emergency medicine physicians and 63.3 percent among surgical subspecialists.

Meanwhile, the share of physicians directly employed by or contracted directly with a hospital grew from 5.6 percent to 9.6 percent. Similarly, the share who worked in a hospital-owned practice increased from 23.4 percent to 31.3 percent.

In 2022, 4.5 percent of physicians worked in a practice owned by a private equity firm, the report noted.

Physicians have been selling their practices to hospitals or health systems primarily due to payment reasons. For example, 80 percent of physicians said the ability to better negotiate higher payment rates with payers was an important reason why they underwent a hospital acquisition. Physicians also cited the need to improve access to costly resources and better manage payers’ regulatory and administrative requirements.

“The AMA analysis shows that the shift away from independent practices is emblematic of the fiscal uncertainty and economic stress many physicians face due to statutory payment cuts in Medicare, rising practice costs, and intrusive administrative burdens,” Jesse M. Ehrenfeld, MD, MPH, president of AMA, said in a press release.

Trends in practice size have also shifted over the last decade, with physicians moving from small to large practices. In 2012, 61.4 percent of physicians worked in practices with ten or fewer physicians; 40 percent were at practices with fewer than five, while 21.4 percent were at practices with between five and ten physicians.

In 2022, the share of physicians working in practices with ten or fewer physicians fell to 51.8 percent. Almost a third (32.8 percent) of physicians worked at practices with fewer than five and 19 percent worked at those with five to ten physicians.

As employment at smaller practices fell, the share of physicians at larger practices grew. The percentage of physicians in practices with at least 50 physicians increased from 12.2 percent in 2012 to 18.3 percent in 2022. The share of physicians in mid-sized practices remained stable over the last ten years.

In 2022, 49.7 percent of physicians were employees, 44 percent were owners, and 6.4 percent were independent contractors. In contrast, 41.8 percent of physicians were employees and 53.2 percent were owners in 2012.

The shift in self-employment was larger for younger physicians, with the share of physicians under 45 who were owners falling from 44.3 percent in 2012 to 31.7 percent in 2022. This indicates that fewer new physicians are beginning their post-residency career in an ownership position.