Nearly 4 of 5 physicians employed by hospitals, corporations

Widespread consolidation in healthcare is affecting physicians, according to a new report from the Physicians Advocacy Institute (PAI) and Avalere Health.

The report analyzed updated data from IQVIA OneKey database which contains physician and practice location information on hospital/health system ownership. The data showed that more than three-quarters of US physicians (77.6%) were employed by hospitals, health systems, and other corporate entities as of January 1, 2024, a stark difference from over ten years ago when just about a quarter of physicians (25.8%) were employed by hospitals and health systems.

Nearly 263,000 more physicians were employed by hospitals and health systems from July 2012 to January 2024, the report found. But more recently, hospitals and health systems employed 16,000 additional physicians from 2022-23 alone.

Hospitals, health systems, and other corporate entities have increasingly hired more physicians compared to private practices over the past five years, a trend that PAI says started in 2019. Since 2019, more than 127,000 physicians have become employees of hospitals, health systems or corporate entities over the total five-year period.

The report noted that the shift toward hospital, health system, and corporate employment accelerated during the COVID-19 pandemic. During the pandemic, medical practices struggled to remain independent in the face of severe financial challenges, including community shutdowns unless for medically necessary care, which oftentimes shifted to hospitals.

Physicians also reported record levels of burnout during and immediately after the pandemic, which may have contributed to the employment trend, so physicians did not have to take on as much of the administrative burden of operating a private practice.

The report showed that 19,100 physicians left independent private practices to join hospitals, health systems, and other corporate entities from 2022-23.

The report also revealed greater consolidation of medical practices through mergers and acquisitions. Between January 2019 and January 2024, more than 44,000 practices were acquired. Acquisitions accelerated specifically from 2022-23, increasing by 6% with more than 8,000 practices acquired during the period.

Additionally, 58.5% of physician practices were owned by non-physicians as of January 1, 2024. At that time, about 30.1% of physician practices were owned by corporations, payers, private equity firms and large pharmacy chains. Meanwhile, hospitals and health systems owned 28.4%by the first of the year, coming in below corporations for the first time since PAI and Avalere Health have tracked practice ownership trends.

“Corporate entities are assuming control of physician practices and changing the face of medicine in the United States with little to no scrutiny from regulators,” Kelly Kenney, chief executive officer of PAI, said in a statement. “Physicians have an ethical responsibility to their patients’ health. By contrast, corporate entities have a fiduciary responsibility to their shareholders and are motivated to put profits first. In some arrangements, these interests can conflict with providing the best medical care to patients.”