Private practice physicians remain 'dinosaurs on the road toward extinction'

Physicians are continuing their migration to employed models from private practice as costs soar and reimbursements decline. 

According to new data from consulting firm Avalere in a study sponsored by the Physicians Advocacy Institute, more than 127,000 physicians moved to employment from 2019 to 2023. Around 78% of physicians were hospital- or corporate-employed by January 2024. 

Additionally, roughly 8,100 private practices were acquired by hospitals or corporations in 2022 and 2023, and 19,100 physicians became employees of hospitals or other corporate entities, up 5.1% since 2022. 

Only 44% of physicians owned their practice as of 2022, according to an American Medical Association report, compared with 76% in the early 1980s. The report cited regulatory and administrative burdens and economic pressures that have forced physicians to shift to hospital and health system settings. 

"Private practice physicians are becoming more and more rare in American healthcare. This is by design and is not random," Kenneth Candido, MD, CEO and president of Chicago Anesthesia Associates, told Becker's. "Large systems are siphoning off private practice physicians and are buying or consolidating practices exponentially. Those who hold out find a shrinking referral base, as those formerly loyal to them are being compelled to exclusively refer within the system. It is a dirty business and a dirty, underhanded game that administrators are playing to monopolize their business models."

Dr. Candido added that the referral process has become weaponized — as hospitals continue to grow, competition is shrinking. 

"Private practice physicians have lost their power in healthcare because their patient bases have dried up … as the hospital systems have gobbled up the patients through their extensive network of non-physician practitioners, the few physicians who have remained in private practice have been gobbled up," Thomas Pliura, MD, a physician and attorney in Le Roy, Ill., told Becker's

About 80 percent of physicians who own their practices said the ability to negotiate higher payment rates with insurance companies influenced their decision to sell their practice, according to the AMA report.

Health systems and hospitals are not the only entities gobbling up physicians. Retail clinics, urgent care centers, telehealth platforms and private equity firms are also racing to acquire physicians. 

UnitedHealth Group-owned Optum, the largest employer of physicians and parent company of ASC chain SCA Health, added 20,000 physicians in 2023. Most recently in the company's string of acquisitions, Optum announced plans to purchase financially troubled Steward Healthcare's 1,700-physician group.

"The private practitioner, unless they are in plastic surgery or dermatology, are essentially dinosaurs on the road toward extinction," Dr. Candido said. "The old mantra of 'divide and conquer' has been expertly used by the major healthcare systems to pick off the lone or small group practitioners and has been extremely lethal and effective."

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