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Trends in Physician Practice Ownership

By May 16, 2019Commentary

There has been an ongoing trend of doctors going into larger practices, not owning their own practices and becoming employees of health systems, large clinic systems or even health plans.  The American Medical Association tracks these developments and released data from its benchmark surveys.   (AMA Report)   In 2016, only 47.1% of physicians had an ownership interest in the practice they worked in, and that continues to decline, to 45.9% in 2018.  Meanwhile, almost half, 47.4%, were employees in 2018.  the remainder of physicians, about 7%, work as independent contractors.  By comparison, in 1983, over 75% of doctors were owners in their practice.  Younger physicians and female ones are less likely to be owners.  In a few specialties doctors continue to have higher rates of ownership, for example, surgical sub-specialties, 64.5%, ob/gyn, 53.85, and radiology, 50.7%.  Others are quite low, such as emergency medicine, where only 26% of doctors were owners, but many physicians in this area are independent contractors. Within physician-owned practices, there are a significant number of employed doctors.

In addition to declining ownership, there has been a decrease in the number of doctors who work in a physician-owned setting, from 60.1% in 2012 to 54% in 2018.  Working in a wholly or partly hospital-owned practice has shown the greatest grow, coming to 26.7% of all doctors in 2018.  Concurrent with these shifts, has been an increase in the size of practices, with the percent of doctors in practices of ten or fewer physicians dropped from 61.4% in 2012 to 56.5% in 2018.  47% of doctors are in groups of 50 or more physicians.  Hospital owned practices tend to be larger.  42.8% of doctors practice in single specialty groups in 2018, a stable number.  25% practice in multi-specialty settings, also stable. Only 14.8% are in solo practice and 8% are employed by a hospital (which is a little misleading, since as noted above, hospitals also own a large number of practices, so in total about 35% of physicians work for hospitals).  Specialists are more likely to be in single practice groups.  Psychiatry has the most solo practitioners, probably because it has relatively low office costs.

The effects of these trends is unclear.  Younger doctors may prefer to avoid the stress of owning and managing a practice.  They may be seeking better work/life balance.  It is not clear whether practice setting is related to feelings of burnout or job satisfaction, but I suspect it is.  What is most important about understanding how doctors practice, is what the effects may be on the quality of care they deliver.

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