53% of Doctors Still Self-Employed

While data shows there's been an uptick in hospital employment for physicians, more than half still work for themselves, an AMA survey finds. The number of physicians in solo practice, however,  has dropped.

Conventional wisdom says physicians in private practice are a dying breed.

The narrative says physicians are flocking to employed arrangements with hospitals and larger physician practices as health reform and compensation models push the healthcare industry away from fee-for-service and toward economies of scale, quality outcomes and population health.

An American Medical Association report released this week, however, suggests that the demise of private practice physicians may be overstated [PDF]. "To paraphrase Mark Twain, the reports of the death of private practice medicine have been greatly exaggerated," AMA President Ardis Dee Hoven, MD, said in prepared remarks.

"This new data shows that while there has been an increase in hospital employment, more than half of physicians (53.2%) were self-employed in 2012, and 60% worked in practices wholly owned by physicians. Needed innovation in payment and delivery reform must recognize the wide range of practice types and sizes that exist today so all physicians can participate in the move to a more patient-centered system that rewards high-quality care and reduces costs."

Of course, the report also shows that conventional wisdom is not completely wrong. There has been a trend toward hospital employment over the past five years. In 2012, 29% of physicians worked either directly for a hospital (5.6%) or for a practice that was at least partially owned by a hospital (23.4%). The last AMA survey taken in 2007–2008 did not distinguish between direct hospital employment and employment in a hospital-owned practice, but found that 16.3% of physicians worked in one of the two settings.

Phil Miller, vice president of communications at Merritt Hawkins, says the AMA findings are consistent with what the Irving, TX-based physician recruiting specialists find in their annual recruiting assignments.

"I was a little surprised to see they indicated that a little over 50% of physicians are still self employed. That contradicts a little some of the other things I have seen out there," he said. "In the great majority of settings that we are recruiting into it's an employed setting, mostly hospital employed. But it could be a community health center or a larger medical group, with the doctor coming in as an employee and not a practice owner."

Miller says that in 2004 only 11% of the physician search assignments Merritt Hawkins conducted were hospital employed physicians. This year, that figure went up to 64%.

"Of the physicians who are being recruited and newly hired by various entities, they are overwhelmingly going to employed settings. If a doctor is coming out of residency for example, the ones who are switching practice locations and are being recruited by people like us they are going into employed settings," Miller says.

It is also becoming increasingly uncommon for independent physicians to be recruited into other independent practices. "We recruit that doctor not for another independent setting. They are going into an employed setting," Miller says.

"That gradually siphons off the numbers of independent doctors. Even in the AMA survey they're showing that the percentage of hospital employed doctors is growing. Today it's a little unusual for a doctor to go from one independent practice to another."

The AMA study also found that:

• The percentage of physicians who were practice owners in 2012 decreased eight percentage points from 2007/2008.
• 18% of physicians were in solo practice, down 6% points over five years.
• Single specialty practice was the most common practice type in 2012, accounting for 45.5% of physicians.

Miller says every trend is pointing towards the employed model.

"The number of solo settings that we recruit into 10 years ago was close to 20%. Last year it was 1%. It was the same thing with partnerships," he says. "Solo practices and partnerships were the classic independent settings and now we do next to none of those anymore. Pretty much 90% or more of the settings we recruit into now feature employment of one kind or another."