3 of 4 Physicians Employed by Health Systems, Hospitals, or Corporate Entities

A new study examines trends in physician practice consolidation and physician employment.

The coronavirus pandemic has accelerated trends in physician practice consolidation and increased the number of employed physicians at health systems, hospitals, and corporate entities, a new study found.

The purchase of independent physician practices by health systems, hospitals, and corporate entities has been going on for several years, as have the increasing number of employed physicians at health systems, hospitals, and corporate entities.

The new study was commissioned by the Physicians Advocacy Institute and conducted by Avalere Health. The Physicians Advocacy Institute is a non-profit organization that supports physician practices through advocacy, research, and educational tools for physicians. The primary source of data for the report was the IQVIA OneKey database.

In the report, corporate entities include health insurers, private equity firms, and umbrella corporate entities that own multiple physician practices. Physician practices are considered independent if they do not have a corporate parent.

The pandemic has had a profound impact on physician practice ownership and physician employment, Kelly Kenney, JD, CEO of the Physicians Advocacy Institute (PAI) said in a prepared statement. "COVID-19 drove physicians to leave private practice for employment at an even more rapid pace than we've seen in recent years, and these trends continued to accelerate in 2021. This study underscores the fact that physicians across the nation are facing severe burnout and strain. The pressures of the pandemic forced many independent physicians to make difficult decisions to sell their practices to hospitals, health insurers, or other corporate entities."

The consolidation trends raise concerns about the patient-physician relationship and the clinical autonomy of physicians, she said. "Regardless of practice ownership, it is important to preserve the patient-physician relationship and maintain physicians' clinical autonomy. PAI supports policies that promote these principles and allow physician-owned practices to compete with corporate and hospital-owned entities."

The study covers a three-year period from January 2019 to January 2022. The research features several key findings.

• The number of physicians employed by hospitals or corporate entities rose steadily from 2019 to 2021, from 375,400 in January 2019 to 484,100 in January 2022. There was an 8.8% increase in the growth rate of physicians employed by hospitals or corporate entities during the pandemic, including rising from 404,100 in July 2020 to 484,100 in January 2022.
   
• There was a sharp increase in the number of physicians employed by hospitals and health systems after the start of the pandemic, rising from 290,200 in July 2020 to 341,200 in January 2022.
   
• There was a sharp increase in the number of physicians employed by corporate entities after the start of the pandemic, rising from 110,900 in July 2020 to 142,900 in January 2022.
   
• The percentage of physicians employed by hospitals, health systems, and corporate entities rose significantly during the three-year study period, from 62.2% in January 2019 to 73.9% in January 2022. In other words, nearly 3 of 4 physicians are now employed by hospitals, health systems, and corporate entities.
   
• There was a steady increase in the percentage of physicians employed by hospitals and health systems during the three-year study period, from 46.9% in January 2019 to 52.2% in January 2022.
   
• There was a sharp increase in the percentage of physicians employed by corporate entities during the three-year study period, from 15.3% in January 2019 to 21.8% in January 2022.
   
• There was a sharp increase in the number of physician practices owned by hospitals, health systems, or corporate entities, rising from 99,100 in January 2019 to 135,300 in January 2022. This represented a 36% increase. Most of this growth occurred after the start of the pandemic.
   
• The number of hospital-owned physician practices increased 8% over the three-year study period, from 61,900 practices to 66,700 practices. Most of this growth occurred after the start of the pandemic.
   
• The number of physician practices owned by corporate entities increased 84% during the three-year study period, from 37,200 in January 2019 to 68,500 in January 2022. Most of this growth occurred after the start of the pandemic.
   
• By the end of the three-year study period, more than half of physician practices were owned by hospitals, health systems, or corporate entities, rising from 38.8% in January 2019 to 53.6% in January 2022. Most of this growth occurred after the start of the pandemic.
   
• There was a modest but steady increase in the percentage of physician practices owned by hospitals during the three-year study period, from 24.3% in January 2019 to 26.4% in January 2022.
   
• There was an 86% increase in the percentage of corporate entity-owned physician practices during the three-year study period, from 14.6% to 27.2%. Most of this increase occurred after the start of the pandemic.

Related: Coronavirus Pandemic Driving Increase in Healthcare Consolidation