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6 in 10 Physicians Work in Small Practices

News  |  By John Commins  
   July 09, 2015

Physicians in small, independent practices are still in the majority, but the trend continues toward employment at larger practices and health systems. "I wouldn't say the game is over for solo physicians, but it's the bottom of the ninth and you are behind. There is nothing going your way," says a recruiting executive.

More than 60% of physicians work in practices with 10 physicians or fewer, and that practice size didn't change much between 2012 and 2014, the American Medical Association says in a new study.

"These data show that the majority (60.7%) of physicians were in small practices of 10 or fewer physicians, and that practice size changed very little between 2012 and 2014 in the face of profound structural reforms to healthcare delivery," AMA President-elect Andrew W. Gurman, MD, said in prepared remarks.

The findings seem at odds with reports that physicians are flocking towards employed models, either with larger physician groups, hospitals or health systems. Nonetheless, the AMA study shows that the trend toward employment and migration to larger practice is occurring.

The Changing Economics of Medicine

Nearly 57% of the physicians worked in practices that were wholly owned by physicians in 2014, which is down from 60.1% in 2012. The percentage of physicians working for hospitals or in practices that had some hospital ownership increased from 29% in 2012 to 32.8% in 2014.

Building an Effective Physician Enterprise

The study also found that:

  • Physicians as practice owners decreased from 53.2% to 50.8%.
  • Solo practitioners decreased from 18.4% to 17.1%.
  • Physicians directly employed by a hospital increased from 5.6% to 7.2%
  • Physicians in practices that had some hospital ownership increased from 23.4% to 25.6%.

Travis Singleton, a senior vice president at Dallas-based physician recruiters Merritt Hawkins, says the AMA findings are largely consistent with Merritt Hawkins' data of physician demand.

"The one number that is probably significantly different from ours is they have 60.7% physicians in practices of 10 or fewer and our number is at around 50%," Singleton says. "The core message of what they are saying is that independent and small practices are alive and well and a large portion of our delivery system."

Singleton says some of the distinctions carved out in the AMA study are more about "semantics."
"They've got 57% working in practices that are wholly owned by physicians as opposed to 33% for hospitals," he says. "Now, it's more about the resources you have at your disposal that shape you practice versus whether you are employed or not, whether it's a hospital or a group that is doing it. Technically, if you work for Kaiser Permanente or Cleveland Clinic you work for a physician wholly owned group. I would argue you operate much closer to a traditional definition of a hospital-employed physician."

Even though a majority of physicians are working in smaller, independent practices, he says the trends are unmistakable. More and more, physicians are gravitating towards employment at larger practices and health systems.

Physician Compensation, Dissatisfaction Ratchet Up

"If you look at our recruitment numbers, 95% this past year were in an employed relationship regardless of the setting they went to. That is staggering," he says. "I would agree with the picture of a landscape that shows relatively smaller independent or group practices as a viable portion of our healthcare delivery system. I don't agree with the fact that that has changed very little since 2012. I don't think that is the case, albeit it has probably changed at a slower pace that people think reading the headlines."

Singleton says that 50% of Merritt Hawkins recruiting searches this year were for hospital-employed direct setting. On the other end of the spectrum, recruiting for solo practitioners represents about 4% of searches.

"I wouldn't say the game is over for solo physicians, but it's the bottom of the ninth and you are behind. There is nothing going your way," Singleton says. "The vast majority of those still in solo settings, about 17% of the marketplace, are your older physicians that never really changed and aren't going to change."

John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.

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