For the first time ever, less than half of physicians are independent

By Alex Kacik  | May 31, 2017

Less than half of practicing physicians in the U.S. owned their medical practice in 2016, marking the first time that the majority of physicians are not practice owners, according to a new study.

Only 47.1% of physicians in 2016 had ownership stakes in a medical practice, an American Medical Association study released Wednesday found. That's down from 53.2% in 2012, and research shows that doctors, especially young doctors, have been shifting from owning their own practice to joining larger practices.

Ownership and employment shifts reflect the industry's increasing compliance costs and new payment models, research shows. Maintaining the necessary information technology and quality and safety compliance often require a larger asset base to spread costs. Payment reforms like accountable care organizations value an integrated care model, which is why independent physicians have gave way to larger systems, healthcare experts said.

Health systems have been aggressively acquiring physician practices as they aim to better align physician networks to reduce medical variation, improve outcomes and satisfy payment reforms that require broader populations to remain healthy. 

But that trend has seemingly stalled, according to AMA data. The percentage of physicians in hospital-owned practices or who were employed directly by a hospital was the same in 2016 as in 2014 at 32.8%, a slight jump from 29% in 2012. In 2016, 21% of doctors in hospital-owned practices said their practice had been acquired by a hospital in the past five years compared to 26.9% in 2012.

Consultants attributed the slowdown to hospitals having "as many practices as they can handle at this point," the study, written by AMA senior economist Carol Kane, said.

"Physician compensation is one of the fastest-growing expenses in health systems," said Joel French, CEO of SCI Solutions, which offers web-based access management products that connect patients, referring physicians and hospitals. It has become as high as 10% of total expenses for some systems, he added.

"The burden is not sustainable," French said.

Multispecialty practices that include primary care phsyicians are more likely to be owned than their counterparts without primary care doctors. In 2016, 45.7% of multispeciality practices that included primary care providers were owned by hospitals compared to 33.3% that did not have primary care doctors. Nearly 14% of multispeciality clinics were wholly owned by a nonprofit foundation, the study found.

While most doctors deliver care in smaller practice of 10 or fewer physicians, the data points to a gradual shift toward larger practices. In 2016, 13.8% of physicians were working in practices with 50 or more doctors compared to 12.2% in 2012.

The AMA's Physician Practice Benchmark Surveys were performed in 2012, 2014 and 2016 and include 95,262 physicians from across the country who provide at least 20 hours of patient care per week.

Alex Kacik is the hospital operations reporter for Modern Healthcare in Chicago. Aside from hospital operations, he covers supply chain, legal and finance. Before joining Modern Healthcare in 2017, Kacik covered various business beats for seven years in the Santa Barbara, California region. He received a bachelor's degree in journalism from Cal Poly San Luis Obispo in Central California.

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