A new study prepared by Avalere Health finds the number of physician practices owned by hospitals/health systems rose 86 percent between 2012-15, with the percentage of physicians employed by hospitals or health systems increasing in every region of the country during this time. Released by the Physicians Advocacy Institute (PAI), the analysis also finds that by mid-2015, 38 percent of U.S. physicians were employed by hospitals and health systems. This reflects roughly a 50 percent increase between 2012 and 2015, growing from 95,000 employed physicians in 2012 to more than 140,000 employed physicians in 2015.
In its analysis of hospital acquisitions of physician practices, the study shows that as of mid-2015, one in four medical practices was hospital-owned. From 2012 to 2015, hospitals acquired 31,000 physician practices. These acquisitions typically involve the acquisition of the services of multiple physicians through employment contracts, as well as the practice’s physical building and equipment. PAI studied these trends in order to better understand how these changes affect the practice of medicine for physicians and also implications for patients and the wider health care system.
Another PAI analysis developed by Avalere earlier this year found Medicare payments for three common services are up to three times higher when performed in a hospital outpatient department instead of a physician-owned office.
“Medicare spends less when patients receive treatment in a physician’s office, yet the number of physician-owned medical practices is rapidly shrinking,” said Kelly Kenney, PAI executive vice president. “The shift toward more physicians employed by hospitals could mean higher costs for the entire health care system. For patients, it impacts both where they receive and how much they pay for care.”
North Carolina Medical Society (NCMS) CEO Robert Seligson, in his capacity as PAI President noted that:  “Regardless of where they live, physicians who want to remain in private practice are under tremendous pressure. Payment policies from governmental agencies and health insurance companies heavily favor large health systems and make it challenging for independent physician practices, especially smaller practices, to survive. Just like what’s happened with local book stores and corner grocers, it is increasingly hard for local physicians to own their practice. The incentives are stacked against them.”
Learn more about the study in the Q and A here and this PowerPoint presentation. Read the media release here.