Nearly seven in 10 U.S. physicians are now employed by hospitals or corporations such as private equity firms and health insurers while the COVID-19 pandemic has turned doctors away from independent practice, a new report finds.
Between January 1, 2019 and January 1, 2021, 48,000 doctors left the private practice to take jobs in hospitals or other companies, Avalere Health researchers concluded in the study. These employers now own almost half of the country’s medical practices.
The Physicians Advocacy Institute, a non-profit group that promotes fair and transparent payment policies, commissioned the study. The organization is not necessarily opposed to the trend, said CEO Kelly Kennedy. But its members, which include leaders of state medical associations, are concerned about the loss of doctors ’autonomy and the rising costs associated with companies employing doctors, he said.
“Doctors need to maintain that independence and preserve that aspect of the patient-physician relationship,” Kennedy said.
Cost is a demonstrable concern. A recent pair of Health studies found that doctors employed by hospitals were more likely to order inappropriate magnetic resonance imaging tests and that the overall test volume increased after hospitals acquired medical practices.
More doctors have turned to corporate entities such as private equity groups and health insurers than in hospitals for the two-year period Avalere Health has studied. During this time, an additional 29,800 physicians became employees of these types of companies, 11,300 of whom made the transition after the onset of the COVID-19 pandemic. This represents a 31% increase in the percentage of doctors employed in the company during the years examined, Avalere Health found.
Hospitals collected an additional 18,600 physicians during the study period, leading to a 5% increase in the share of doctors employed by hospitals. Hospitals also acquired an additional 3,200 medical records at that time, an increase of 8%.
Hospitals have employed more doctors than other types of companies before the past two years, so there has been perhaps less room to grow, Kennedy said.
“We were at a fairly high level at the beginning of the study period, meaning that the hospitals had already acquired a lot of medical practices,” he said.
Hospitals have employed 283,000 physicians as of January 2019, or 46.9% of all U.S. physicians at present, and 301,600 as of January 2021, or 49.3% of all U.S. physicians, Avalere Health data show. . Growth became stronger after July 2020.
Meanwhile, corporate entities have employed 92,400 physicians as of January 2019, or 15% of all U.S. physicians, and the total has increased to 122,200, or 20%, as of January 2021.
The Avalere report did not reveal what proportion of these doctors were private equity employees versus employees by health insurers or other types of companies.
It could be because private equity firms tend to be less transparent than other firms. Private equity companies generally do not report to antitrust or financial regulators under current law, but instead fly largely under the public and regulatory radar, according to a recent report by researchers at the University of California, Berkeley and the American Antitrust Institute (AAI).
“Even where transactions are reportable, the complex structure of private equity funds obscures the competitive impact of these deals,” the report said. “As a result, private equity firms operate in healthcare without any effective supervision.”
Investments in private equity in healthcare have become larger over time. In 2010, these companies spent $ 41.5 billion on health care. In 2019, they invested $ 119.9 billion. Cumulatively, private equity firms have pumped about $ 750 billion into the sector between 2010 and 2019.
The private equity business model is “fundamentally incompatible” with healthy healthcare serving patients, argue UC Berkeley-AAI authors. Private equity is concerned with short-term income generation and consolidation, and its business tactics undermine competition and destabilize healthcare markets, the report says.
The American Medical Association also highlighted a growing employment of physicians in hospitals and other businesses when it said that, for the first time, most physicians have been working outside of physicians ’proprietary practices since last year. A May report on the group’s biennial survey of physicians, which included responses from 3,500 physicians, found that 49.1% of patient care physicians will work in proprietary medical practices by 2020.
COVID-19 has exacerbated a number of ongoing trends that are moving doctors away from independent practice, Kennedy said. Burnout is growing among health care workers of all genders, studies show. And not all private practices could survive the declines in revenues they suffered during the pandemic, he said.
“There have been efforts to support doctors and other health care providers financially during the pandemic,” he said. “But we all know that they haven’t fully replaced the revenue they lost.”