For The First Time, Physicians Are Less Likely To Operate Their Own Practices

Employed physicians for the first time outnumber those with their own practices, a new report says



Physicians’ ownership of their own practices has been in steady decline for decades.

The doctor is in — and now more likely to work for someone other than herself.

The share of patient-care physicians working as employees in 2018 (47.4%) for the first time outstripped the share of those with an ownership stake in their practice (45.9%), a newly updated benchmark survey from the American Medical Association found.

Physicians’ ownership of their own practices had been in steady decline for decades, according to previous AMA data. The share was 75.8% in 1983 and 57.7% in 1994. By 2012, the share of physicians who were owners had dwindled to 53.2%.

The share of patient-care physicians working as employees in 2018 outstripped the share of those with an ownership stake in their practice.
Meanwhile, the share of physicians who worked as direct hospital employees or contracted directly with a hospital rose from 5.6% in 2012 to 8% in 2018. The proportion of physicians working in solo practice dropped from 18.4% in 2012 to 14.8% in 2018.

Physicians who owned their practices skewed more male and older, the survey found. One theory for the age difference: They’re mainly comprised of traditional primary-care physicians, who are also on the decline among younger doctors. The share of physicians who were owners were more likely to be men (52%) than women (34%) and over 55 (54%) than under 40 (25.5%).

Why the decline in independent physicians?

Some doctors say independent physicians tend to work longer hours to manage their practice and get paid the same (or even less) for the same amount of work; plus, their income will rise and fall, depending on demand. By having an employer, they can also avail of better retirement and health-insurance benefits.


Some research has suggested that working for a hospital can be even more taxing than working in a private practice. ‘Physicians working in corporate or hospital-owned organizations feel the impacts of burnout more keenly than peers working independently or within physician-owned practices,” according to a 2018 study by Geneia, an analytics company.

What effect will this have on their patient care?

Those patients who seek medical attention from employed positions may not receive the kind of care they expect, if they’re more likely to suffer from work-related stress. Some 57% of independent physicians report lower empathy for patients as the result of physician burnout, compared to 72% of corporate/hospital-owned physicians, the report found.

“Physician burnout is an unfortunate reality in the health-care industry, as doctors and clinicians cope with time-consuming technologies and complex electronic health records that infringe on time spent with patients. Luckily, there are innovations that can help circumvent the issue,” the Geneia researchers said.

Will there be any financial impact on patients?

“When hospitals acquire physicians, referral patterns change,” according to a recent report in Modern Healthcare. Employed physicians are more likely to refer patients to higher-cost facilities within their employer’s network. “Data show that hospital-employed physicians perform more services than their independent counterparts at higher costs,” the report added.

In some cases, drug discounts are only given to some hospitals, so independent physicians who are unable to shoulder the cost of prescribing those medicines may be forced to send low-income patients to higher-cost treatments at other hospitals, it added. Oher research has shown an increase in Medicare costs along with the rise in hospital-employed physicians.

Carol Kane, the AMA’s director of economic and health policy research and author of the most recent report on the decline in physicians, urged caution in “assuming current trends will continue indefinitely,” given the lengthy time-span over which the change in employment status unfolded.

“One motivation given for the shifts toward larger practices (which typically have a higher employee to owner ratio) during the 1980s and 1990s was the desire to slow health-care spending growth,” Kane wrote. It will also help improve efficiency, she said.

Physicians, meanwhile, who owned their practices skewed more male and older, Kane’s study found. The share of physicians who were owners totaled 34% among women and 52% among men, and 25.5% among the under-40 crowd versus 54.3% of those aged 55 and up.

Women physicians tended to work in specialties that had higher-than-average shares of employed physicians (like pediatrics). They also tended to be younger than male physicians and entered the field relatively recently, in a time “when employment has become increasingly the norm.”

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