The independent healthcare market is shrinking as consolidation climbs, reimbursements fall and inflation remains high. Here are five notes on the state of physician independence:
1. Hospital closures are on the rise, which leaves more physicians in a state of uncertainty in an already turbulent industry.
"Physicians are affected in multiple ways by these shuttering services. First, they have to find alternative facilities and venues to address their patients' needs, which in this day of tight competition and draconian restrictive covenants is not an easy task," Shakeel Ahmed, MD, gastroenterologist and CEO of Atlas Surgery Group in St. Louis, told Becker's. "In addition, closure of services inevitably leads to either a job loss or curtailment of revenues or benefits for providers. This job loss not only affects the physicians in question, but then leads to an increased burden on those left standing to shoulder the load left behind."
2. Corporate entities are acquiring physicians — quickly.
Research by the Physicians Advocacy Institute and Avalere Health found that as of 2023, 58.5% of practices are owned by health systems or corporations. Corporations own slightly more than health systems, at 30%. This trend has been growing over the past decade. from 2012 to 2022, the share of physicians who were self-employed dropped by 9%. At the same time, the percentage of employed physicians grew from just under 42% to almost 50%, according to a 2023 American Medical Association news release.
3. Increasingly lower reimbursement rates are driving physicians toward employed settings.
According to a 2023 American Medical Association news release, for 4 out of 5 physicians, the need for better leverage in payer negotiations played a very important or important reason in the sale of their private practice to a hospital or health system.
4. The growing influence of private equity is also changing where and how physicians work.
"The healthcare landscape is witnessing a significant shift with the growing influence of private equity in private practice. Private equity firms have been increasingly investing in physician practices, driven by the potential for profit and market consolidation. While this trend can offer financial resources and operational support to struggling practices, it also poses several threats to physicians and patient care," Ernest Braxton, MD, a spine and neurological surgery specialist at Vail-Summit Orthopaedics and Neurosurgery in Vail, Colo., told Becker's
"One major concern is the prioritization of profit over patient care. Private equity investors typically aim to maximize returns on their investments, which can sometimes lead to cost-cutting measures, increased patient volumes and pressure to prioritize revenue-generating services over comprehensive care. This can compromise the quality of care provided to patients and strain physician-patient relationships."
5. For physicians who join hospital systems, a lack of autonomy is a major concern.
"In the past, a hospital system could be looked upon like a pyramid, with a wide base and narrow top. The base represented all those carrying the weight of the system, including nurses and physicians and ancillary staff. The top of the pyramid could be considered to be the CEO, CMO, CFO and a few directors of services," Kenneth Candido, MD, CEO and president of Chicago Anesthesia Associates, told Becker's.
"Now that pyramid is looking more and more like it is inverted, with the narrow peak being on the ground, carrying all the weight, and being represented by the 'worker bees' like physicians and nurses, with the mid- and upper-level executives ever expanding towards the top, receiving a greater share of revenue while carrying almost no burden and no risk. At one point, that upside-down pyramid is going to topple over. It is inevitable as a simple law of physics and mathematics. American healthcare is the upside-down pyramid, and it is only a matter of time before it will need to be put right-side up again."