Is the prognosis for private practice poor?
Key Takeaways
Fewer than half of physicians are in private practice, a downward trend likely hastened by the pandemic.
Hospitals and corporate entities are aggressively consolidating healthcare offerings by gobbling up private practices.
Despite a decline in the number of physicians choosing private practice, many still prefer the autonomy, compensation, and work-life balance of working for themselves.
Fewer physicians are hanging their own shingle, according to recent survey data out of the AMA.
Private practices have been under duress for years, but COVID-19 likely worsened the situation, according to AMA research.[] The pandemic shrank patient revenues and increased medical supply expenditures, and shone a light on the extensive regulatory pressures physicians face.
The numbers
In 2020, 50% of physicians were working in private practices, 44% owned a stake in their practice, and 5.8% were independent contractors.
By comparison, 41.8% and 47.4% of physicians were employed by institutions in 2012 and 2018, respectively. Of note, 2020 was the first year in which fewer than half of physicians were in private practice.[]
“Although the 2020 data are largely consistent with observed trends since 2012, the magnitude of the changes since 2018 suggest that the shifts toward larger practices and away from physician-owned practices have accelerated,” the AMA stated. “The Benchmark Survey data also make apparent the wide range of practices in which physicians work. No single practice type, ownership structure, or size can or should be considered the typical physician practice.”
A shift also occurred in physician practice size, according to the survey results. This trend’s been ongoing for years but accelerated between 2018 and 2020, with the number of practices with 50 doctors or more rising from 14.7% in 2018 to 17.2% in 2020.
The AMA survey results are echoed by other research such as an ongoing review by Avalere Health and Physicians Advocacy Institute, which has compiled data between 2019 and 2021. Here are some highlights from its findings:[]
About 75% of physicians are employed by hospitals, health systems, and corporate entities (eg, private equity firms, insurers).
In 2021, the number of employed (not in private practice) physicians grew from 69.3% to 73.9%.
More than 100,000 physicians shifted to employed status since January 2018, with 76% making the jump after the pandemic began.
Hospitals and corporate entities own 52.1% of physician practices, with hospitals owning 26.4% and corporate entities owning 27.2%.
Hospital and health system acquisitions of private practices were steady at 9% growth between 2019 and 2021.
An 86% growth in medical practice acquisition during the 3-year study period occurred with corporate entities.
Every region of the country witnessed increased hospital and corporate ownership of private practices, with the Midwest having the highest share of physicians employed by hospital/healthcare systems and the South experiencing the highest jump in corporate ownership.
Overall, the study results demonstrate how hospitals and corporate entities aggressively perpetuate healthcare consolidation through the acquisition of physician practices.[]
Pros and cons of private practice
A multisource Q&A published in Becker’s ASC Review examined the flip side of this issue and asked 21 doctors why physicians pursue private practice over hospital employment.[]
As for the pros of private practice, physicians mentioned increased compensation, more autonomy, better mentoring opportunities, additional revenue streams (eg, ambulatory surgery centers, imaging centers, real estate), scheduling freedom, and flexibility in adapting to healthcare changes.
One physician mentioned that a con of private practice was the lack of teaching opportunities—even though many private practices align with universities to gain academic cachet. Another physician noted that to do private practice, one must enjoy the business of medicine and have an enterprising spirit.
Private practice can be a tough road, said one orthopedic surgeon, due to increasing costs and the complexities of managing a business.
What this means for you
Ultimately, the decision whether to go into private practice—and work for yourself or a small group of co-owners—is personal. Despite decreasing numbers of physicians pursuing private practice, plenty still do it. As with anything, there are benefits and drawbacks to private practice. One enduring allure, however, is the prospect of being your own boss, which still appeals to about half of physicians.