There’s been no slowdown in the trend toward physician employment, as new data shows that hospitals acquired 5,000 independent physician practices in a 12-month period.
Hospitals bought those practices between July 2015 and July 2016, according to data from the Physicians Advocacy Institute (PAI) and Avalere. Over the same period, the number of physicians employed by hospitals grew by 14,000, representing nearly 11% growth, the report said.
The data shows the trend toward hospital acquisition of practices continued nationwide, part of a larger movement toward consolidation in the healthcare system. But 2016 marked a tipping point for physician practices, as physician owners are no longer the majority in the U.S., according to a survey by the American Medical Association. Less than half of practicing physicians own their own practice.
The PAI report shows that 42% of physicians were employed by hospitals in July 2016, compared to just one in four physicians in July 2012. The analysis, conducted by Avalere Health, shows that over the four-year period from July 2012 to July 2016, the nationwide trend of physicians leaving private practice to become employed by hospitals and health systems intensified significantly.
RELATED: Tipping point—AMA study finds physician practice owners no longer the majority
“As payers and hospitals continue to drive consolidation across the healthcare system, it is becoming more and more difficult for a physician to maintain an independent practice,” Robert Seligson, PAI president and CEO of the North Carolina Medical Society, said in an announcement (PDF).
“Payment policies mandated by insurers and government heavily favor large health systems, creating a competitive advantage that stacks the deck against independent physicians, who are already struggling to survive under expensive, time-consuming administrative and regulatory burdens,” Seligson added.
Those same regulatory challenges and pressure to invest in healthcare technology are expected to continue to drive acquisitions of physician practices in 2018. “I don’t see any reason the trend is going to slow down,” Jeff B. Swearingen, a managing director of Edgemont Capital Partners, a healthcare-focused investment bank in New York, told FierceHealthcare in an interview earlier this year.
According to the PAI data, from mid-2012 to mid-2016, the percentage of hospital-employed physicians increased by more than 63%, with increases in nearly every six-month time period measured over those four years. All regions of the country saw an increase in hospital-owned practices at every measured time period, with a range of total increase from 83% to 205%.
The results of those acquisitions? Earlier research conducted by Avalere and released by PAI found that increased physician employment by hospitals caused Medicare costs for four healthcare services to rise $3.1 billion between 2012 and 2015. Medicare beneficiaries faced $411 million more in financial responsibility for these services than they would have if they were performed in independent physicians’ offices.
While healthcare consolidation is changing the industry, there is little evidence that it improves patient care or lowers healthcare costs, experts told lawmakers at a hearing last month.