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Private practice is becoming a thing of the past.
In the past decade, the percentage of physicians working in private practices fell 13 percentage points, to 46.7%, according to an analysis of data from 2012–2022 from the American Medical Association (AMA) released July 12.
“Economic, administrative, and regulatory burdens” have caused many physicians to shift away from traditional medical practice business models and sell their practices to hospitals or health systems, the AMA concluded.
“The AMA analysis shows that the shift away from independent practices is emblematic of the fiscal uncertainty and economic stress many physicians face due to statutory payment cuts in Medicare, rising practice costs, and intrusive administrative burdens,” AMA President Jesse Ehrenfeld said in a statement.
Four out of five physicians surveyed said the need for more favorable payment rates from payers was a top reason they decided to sell their private practice to a hospital or health system. Ehrenfeld said Medicare has “failed to keep up with the costs of running a medical practice.”
The Covid-19 pandemic also exacerbated financial pressures on primary care practices, forcing many to switch business models to stay viable.
As it’s become harder to run a private practice, the percentage of “physicians working in hospitals as direct employees or contractors increased from 5.6% to 9.6% between 2012 and 2022.”
Other stats from AMA’s analysis:
- In the last decade, the percentage of physicians working in practices that are at least partially owned by a hospital or health system rose to 31.3% from 23.4% and the percentage of self-employed physicians fell to 44% from 53.2%.
- “In 2022, 4.5% of physicians worked in a practice owned by a private equity group.”
- Younger physicians are less likely to be self-employed. In the past 10 years, the percentage of physicians under age 45 who were self-employed fell from 44.3% to 31.7%.
Methodology: The data for this analysis came from the AMA’s biennial Physician Practice Benchmark Survey, a nationally representative survey of physicians who are post-residency, not employed by the federal government, and provide at least 20 hours of patient care per week. The AMA surveyed 3,500 physicians from September to November 2022, with a response rate of 31%, and did not report a margin of error.