Depending on geographic location and specialty, the independent physician market is rising or sinking fast.
The American Medical Associationreleased a survey in early May showing the overall number of physicians in wholly physician-owned practices dipped to 49 percent last year, a 5 percentage point drop from 2018. The pandemic accelerated an overall trend to physicians becoming employees as many practices were forced to temporarily close or limit hours last spring.
Younger physicians are also more likely to enter employment contracts than in previous generations. The report showed just one-third of physicians under 40 were in private practice last year. ASC owners and operators across the U.S. are seeing these trends play out.
"In North Carolina, the majority of primary care physicians are hospital-affiliated or [employed], part of ACOs or closed referral networks," said Brian Bizub, CEO of Raleigh (N.C.) Orthopaedic Clinic, a privately owned, midsized physician group with two ASCs. "The payers work closely with the hospital systems to have in-network plans, which adds to the complexity of seeking a position in a private practice. The current state of healthcare reform is creating uncertainties and the shift in physician preferences is leaning toward hospital employment over private practice."
For ASCs, the migration of physicians from private practice could be fatal. Centers depend on case volume from independent physicians, since hospital employed physicians are unable to take cases outside their network. ASCs in consolidating markets are finding creative ways to align with health systems, or selling their centers outright.
Raleigh Orthopaedic Clinic struck a deal with a local hospital system to become part of the hospital's referral network.
"Raleigh Orthopaedic Clinic's position is greatly different than other highly competitive markets, so our 100-plus-year-old organization's reputation and physicians' willingness to work with a hospital system continues to allow for the organization to stay independent and profitable as a midsized, physician-owned practice despite the challenges that every private practice faces," Mr. Bizub said.
Raleigh is among the fastest-growing large metropolitan areas, and so far in 2021 has reported about 70 people moving to the city daily. With 180 miles of green space trails and other outdoor activities, the city attracts active people and needs more orthopedic services.
Girard Bullaro, administrator of Wellness Ambulatory Surgery Center in McKinney, Texas, said his county 20 miles north of Dallas is growing. Physician recruitment is difficult, but for a different reason than in Raleigh, he said.
"Recruiting more surgeons and specialties to our ASC has been an uphill battle," he said. "It has been difficult because it's a very saturated market with ASCs and large hospital systems, like Baylor and HCA Healthcare. Our strategy for growth is to look to bring physicians in from other parts of the country to join our partners' practices and to offer office space to large groups who want to expand their practices from east and west Texas."
He anticipates demand for specialty care will increase as large companies and people from California, Washington and Oregon move to Texas. He aims to build a new office complex that includes primary care physicians and recruit new members who can use the group's ASC.
Nashville, Tenn., also grew during the pandemic, at what Darren Harris, CEO of Bone and Joint Institute of Franklin, describes as a "staggering pace." He said the recession and pandemic affected patient volume, but also forced the institute to shift to telemedicine, contactless scheduling and performing more procedures in the ASC.
"The pandemic did slow some growth, and from what I have seen, new physician recruitment has slowed, but mergers and acquisitions have increased," he said. "I have seen a shift to more employed models for physicians than moving into private practice. The uncertainty of the recent pandemic has more physicians lean to more secure staffing models."
In Stroudsburg, Pa., nearly all the partners in Pocono Ambulatory Surgery Center are independent, except two employed by a hospital. One of those physicians became employed two years ago, and the other is retiring.
The local hospital contracts are affecting the ASC's recruitment efforts in a unique way.
"The newer physicians being recruited to come to our area at one of the hospitals are only being offered a one-year rolling contract for hospital employment, so the security of having that job after one year is not known," said Linda Bravyak, RN, CEO of Pocono ASC. "It may not be worth the risk of uprooting and bringing their whole family with no guarantee of continued employment."
She has seen physicians wanting to stay independent as long as possible, but when the referral base dries up, many may feel they have no choice beyond hospital employment.
"In the past five years since I started, we have lost three physicians to employment at a competing hospital," Ms. Bravyak said.
David Bittner, CEO of OAA Orthopaedic Specialists in Allentown, Pa., also has witnessed increased challenges for physicians to remain independent, especially during the pandemic. He said there are two major health systems in the market with another likely to enter within months.
"While the systems are employing just about every independent provider they can to enclose their care networks, the few independent holdouts remain focused on patient-centered care and value as drivers for success," he said.
Mr. Bittner said OAA plans to remain independent and grow as a quality care provider that engages patients during their care journey.
"We believe that the independent market can work together while maintaining their principles in self-governance to provide patients with world-class care with the best outcomes and at a fraction of the cost," he said. "It is a hard battle against the system offerings, but one we feel strongly serves as a patient benefit, and so we are encouraging independents of all services to join us."