Physician practice ownership has been declining for decades. In 2022, just 44% of physicians owned their practices, compared with 76% in the early 1980s, according to a report from the American Medical Association.
Over the last 10 years, 77% of physicians have shifted away from independent practice to employed models, driving significant consolidation across healthcare.
This shift raises concerns for many industry leaders.
"In order for physicians to regain their power, they would need to be in control of their own practices once again," Evan Pollack, MD, an internist in West Chester, Pa., told Becker's
Here are five effects of physician practice sales:
Revenue-focused care
Private-equity acquisitions of physician groups increased by more than 600% from 2012 to 2021, according to analysis from Health Affairs. Often, when private equity or insurance companies purchase practices, the focus shifts to profits over patient care, Dr. Pollack said.
"The focus for these entities is revenue, and if a practice can’t be turned around to make more money, they might get cut loose." he said. "Physicians can end up losing their patients and find themselves in worse situations than before."
This pressure extends to health system-backed physician groups as well. A 2022 study in JAMA Health Forum found that health systems continue to pay physicians based on the volume of services they provide — volume-based compensation was the most common type of base pay for more than 80% of primary care physicians and for more than 90% of physician specialists.
"Often we see that the priority in healthcare is not patient care but profit," Dr. Pollack said. "Healthcare should be reimbursed based on the ability to care effectively for patients, not just on generating profits."
Loss of autonomy
Another significant consequence of practice sales is the erosion of physician autonomy.
"The main complaint from physicians is that by selling to an entity, they lose control of their practice," Dr. Pollack said. "There may be restrictions on how many patients they see per day, what they can order and how they arrange their schedules."
This sentiment is echoed by many. Fifty-six percent of employed physicians said what they like least about their job is less autonomy, according to the Medscape's "Employed Physicians Report 2023," a jump from 48% the previous year.
Additionally, around 61% of employed physicians said they have moderate or no autonomy to make referrals outside of their practice or ownership system, and 47% said they adjust patients' treatment options to reduce costs based on practice policies or incentives, according to a survey from NORC at the University of Chicago.
"Due to declining reimbursements and increasing regulatory and nonclinical burdens, more and more physicians decide to become employees of large organizations," Vladimir Sinkov, MD, founder and CEO of Sinkov Spine Center in Las Vegas told Becker's. "Once they become employees, a significant amount of clinical and career autonomy is lost."
Financial conditions don't necessarily improve
While selling a practice might seem financially appealing, some physicians don’t see the expected benefits.
"I don't see consolidation producing all of the promises that were made when it was pitched with some health systems having approached the leaders in a particular community promising access to various resources," Matt Mazurek, MD, assistant clinical professor of anesthesiology at St. Raphael's Campus of Yale New Haven (Conn.) Hospital told Becker's.
More than 20% of healthcare bankruptcies in 2023 were by PE-backed companies, according to a new report from the Private Equity Stakeholder Project.
"So when these systems come in and say that they'll … save the practice, some are even hostile takeovers," Dr. Mazurek said. "They say nothing's going to change for the first couple of years, and while that may be true, eventually the system will want to adopt what works in their best interest, not necessarily the physicians' best interest, and the resources begin getting taken away."
Rising costs
Consolidation can also lead to increased costs for patients. The vertical integration of physician groups and health systems is resulting in a push of procedures to HOPDs over ASCs, driving Medicare and patient out-of-pocket costs up, according to recent studies.
Facility fees are another cost concern. Hospitals are allowed to charge these fees when services are provided in outpatient settings, even if they are far from the hospital’s main campus. As health systems acquire more physician-owned practices, they not only charge hospital-level rates but also add these facility fees, further increasing patient costs.
Potential decline in care quality
Evidence on the impact of consolidation on the quality of care for patients is mixed, but several studies have found that increased market consolidation was associated with higher risk-adjusted, one-year mortality rates for heart attacks and small decreases in patient experience measures.
"Private practice will get more and more squeezed by declining reimbursements and increasing overhead and these factors may eventually lead to the disappearance of private practice," Quentin Durward, MD, neurosurgeon in Dakota Dunes, S.D., told Becker's. "If that happens there will be a catastrophic decline in the availability and quality of medical care in this country."