A Case Of The Dwindles
In my experience, private practice has been in decline for decades, partially due to the growing importance of networks and the increasing costs of running a practice, which are more manageable at larger scale. Other factors, including the growing disconnect between the amount payors reimburse physicians for the work physicians do, how important physicians are to hospitals and the ever-growing administrative challenges of managing a private practice, have pushed more physicians into employment in the past ten years.
The American Medical Association reported that in 2020, for the first time, fewer than half of physicians worked in physician-owned practices. Research by Avalere Health and the Physicians Advocacy Institute (PAI) found that almost 75% of physicians are now employed by corporations, which can range from hospitals and networks to insurers and private-equity-owned groups.
While there are still more not-for-profit community hospitals than for-profit hospitals in the US, according to the American Hospital Association, there are also new players in the for-profit hospital and outpatient realms, including insurers and private equity. In recent years, the rate of conversion to employment has been fairly steady, transforming at a rate of about 1%-2% a year. But this trend accelerated during the pandemic with a 10% absolute increase in the proportion of physicians employed by hospitals, networks or corporate entities over the past two years.
A Revolving Door
These changes in employment have been accompanied by some unprecedented levels of physician movement. In dermatology, for example, workforce mobility research found at least half of physicians have changed where they work and who they work for in the past five years. The financial pressures created by the Covid-19 crisis further accelerated consolidation across healthcare.
While acquisitions may offer economies of scale and other benefits, they can also create serious concerns for both physicians and, in turn, patients. Because when doctors are unhappy at their jobs, patient care has been known to suffer, as well. To achieve better health outcomes and ensure the best patient experience possible, physicians need to be in a supportive work environment that allows them to perform at their best.
On the whole, are physicians happier being in physician-owned practice? Or are they better off being employed by a corporate entity? To determine the answer, it helps to look at the advantages and disadvantages of each scenario and the impact different environments have on the quality of work for physicians.
There Can Be Downsides
Consolidation usually is followed by rounds of cost-cutting, cost standardization and standardization of practices. When physicians become employees, they typically are more likely to be told how many patients they must see, the hours they will work, how long each visit will last and how the practice is managed. This decreased autonomy can decrease engagement and increase burnout. Indeed, physician satisfaction with some of these arrangements has proven to be poor: a McKinsey study showed that 26% of physicians who joined a practice or health system expressed interest in returning to self-employment.
Physicians in large owned groups are even less satisfied than those who work for independent groups, both small and large, and frustration has led some physicians and physicians in training to join unions, according to a recent Viewpoint article published in JAMA. (Stanford, the University of Southern California and the University of Vermont are recent examples). A Net Promoter Score (NPS) is a measure of an employee’s likelihood to recommend their employer; Bain Consulting recently reported that physicians in corporate-owned groups gave an NPS of only 6 points, compared to scores of 40 points from those at physician-led practices.
In considering whether to run an independent practice or take an employed position, one of the most important factors a physician should consider is the impact on patients, and the potential for physician burnout. Research shows stressed and unhappy doctors, especially those who feel that they don’t have the right resources or support to do their job well, can affect the quality of care and lead to changes in patient-doctor interactions. Moreover, when physicians leave practices, their departures disrupt both access and continuity for patients. And of course, if a hospital is closed as part of a consolidation of care effort, there may be nowhere for them to work at all.
A New (Healthcare) World Order
The pressures on the healthcare system in the past few years have been profound and accelerated a pre-existing trend in consolidation. Consolidation isn’t all bad—and certainly has affected other professional industries, from law to accounting. That said, it’s important for stakeholders across the industry, including patients, to be aware that consolidation can fundamentally change how doctors work and think about their work. And all of this has a trickle-down effect on patient care.
As one newspaper report revealed, in some cases the drive for profits appears to have crossed the line into an area that is inconsistent with the mission of providing equitable care to people who need it. So what can be done to avoid heading down an undesirable path while protecting access to care?
Experts agree physician leadership plays a critical role in mitigating that risk. Hospitals and private equity firms that own physician groups and physician practices need to engage physicians and give them a say in determining the way practices operate. Doing so can offset the negatives of consolidation by strengthening the patient-physician compact—and shows their employed physicians that they are dedicated to protecting physicians’ professional well-being and that of the patients for whom they care.
