The Changing Landscape of Private Practice Ownership

For decades hospitals have been buying medical practices in an effort to grow market share and add highly specialized care services.

In its 2016 Physician Practice Benchmark Survey, the American Medical Association (AMA) reported that for the first time ever, at 47%, less than half of practicing physicians owned their own practices. That’s down from 53% in 2012. Ownership varies by age, gender and specialty. The research indicates younger doctors (less than 40 years old) are more than 3x as likely as older physicians to be hospital employed, and only 37% of women have ownership stake in their practice versus 52% of men. At 59%, surgical sub-specialties had the highest percentage of physician owners, whereas only 28% of emergency medicine doctors were owners.

For some private practices an acquisition is ideal due to declining reimbursements and the operational burdens of increased administrative requirements and compliance duties. Some would argue running a private practice is becoming more complex and less financially sound. However, despite changes to the healthcare system, the majority of physicians maintain the shift toward the employed model is not a positive trend as private practices better control quality and consistency of patient care with lower physician turnover and more clinical autonomy. To maintain independence, physicians say innovation – such as increased use of MIS techniques, improved marketing strategies and adoption of new payment methods – is key to survival.

While the physician practice landscape will continue to change and hospital acquisitions of private practices will likely continue, the AMA’s research suggests that the pace of these acquisitions is slowing. The percentage of hospital-employed physicians or those who worked for practices at least partially owned by hospitals increased from 2012 to 2014. However, from 2014 to 2016, no increase was observed in the aggregate of these two groups.

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