By the end of 2020, almost 70 percent of physicians reported being employed, and there was a steep acceleration of physicians joining hospitals or corporate entities in the last six months of the year.
Avalere released a report June 29 outlining trends in physician employment from January 2019 to January 2021. The big findings:
1. The rate of employed physicians climbed steadily from January 2019 to January 2020, from 62.2 percent to 64.5 percent. By July 2020, 65.8 percent were employed, and in the last six months of the year employment jumped nearly 4 percentage points to 69.3 percent.
2. In 2020, 48,400 physicians left independent practice for employment by hospitals, health systems or corporate entities. Hospitals and corporate entities acquired 20,900 physician practices from 2019 to the end of 2020.
3. Physician employment by hospitals and health systems has been relatively flat from January 2019, when 46.9 percent of physicians were employed, to July 2020, when 47.6 percent of physicians were employed. From July to January 2021, 11,400 physicians left private practice for hospital employment, which reached 49.3 percent.
4. Corporate entities, including insurers and private equity firms, increased employment by 3 percentage points last year. In January 2020, corporate entities employed 16.9 percent of physicians. A year later, 20 percent of physicians were employed by corporate entities, with 11,300 physicians making the change in the last six months of the year.
Independent physicians and ASCs see the trend toward consolidation as a threat to their business model. When referring physicians join larger networks, they often are unable to refer outside of those networks. Likewise, specialists employed by hospitals are often unable to take cases to independent ASCs.
"The most significant external threat is marketplace competition and/or domination by the hospital systems or its affiliates, mainly by physician employment and through hospital-owned ASCs or joint ventures," Raghu Reddy, executive administrator of SurgCenter of Western Maryland in Cumberland, told Becker's. "The hospital JVs are on the rise in many states, especially when physicians are selling their practices to the hospitals or joining supergroups that may affiliate with a hospital to minimize the politics."