After years of steady migration into hospital employment, some physicians are beginning to reconsider whether the security of a paycheck is worth the trade-offs.
For Joshua Siegel, MD, director of orthopaedic sports medicine at Exeter, N.H.-based Access Sports Medicine and Orthopaedics, the shift feels familiar. He sees physician employment as a pendulum that has swung hard in both directions, and he believes it’s starting to move back toward independence again.
“When I first started, there was a huge preponderance of physicians getting out of fellowships, at least in orthopedics, and not wanting to join a hospital, rather going into an independent group so they could provide this large swath of services that might be prohibited or limited at an institution,” he said.
Over time, however, he watched the market change. The business side of medicine got more complex as the difficulty of staying independent mounted and the gap between what an employed physician could earn and what an independent physician could take home began to shrink.
Between 2019 and 2023, physician employment by hospitals, health systems or other corporate entities jumped from 62% to 78%, according to a December 2025 report from the Progressive Policy Institute.
“People didn’t want the headaches of working all the time and building a business and creating a practice when they could just walk into a shift, an hourly-type position, a salary-based position in a hospital and be busy right away,” he said. “That was the initial move toward hospital-based employment. And the hospitals could also initially — and often still can — pay a little bit more for someone coming out of training.”
But after the initial appeal of stability and higher starting compensation, Dr. Siegel said the downsides of employment can become more visible.
He pointed to the bureaucracy physicians have to navigate once they’re inside a larger system, and the reality that renegotiating core elements of a job (hours, workload, productivity expectations, compensation) can be more difficult than physicians anticipate when they sign.
According to a survey from consulting firm Bain & Co., average satisfaction for physician-led organizations ranges from roughly 70% to 90%, compared to 50% to 75% in health system-led practices. Additionally, 78% of physicians in physician-led practices report that their organizations have effective processes and workflows, compared to 59% in health-system-led ones.
Additionally, physicians lose their goodwill, especially in mid-sized communities, when they leave the hospital, while the hospital generally retains the goodwill that the physician built up.
“What you’re seeing now is a lot of doctors coming out and getting burned,” he said. “They’re working for two, three years. They have a hard time renegotiating. A lot of what was promised isn’t materializing. Some of their salaries — they have to either make them, or they’re responsible to, in some way, pay them back. So this great deal all of a sudden turns into these handcuffs. And the docs leave.”
Nearly 25% of physicians in health system-led organizations are contemplating a change in employers, compared to just 14% in physician-led practices, according to the Bain survey. Notably, of those considering a switch, 37% are looking to move to physician-owned settings.
According to Dr. Siegel, those experiences travel through professional networks, residencies, fellowships and training programs. He thinks younger physicians are increasingly looking at employment as a first stop, not a final destination, especially if they believe they’ll have more earning potential once they have a few years of experience.
Still, Dr. Siegel believes the most consequential driver will be site-of-service payment changes. If payers continue to narrow the gap between what’s reimbursed in hospital outpatient departments and what’s paid in physician offices or ASCs, he thinks the economics of where care happens will shift.
“You’re starting to see a narrowing of those payment differentials from insurance companies,” he said, “where it doesn’t matter where the treatment was: office-based, surgical center-based, hospital outpatient department-based, or inpatient.”
Notably, CMS’ 2026 Hospital Outpatient Prospective Payment System rule moves Medicare further toward site-neutral payment, as part of an effort to narrow long-standing payment gaps between hospital outpatient departments and ASCs. According to a Health Affairs analysis, the payment rule not only updates reimbursement for outpatient and surgical care but also explicitly seeks feedback on the development of future site-neutral payment policies.
If that narrowing accelerates, Dr. Siegel expects either hospitals lose the financial advantage that has helped them consolidate outpatient volume, or independent practices gain enough margin stability to invest and expand.
“There’s no way hospital rates will go down to what independent rates are, and there’s no way they’re going to jack up independent rates and not try to save money on the hospitals,” he said. “I have a feeling this big movement to the middle is going to benefit smaller independent practices, because they’re already profitable — making sometimes half of what hospitals are getting for the same services.”
He also framed the moment as part of broader disruption in healthcare, one he hopes results in physicians regaining more influence over how they practice.
“I think all the negativity in healthcare we’re seeing is indicative of a lot of change occurring in medicine, and I’m really hoping it’s for the better.There’s a lot of value in all this stuff that people are very afraid of, and to me, I’m pretty optimistic about where everything’s gone,” he said. ” I’m hoping the pendulum continues to move back to the realm where physicians have a little more control over their own practices, and we’re no longer just commodities that can be traded out like any other non-professional profession.”
