Editor’s note: These responses were edited lightly for clarity and length.
Question: With the decline of independent practices, where do you see most physicians transitioning — hospital employment, ASCs, private equity-backed groups or other settings? What factors are driving these shifts?
Bernard Boulanger, MD. CEO of Provider Enterprise and Executive Vice President of Tower Health (West Reading, Pa.): All indications are that the corporatization of the physician workforce will continue with physicians transitioning from independent practice to employment. Physicians must recognize the trade-offs that are built into such a transition of practice, such as greater financial stability versus autonomy. In recent years, the three largest drivers of physician practice acquisitions have been private equity, physician medical groups and health insurers, rather than hospitals and health systems. Private equity acquisitions can be quite attractive, particularly for the mature physician. The private equity appetite to acquire physician practices is strong despite increased regulatory scrutiny, which may or may not continue under the new federal administration. Hospitals and health systems are often unable to match the upfront “price” paid by private equity. Independent physicians seeking employment must carefully consider all aspects of the transition and seek advice.
Quentin Durward, MD. Neurosurgeon at the Center for Neurosciences, Orthopaedics & Spine (Dakota Dunes, S.D.): There is a sea-change I see occurring in neurosurgery practice as neurosurgeons move from physician-owned private practices to various forms of employment. The inability to cover the overhead in private practice and still make a living is the fundamental driver that has led to this migration of neurosurgeons.
Sean Gipson. CEO and ASC Division President of Remedy Surgery Centers (Hurston, Texas): The decline of independent practices in healthcare is largely influenced by several key factors that have reshaped the medical landscape. Most physicians are transitioning to employment models with hospitals, large healthcare systems, and group practices. On the other hand, some physicians that have worked in the previously mentioned areas are looking at an ASC scenario lessening the call burden, creating a better work-life balance for these physicians. I believe the main factors driving these shifts include:
Financial pressures: Independent practices often struggle with the increasing costs of running a business, such as administrative costs, insurance, technology, and compliance with regulations like HIPAA. Larger healthcare systems can absorb these costs more easily and provide financial stability to physicians.
Administrative burdens: The administrative load associated with insurance billing, electronic health records management and navigating complex regulations has become overwhelming for many independent practices. Larger systems often have teams and infrastructure to manage these responsibilities, allowing physicians to focus more on patient care.
Reimbursement and payment models: Changes in reimbursement from insurance companies, along with the shift towards value-based care, have made it more difficult for independent practices to maintain profitability. Large organizations are better equipped to negotiate reimbursement rates and manage risk under new payment models.
Work-life balance and job security: Employed positions in hospitals and large practices often provide more predictable hours, benefits (such as retirement, healthcare, and malpractice insurance), and job security. Many physicians are drawn to these aspects, especially considering the burnout that is prevalent in smaller, independent practices.
Technological advancements: The rising cost of adopting and maintaining advanced medical technologies can be prohibitive for independent practices. Larger health systems can more easily integrate new technologies and provide physicians with better tools for diagnosis and patient care.
In my opinion, I see the transition from independent practices to larger healthcare systems being driven by financial, administrative, and technological factors that make it more challenging for solo or small group practices to survive. The trend seems likely to continue, with more physicians opting for the stability and support of larger organizations.
Michael Gomez, MD. NICU Medical Director of Pediatrix Medical Group (Long Branch, N.J.): I see the following:
– Hospital employment will suit primary care and hospital-based specialists best
– ASCs and private equity will employ those who don’t need such intensive hospital resources as their care stands alone for specific populations
– More physicians will try small private practices using either a “boutique” or “concierge” model, but it is very specific to certain locales and patient needs
Physicians will need to adapt to a population-based commodity model for most care with some portion of physicians needed for more complex craft-based care in both mind-set and compensation expectations, though either can be hugely successful if built and marketed correctly. Cost will drive everything in health care as it consumes a larger portion of every US dollar. Managing 350 millions lives in a “system” will be a must for financial and political stability of the country.
Shadi Jarjous, MD. Chief of the Division of Hospital Medicine at Lehigh Valley Health Network (Allentown, Pa.): I think the physicians’ abandonment of independent practices will continue and probably accelerate over the next decade, despite its undesirable impact on autonomy. This is mainly due to the unsustainable increased demand on physicians regarding productivity, efficiency, and fiscal responsibility with less resources, which is driven by the continuous decline in payment and the increase in cost of overhead and supply chain. This disparity has a net negative impact on the work-life balance for physicians, a group that historically has always been asked to stretch their limits, to generate an adequate margin to sustain their business. This has proven to be unacceptable and intolerable to many physicians. The transition will continue to favor hospital and healthcare system employment models due to the perceived job security, the potential for better work-life balance and the reduced burden related to overhead and business management.
Ira Kornbluth, MD. President of Clearway Pain Solutions (Annapolis, Md.): There will be a growing trend toward hospital employment as hospitals are offering attractive packages and perceived stability. However, there are various specialties which appreciate better efficiencies and economics in a PE-backed setting. The potential for equity participation and lesser administrative burdens in an outpatient PE-backed setting is attractive to many specialists. Often, the ability to perform procedures in an ASC versus hospital setting and participation in ASC economics helps to create an attractive counterbalance to a hospital employment model.
Matt Mazurek, MD. Assistant Professor of Anesthesiology at Yale School of Medicine (New Haven, Conn.): Many physicians, especially younger and mid-career physicians, are seeking work-life balance. I know it sounds cliché to use the term, but there is no other substitute. Younger physicians want a life outside of work, and as employees, they will seek options. With declining reimbursements, systems need to produce more RVUs per physician to maintain income. Physicians and systems now have competing and opposed interests. For proceduralists, ASC employment offers a more predictable schedule with either no-call or light call. Private equity-backed groups do not have a great reputation with many physicians. After acquisition, many PE firms resell the groups and through these mergers and acquisitions, contracts change, workload expectations change and compensation changes. I tell my residents that if they decide to work for a PE-owned group, they need to have an exit strategy before they start. PE employment is less predictable and stable.
Younger physicians and mid-career physicians will choose the environment that is the best fit for their particular situation and need. Hospital employment offers a stable environment, and there can be opportunities for these physicians to ascend in leadership and other important roles. Lastly, some physicians are choosing to stay in an academic position or return to an academic environment. Staying in academia offers physicians numerous opportunities to teach, do research, and lead the hospitals and schools in a myriad number of ways. I accepted a position at Yale because I knew the environment would be rich with opportunities to contribute to medicine beyond patient care. As a former partner in private practice, employee of a PE owned physician group, and employee of a large hospital system, I bring a unique perspective to the table with the medical students and residents. I am biased, but I strongly encourage them to remain in an academic setting to continue to learn and grow. The opportunities and stability are unmatched, and I get to work alongside outstanding and talented colleagues with a similar value system.
These opinions are solely my opinion and not those of Yale School of Medicine or Yale New Haven Health.
Pradnya Mitroo, MD. President of Fresno (Calif.) Digestive Health: The physician employment landscape is undergoing significant changes, with a clear shift away from independent practice toward employed models. The traditional private practice model is becoming less sustainable due to rising administrative burdens, increasing overhead costs and decreasing reimbursements.
Some physicians feel that employed models with larger organizations, whether it be hospital or P- backed groups, offer more financial stability. Hospitals and PE backed groups offer guaranteed salaries and benefits reducing financial risks for physicians and they have greater bargaining power with insurance companies to get better reimbursement rates. However both of these models decrease physician autonomy.
I see that in the future physicians will form large physician-owned groups or hybrid models with PE or the hospital where they maintain some autonomy while benefiting from shared resources
This is what we have done in our practice, we have merged to form a large private GI practice and have a hybrid model in our two ASCs, one with the hospital and another as a PE backed joint venture.
Eric Tower. Healthcare Advisor at Blank Rome (Chicago): Until a couple years ago, a decent amount of the activity in the physician space might be considered “growth for growth’s sake.” If Medicare does require site-neutral payments, I wouldn’t see hospitals having the financial wherewithal to expand across the physician continuum. Also, my own opinion is that many doctors don’t want interference with their medical judgment — most will adapt their practices for data-driving quality findings, though — or to be viewed as a referral source for lucrative ancillary business or procedures. We may also see a bit of a reshuffling within the PE space as the reality of investment timeframes gets adjusted to reflect market realities. There is an increased focus on patient convenience and cost-effective, high-quality care. Personally, I think the most significant growth mid-term will be by entities with longer time horizons than we saw in this last wave of acquisitions, with a more focused model and possibly more data-driven analytics supporting quality.
Frank Vrionis, MD. Neurosurgeon at Baptist Health South Florida (Boca Raton): Already approximately 80% of physicians are currently employed by hospital and private-equity groups. This accelerating trend has been present for over 10 years and has been a Faustian bargain for physicians exchanging autonomy for financial security. As we enter an era of medical feudalism, the new lords will be the hospital administrators and private equity shareholders that consume 20% to 40% of healthcare dollars, an amount disproportionate to what any other country in the world is spending. Physicians in independent practices are facing daily insurance denials, increased expenses on labor, coding, billing and insurance while their income is getting squeezed from every angle. Some physicians will opt for ASC ownership or co-ownership to increase revenue, others will transition to hospital employment and others will opt for early retirement. Some physicians will curtail their practices to more lucrative procedures, drop certain insurance carriers or turn to concierge medicine in more affluent areas. All these factors affect medical care as financial considerations are frequently placed ahead of the patient’s needs.
