Physician Practice Acquisitions By Hospitals, Corporations Grew
More physicians left independent practices and became employed by hospitals and corporate entities as physician practice acquisitions increased during the pandemic.
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- Physician practice acquisitions increased during the COVID-19 pandemic, resulting in nearly three-quarters of physicians being employed by hospitals, health systems, or other corporate entities, according to data from Avalere.
Avalere gathered physician data from the IQVIA OneKey database between January 2019 and January 2022. The information was presented in a study sponsored by the Physicians Advocacy Institute (PAI).
Researchers found that the number of acquisitions of physician practices and employed physicians grew in 2021 as the pandemic continued.
Nationally, hospitals and other corporations acquired 36,200 additional physician practices between 2019 and 2021, leading to a 38 percent increase in the percentage of corporate-owned practices.
More than 108,000 physicians became employees of hospitals or other corporate entities throughout the study period, representing a 19 percent increase in the percentage of employed physicians since. More than 75 percent of those employees (83,000) made the shift after the start of the pandemic.
The employee growth was split almost evenly between hospitals and other corporate entities. Just over 58,000 of those newly employed physicians became hospital employees, resulting in an 11 percent increase in hospital-employed physicians. The majority of the shift occurred during the pandemic (51,000 employees), signaling a 9.7 percent hike following COVID-19.
Hospitals acquired 4,800 physician practices over the three years, increasing the number of hospital-owned practices by nine percent, the report found.
Meanwhile, 32,000 physicians became employed by corporate entities during the pandemic, with a total of 50,500 throughout the study period. This represents a 5.5 percent increase in the number of physicians employed by corporations during the pandemic and a 43 percent boost over the last three years.
The number of corporate-owned physician practices increased by 86 percent, as corporate entities acquired 31,300 practices between 2019 and 2021.
The growing rate of physician practice acquisitions led to 74 percent of physicians working for a hospital or a corporate entity as of January 2022, the report revealed. The percentage of hospital or corporate-owned physicians grew by 19 percent from 62.2 percent in January 2019.
“COVID-19 drove physicians to leave private practice for employment at an even more rapid pace than we’ve seen in recent years, and these trends continued to accelerate in 2021,” Kelly Kenney, chief executive officer of PAI, said in a press release RevCycleIntelligence received by email.
“This study underscores the fact that physicians across the nation are facing severe burnout and strain. The pressures of the pandemic forced many independent physicians to make difficult decisions to sell their practices to hospitals, health insurers, or other corporate entities.”
By the end of 2021, 53 percent of physicians were employed by hospitals, while other corporate entities employed nearly 23 percent of physicians, the report noted.
The report findings highlight the ongoing trend of physicians leaving independent private practices for employment under hospitals and other corporate entities. Physician practice acquisitions by hospitals and corporations were the driving factor behind this shift.
The COVID-19 pandemic accelerated this trend and contributed to the ongoing shift toward consolidation within the healthcare industry.
However, physician practice acquisitions by private equity firms were in full swing even before the onset of the pandemic. Research from February 2020 revealed that private equity firms acquired more than 350 physician practices between 2013 and 2016.
The industry remains divided on the benefits of healthcare mergers and acquisitions, perhaps due to the varying outcomes the transactions produce.
A Health Affairs study from April 2022 found that hospitals saw higher operating margins, lower costs per adjusted discharges, and increased inpatient utilization following private equity acquisitions.
But 2019 data revealed that physician-hospital integration led to higher healthcare costs for patients with little change in care quality.
