Report: More than three-fourths of doctors are employed by corporations

More than three-fourths of all U.S. doctors are now employed by hospitals, health insurers, private equity or other corporate entities, as rampant consolidation continues to shrink the number of independent physicians, according to new data. 

Between 2019 and 2024, more than 44,000 medical practices were acquired, according to the report published Thursday by Avalere Health, commissioned by the Physicians Advocacy Institute. As a result, nearly 60% of medical practices are now owned by corporations. 

As of January 2024, physician practice ownership by corporations — including health insurers, pharmacy chains and PE firms — exceeded ownership by hospitals and health systems for the first time, 30.1% to 28.4%. However, hospitals employ more than half of all U.S. physicians, while other corporations employ a little over one-fifth. 

Corporations have been gobbling up physician practices for years, but the trend accelerated during the COVID-19 pandemic as independent physicians — many of which operate on razor-thin margins — faced new hurdles to stay in business. 

Most physicians who sell their practices do so to better negotiate higher payment rates with health insurers, and to get help managing insurers’ administrative and regulatory requirements, according to a survey published last year by the American Medical Association. Doctors said the need to improve access to expensive resources also drove decisions to sell. 

As for buyers, financial incentives abound for nabbing physician offices. For hospitals, doctor’s offices bring in more outpatient revenue, while entrenching referral streams to inpatient facilities. For health insurers, owning networks of doctor’s offices means they can direct their members to owned assets for medical care and essentially pay themselves for providing the service. For private equity firms, many pursue a roll-up strategy, linking together purchased facilities to boost purchasing power and share resources with the goal of increasing profits. 

Health insurers, PE firms and other non-hospital entities have been particularly active of late, according to the new data from Avalere and PAI. In the past two years, the report found hospital consolidation moderated somewhat, with a 7.3% increase in the percentage of hospital-owned practices. Meanwhile, corporation buys accelerated, with an 11% increase in the percentage of corporate-owned practices. 

The end result is that 77.6% of U.S. physicians were employed by hospitals, payers and other corporations as of January, the report found. 

Calls have been mounting for regulators to take a more active stance reviewing health care deals as the number of independent doctor’s offices continues to shrink, especially given research that the consolidation leads to higher health care costs for patients without a corresponding increase in care quality. 

Consolidation also leads to lower physician pay; research suggests. 

“Corporate entities are assuming control of physician practices and changing the face of medicine in the United States with little to no scrutiny from regulators,” Kelly Kenney, chief executive officer of PAI, said in a statement on the report. 

“Physicians have an ethical responsibility to their patients’ health. By contrast, corporate entities have a fiduciary responsibility to their shareholders and are motivated to put profits first. In some arrangements, these interests can conflict with providing the best medical care to patients,” Kenney continued.