By Eliza Dailey

I get excited anytime there's new data published on physician employment. (I'm a researcher after all.) But as the physician market becomes more complex, it's increasingly difficult to collect meaningful data on physician ownership and employment. One of the biggest reasons for this is that the strict dichotomy between hospital-employed and physician-owned medical groups no longer exists—there's a lot of gray area that's hard to capture in a survey. However, a recent report from Physician Advocacy Institute (PAI) and Avalere Health includes an important new data point: ownership by other corporate entities.

We've been defining the independent physician landscape wrong—here's a new approach

Study details

Radio Advisory episode: An update on the physician landscape, one year later

Researchers analyzed data on physician employment and physician practice trends with an eye towards the impact of the Covid-19 pandemic. Researchers used data from the IQVIA OneKey database to determine physician employment and practice ownership over a three-year period between January 2019 and January 2022. They looked at three types of ownership: hospital-owned, corporate-owned (by health insurers, private equity firms, and more), and independently owned.

In total, 108,700 physicians became employees of hospitals or other corporate entities during the three-year study period, with 83,000 making the change after the Covid-19 pandemic began. You've probably already seen the headlines that almost three-fourths of physicians are now employed. This isn't all too surprising given the financial pressures that many small private practices faced during the pandemic.

However, digging into the report some more, I found that the more interesting and consequential findings related to practice aggregation. According to the report, hospitals and other corporate entities acquired 36,200 physician practices over the three-year study period. By January 2022, hospitals and corporate entities owned more than half of physician practices, up from 38.8% in January 2019. This was a 38% increase in hospital- or corporate-owned practices over three years, with a 9.4% increase in growth rate after the start of the pandemic.

The trend I'm watching: Rapid growth in non-hospital employment

My big takeaway: While hospitals and corporate entities own similar slices of the physician practice market today, corporate ownership is growing at a much faster clip. Just take a look at the graph below.

You can see that during this time, physician acquisitions were largely made by corporate entities, rather than hospitals.  As of January 2022, hospitals owned 26.4% of physician practices, up from 24.3% in January 2019. In comparison, corporate entities owned 27.2% of physician practices in January 2022, up from 14.6% in January 2019.

The who's who of physician group funders: 3 key relationships to watch

That translates to a 9% increase in the number of hospital-owned practices compared to an 86% increase in the number of practices owned by other corporate entities. That's almost 10x the growth rate.

These numbers reflect what my team has said for a while: Hospitals are not the driving force in physician aggregation today. Don't get me wrong, hospital employment isn't going away, but other corporate entities have already surpassed them in terms of sheer number of practices owned (68,500 vs. 66,700 respectively).

Keep an eye on non-hospital players moving forward

We expect these trends to continue as non-hospital aggregators increase their activity in the physician space. And we find that these organizations are often more attractive to today's independent physicians who seek partners that prioritize clinical and decision-making autonomy.

I'll be keeping an eye on these trends because they signal important shifts in power dynamics between hospital incumbents, physicians, and the other corporate entities trying to win their favor.