Report details  

Every other year, PAI and Avalere Health release a report on physician practice acquisition. This report adds data from 2022 and 2023 to previous research looking at practice ownership by both health systems and corporate entities, such as health plans, private equity, and retailers.

We're now at a point where there are three distinct types of medical groups: health system-owned, corporate-owned, and physician shareholder-owned. Understanding not just what percentage of physicians are employed — but also who employs them — is critical to understanding the current landscape.

For the report, PAI and Avalere reviewed data from IQVIA OneKey, a repository that contains information on physicians and practices' ownership.

In total, 503,113 physicians were employed, and 357,471 practices were owned by hospitals or corporate entities as of Jan. 1, 2024. The report found that 77.6% of all physicians are employees of a hospital, health system, or other corporate entity, and that 58.5% of physician practices are owned by hospitals, health systems, or other corporate entities.

All regions of the United States saw continued growth in physician employment and practice acquisitions between 2019 and 2023. This was especially accelerated in the last half of 2020 and throughout 2021, the report found.

The 3 biggest findings from this year's report

We dug into the data to understand the most important findings and changes since the last report two years ago.

1. Following a post-COVID spike, physician employment and practice acquisitions slow. 

In PAI and Avalere's last report covering January 2019 to January 2022, we saw a 19% increase in employed physicians and 38% increase in health system- or corporate-owned practices. Two years later, both are still growing, but more slowly. From 2022 to 2023, we saw just a 5.1% increase in employed physicians and 9.2% increase in health system- or corporate-owned practices.

During and after the COVID-19 pandemic, there were many factors that made medical groups amenable to acquisition and employment: financial instability, fragmented practices, needed technology investments, and more. These factors haven't gone away, but they have eased. There's also less running room today for corporate and health system owners who've already consolidated practices in many geographies.

Our take: Physician employment and practice ownership will level out. We'll continue to see acquisitions, but they will be more selective and strategic in contrast to the high volume of mergers and acquisitions immediately following the COVID-19 pandemic. Independent medical groups must continue to grow to compete in this landscape and must decide whether that comes from acquisition, partnership, or going it alone.

2. Employment remains the predominant practice model for physicians, with health systems as the top employer.

As of January 2024, 77.6% of all physicians are employed. Of those, 55.1% are employed by health systems, and the rest are split between being employed by corporate entities (22.5%) and being shareholders in their own practices (22.4%). With more practice options than ever before, physicians continue to hang their hats with health systems. And we expect this to continue, as 68% of final-year residents express a preference for hospital employment.

Our take: Health systems can't rest on their laurels. While they continue to be the majority employer of physicians, we know that today's doctors have more practice options and are willing to act on their discontent to change employers. All physician employers, including health systems, must revisit their employee value proposition to ensure that they're the employer of choice in their market.

3. Corporate entities own the most practices, but their recent spike in growth is leveling out.

According to this year's report, 58.5% of practices are health system- or corporate-owned, with slightly more of those owned by corporations (30.1%) than by hospitals (28.4%). However, this year's data paints a slower growth story for corporate players.  

From 2019 to 2022, corporate-owned practices grew about 10 times faster than hospital-owned practices (86% vs. 9%, respectively). However, from 2022 to 2024, that growth slowed, with corporate-owned practices only growing about 1.5 times faster than hospital-owned practices (11% vs. 7.3%, respectively). That's a notable deceleration in just two years.

Our take: 2024 is a defining year for corporate medical groups. They're now on the same scale as health system-owned groups, and as a result, must face the same evergreen challenges: integrating practices, managing referral leakage, realizing ROI, and balancing physician autonomy. To remain the predominant owner of practices, corporate entities will need to focus on performance and grow differently this year.

We're sharing our latest research on this topic in our webinar on May 21st at 1 pm ET: The strategy leader's guide to corporate medical groups. During the webinar, we'll cover key trends that enabled the rise in corporate medical groups, provide a deep dive into the four primary ambitions of these groups, and offer guidance on how incumbent providers should respond. (Physicians Advocacy Institute press release, April 2024; Muoio, Fierce Healthcare, 4/12; AMN Healthcare survey, 9/2023)