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AMA Analysis Shows Most Physicians Work Outside of Private Practice


 

The majority of patient care physicians worked outside of physician-owned medical practices in 2020, according to a newly released biennial analysis of physician practice arrangements by the American Medical Association (AMA). This is the first time the share of physicians in private practices has dropped below 50% since the AMA analysis began in 2012.

Although data collected by the AMA from 3,500 U.S. physicians through the 2020 Physician Practice Benchmark Survey show the continuation of shifts toward larger medical practices and away from physician-owned practices, the magnitude of change since 2018 suggest these trends have accelerated. The survey was conducted from September to October 2020, roughly six months into the COVID-19 pandemic, and therefore may not reflect the full impact the pandemic will have on physician practice arrangements.


The AMA survey data show 49.1% of patient care physicians worked in physician-owned practices, down from 54% of physicians in the 2018 AMA survey. The drop of nearly five percentage points is the largest two-year change measured since the AMA survey began in 2012. The ongoing shift toward larger practice size also appears to have accelerated between 2018 and 2020. The share of physicians in practices with at least 50 physicians increased from 14.7% in 2018 to 17.2% in 2020, also the largest two-year change measured by the AMA survey since 2012.

"There are several contributing factors to the ongoing shifts in practice size and ownership that include mergers and acquisitions, practice closures, physician job changes, and the different practice settings chosen by younger physicians compared to those of retiring physicians," said AMA President Susan R. Bailey, M.D. "To what extent the COVID-19 pandemic was a contributing factor in the larger than usual changes between 2018 and 2020 is not clear. Physician practices were hit hard by the economic impact of the early pandemic as patient volume and revenues shrank while medical supply expenses spiked. The impact of these economic forces on physician practice arrangements is ongoing and may not be fully realized for some time."


The new AMA analysis illustrates the wide variety of practice types, sizes, and ownership arrangements in which physicians work. Due to this diversity, no single practice type, size, or ownership structure can or should be considered the typical physician practice, according to the analysis. Key findings on the shifting distribution of physician practice arrangements are compiled by:

Employment Status

Employed physicians were 50.2% of all patient care physicians in 2020, up from 47.4% in 2018 and 41.8% in 2012. In contrast, self-employed physicians were 44% of all patient care physicians in 2020, down from 45.9% in 2018 and 53.2% in 2012. The percentage of physicians who were independent contractors has been steady, fluctuating in the narrow band between 5% (2012) and 6.7% (2018).

Practice Ownership
With the steady decline since 2012 in the share of physicians working in private practices, there has been a concurrent increase in the share of physicians working directly for a hospital or for a practice at least partially owned by a hospital or health system. Almost 40% of patient care physicians worked either directly for a hospital or for a practice with at least partial hospital or health system ownership in 2020, up from 34.7% in 2018 and 29% in 2012. Physicians working directly for a hospital were 9.3% of all patient care physicians, an increase from 8% in 2018 and 5.6% in 2012. Physicians working in practices at least partially owned by a hospital or health system were 30.5% of all patient care physicians, an increase from 26.7% in 2018 and 23.4% in 2012. For the first time the AMA survey included an option for private equity and found 4% of patient care physicians worked in practices owned by private equity firms.


Practice Size
Despite the trend toward larger practices, most physicians (53.7%) still work in small practices of 10 or fewer physicians. This share has fallen continuously from 61.4% in 2012. The survey found that physicians age 55 and older were significantly more likely to work in small practices than physicians under the age of 40. The large difference between age groups suggests that one reason for the shift in practice size is that retiring physicians who leave small practices are not being replaced on a one-for-one basis by younger physicians. The same reason also appears to be a factor in the shift in practice ownership.

Business Structure

New in the 2020 AMA survey, physicians in private practice were asked about their business structure. The type of business structure has tax and liability implications for the practice owners. Together, two business structures accounted for over half of physicians in private practice: limited liability companies (27.8%) and S corporations (24.7%). Fifteen percent of physicians in private practice indicated that their business was a C corporation. The shares of physicians in partnerships and in sole proprietorships were similar, each around 10%.

The new analysis is the latest addition to the AMA's Policy Research Perspective series that examines long term changes in practice arrangements and payment methodologies. The new AMA study, as well as previous studies in the Policy Research Perspective series, are available to download from the AMA website.

 
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