More Physicians Move to Practices Owned by Hospitals & Private Equity Groups

Physicians continue to move away from private practices and increasingly work at practices owned by hospitals or private equity groups, according to the latest analysis (PDF) from the American Medical Association (AMA). Physicians reported that inadequate payment rates, costly resources, and burdensome regulatory and administrative requirements are longstanding and important drivers of this change.

“The share of doctors working in practices wholly owned by physicians is unraveling under compounding pressures,” said AMA President Bruce A. Scott, M.D. “The cumulative impact of burdensome regulations, rising financial strain, and relentless cuts in payment poses a dire threat to the sustainability of private practices. After adjusting for inflation in practice costs, Medicare physician payment has fallen 33 percent over the past quarter century, which has severely destabilized private practices and jeopardized patients’ access to care. Payment updates are necessary for physicians to continue to practice independently.”

According to the analysis, the share of physicians working in private practices in 2024 was 42.2 percent, a decline of 18 percentage points from 60.1 percent in 2012. Private practices now account for less than half of physicians in most medical specialties, ranging from 30.7 percent in cardiology to 46.9 percent in radiology. Exceptions included orthopedic surgery (54 percent), ophthalmology (70.4 percent), and other surgical subspecialties (51.2 percent).

In contrast, the share of physicians working in hospital-owned practices in 2024 increased to more than one-third (34.5 percent), an increase of 11 percentage points from 23.4 percent in 2012. Twelve percent of physicians were employed directly by a hospital (or contracted directly with a hospital), double the share (5.6 percent) in 2012.

In 2024, 6.5 percent of physicians characterized their practice as private equity-owned, higher than the shares in 2020 and 2022, which were both around 4.5 percent, the report noted.

Among independent physicians that sold their practices in the last 10 years to a hospital, private equity firm, or insurer, the most cited reason was inadequate payment rates (PDF, rated as important or very important by 70.8 percent of physicians). Next were the need to improve access to costly resources (64.9 percent) and better manage payers’ regulatory and administrative requirements” (63.6 percent).

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.

Editor’s note: On behalf of physicians nationwide, the AMA has led a multi-year effort calling for Medicare physician payment reform. Learn more at FixMedicareNow.org.

About the American Medical Association
The American Medical Association is the physicians’ powerful ally in patient care. As the only medical association that convenes 190+ state and specialty medical societies and other critical stakeholders, the AMA represents physicians with a unified voice to all key players in health care. The AMA leverages its strength by removing the obstacles that interfere with patient care, leading the charge to prevent chronic disease and confront public health crises and, driving the future of medicine to tackle the biggest challenges in health care.