May 23, 2024
Three in Five Physician Practices Now Owned by Nonphysicians

Physician practice ownership by corporations, including health insurers, private equity firms, and large pharmacy chains, reached 30.1% as of January for the first time surpassing ownership by hospitals and health systems (28.4%), according to a new report.

photo of Healthcare finance account report tablet pc stethoscope

As a result, about three in five physician practices are now owned by nonphysicians.

In early 2020, corporations owned just about 17% of US medical practices, while hospitals and health systems owned about 25%, according to the report released Thursday by nonprofit Physician Advocacy Institute (PAI). But corporate ownership of medical groups surged during the pandemic.

These trends raise questions about how best to protect patients and physicians in a changing employment landscape, said Kelly Kenney, PAI’s chief executive officer, in a statement.

“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,” Kenney said.

The research, conducted by consulting group Avalere for PAI, used the IQVIA OneKey database that contains physician and practice location information on hospital and health system ownership.

By 2022-2023, there was a 7.3% increase in the percentage of practices owned by hospitals and 5.9% increase in the percentage of physicians employed by these organizations, PAI said. In the same timeframe, there was an 11% increase in the percentage of practices owned by corporations and a 3.0% increase in the percentage of physicians employed by these entities.

“Physicians have an ethical responsibility to their patients’ health,” Kenney said. “Corporate entities have a fiduciary responsibility to their shareholders and are motivated to put profits first…these interests can conflict with providing the best medical care to patients.”

Federal Scrutiny Increases

However, both federal and state regulators are paying more attention to what happens to patients and physicians when corporations acquire practices.

“Given recent trends, we are concerned that some transactions may generate profits for those firms at the expense of patients’ health, workers’ safety, quality of care, and affordable healthcare for patients and taxpayers,” said the Federal Trade Commission (FTC) and the Justice (DOJ) and Health and Human Services (HHS) departments.

This statement appears in those agencies’ joint request for information (RFI) announced in March. An RFI is a tool that federal agencies can use to gauge the level of both support and opposition they would face if they were to try to change policies. Public comments are due May 6.

Corporations and advocacy groups often submit detailed comments outlining reasons why the federal government should or should not act on an issue. But individuals also can make their case in this forum.

The FTC, DOJ, and HHS are looking broadly at consolidation in healthcare, but they also spell out potential concerns related to acquisition of physician practices.

For example, they asked clinicians and support staff to provide feedback about whether acquisitions lead to changes in:

  • Take-home pay
  • Staffing levels
  • Workplace safety
  • Compensation model (eg, from fixed salary to volume based)
  • Policies regarding patient referrals
  • Mix of patients
  • The volume of patients
  • The way providers practice medicine (eg, incentives, prescribing decisions, forced protocols, restrictions on time spent with patients, or mandatory coding practices)
  • Administrative or managerial organization (eg, transition to a management services organization)

Kerry Dooley Young is a freelance journalist based in Washington, DC.

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