Every year since 2012, the American Medical Association (AMA) performs a comprehensive national survey looking at the practice arrangements of physicians across the nation. Last month, the AMA released a report on the 2018 Physician Practice Benchmark Survey – the most current set of data and an incredible look at how the market has shifted over the last six years.
We encourage you to read the full report—it’s fantastic. But, to save you time, we’ve highlighted four key themes really stood out to us.
For the first time in American history, there are fewer physicians who own their practice than are employed.
Physicians who own their practice, or part of their practice, now represent 45.9 percent of physicians, while those employed now represent 47.4 percent.
Since the first Benchmark Survey in 2012, the share of physicians who are owners has fallen by more than 7 percentage points—it was 53.2 percent in 2012. This decline actually began 35 years ago and has continued at varying rates since 1983, when owner physicians accounted for about 75.8 percent.
The percentage of solo practice physicians are falling while employment grows at hospitals and very large practices.
Many aspects of physician practice types have stayed relatively stable since 2014: most physicians still belong to single specialty groups in 2018 than any other practice type, while twenty-five percent of physicians practiced in multi-specialty groups.
But the solo practice has continued to decrease, from 18.4 percent to 14.8 percent between 2012 and 2018. That decrease correlates elsewhere: physicians employed directly by or contracted directly with a hospital increased to 8 percent from 5.6 percent in 2012.
“This is in no small part due to the many headaches associated with running a private practice,” said Vicrum Puri, Co-Founder and CEO of Lina, “reimbursements are falling, operating costs are increasing and real estate prices continue to escalate. That’s just the tip of the iceberg. Many practitioners who would prefer to operate independently feel it is just not an option.”
So, what does this look like across specialty? From those specialties included in the 2018 data, psychiatry had the largest share of physicians in solo practice at 28.1 percent, followed by general internal medicine at 19.9 percent.
“There’s a rush towards employment because of the huge hassle and the payment issues,” said Lou Goodman, Ph.D., president of the Physicians Foundation, “but after a while, both the doctors and the hospitals, per se, may say, ‘Hey, wait a minute. This might not be the model for everyone.’”
The share of small practices is also decreasing with the distribution shift to hospitals and very large practices.
In 2018, 56.5 percent of physicians worked in practices with 10 or fewer physicians, down from 61.4 percent in 2012. This is one of the most visible changes. The share of small practices have been shrinking, while physicians at very large practices (50+ physicians) increased from 12.2 percent in 2012 to 14.7 percent, and physicians at hospitals increased from 5.8 percent to 8.5 percent.
This trend is particularly concerning as small practices have many advantages for both patients and physicians. For example, research studies have shown that physicians in solo or small practices are less likely to burn out and more likely to develop deeper relationships with their patients.
More physicians are working directly for a hospital or in a practice that’s at least partly owned by a hospital.
Direct employment and contracting with a hospital has increased from 5.6 percent to 8.0 percent. Meanwhile, the number of physicians in hospital-owned practices also increased from 23.4 percent to 26.7 percent. In 2018, 34.7 percent of physicians worked either directly for a hospital or in a practice at least partly owned by a hospital in 2018, climbing up from 29.0 percent in 2012.
Using data from the survey, we find that 40.0 percent of physicians worked in a practice that was both small (10 or fewer physicians) and physician-owned.
This is in no way a recent trend and there are many contributing factors. A House Small Business Committee hearing on July 19, 2012, “The Hearing on Health Care Realignment and Regulation: The Demise of Small and Solo Medical Practices?” became a platform for physicians to voice their concerns. Among the mentioned culprits were: flat or declining reimbursement; more regulations and administrative tasks; the cost of malpractice insurance; the burden of implementing information technology systems; the debt of medical school tuition; the upheaval brought about by healthcare reform; and the instability of the Medicare physician payment system.
Is this all bad news for solo & small practices?
“Transformational change continues in the delivery of health care and physicians are responding by reevaluating their practice arrangements,” said AMA President Barbara L. McAneny, MD. “Physicians must assess many factors and carefully determine for themselves what settings they find professionally rewarding when considering independence or employment.”
As fewer physicians work in and own small practices, there are many organizations focused on directly addressing the factors that contribute to the themes outlined above. At Lina, we’re focused on tipping the scales in favor of the private practice by starting with the physical space where the practice operates. Others are working on creative ways to address reimbursements or the simplification of IT solutions to reduce time spent on paperwork. Solutions for online practice management and trends like medical coworking are on the rise.
“If private practice disappears, patient access to care, local employment, and tax revenue will all suffer,” said Louis McIntyre, MD, chief of orthopedics at Westchester Orthopedic Associates in New York. “We need to strengthen private practice as well as the other models of healthcare delivery to ensure patient access to quality care.”
Despite these themes, there are many reasons to be optimistic about creative approaches to strengthening the private practice–both for the practitioner and the patient. We see a lot of great things that lie ahead, and we’re excited to be a part of it.
Frequently Asked Questions
What percentage of doctors belong to the AMA?
While the AMA (American Medical Association) is one of the most prominent professional organizations for physicians in the United States, not all doctors are members. The AMA does not publicly disclose the exact percentage of doctors who are members. However, it's worth noting that the AMA represents a broad swath of medical professionals but is not universally subscribed to by all physicians.
Who can belong to the AMA?
The American Medical Association is open to medical professionals in various categories. This includes practicing physicians, medical students, residents, and fellows. Physicians from all specialties can join the AMA, and the organization offers different types of memberships tailored to the needs and career stages of medical professionals. The AMA serves as a platform for medical advocacy, education, and networking, offering a range of resources to its members.
What is the AMA Physician Practice Benchmark Survey?
The AMA Physician Practice Benchmark Survey is an annual, comprehensive national investigation into the practice arrangements of physicians across the United States. This survey is aimed at gathering insights into various aspects of medical practice, such as ownership vs. employment status, size of the practice, and other relevant metrics.
The 2018 survey in particular showed some intriguing shifts in the medical field, such as the decreasing number of physicians who own their practices, which now stands at 45.9%, as compared to those employed, at 47.4%.
What are some advantages of small practices for both patients and physicians?
Small or solo practices offer distinct benefits for both physicians and patients. For physicians, smaller settings often provide more control over work hours, the pace of work, and decision-making processes. This autonomy can lead to lower rates of burnout and increased job satisfaction.
For patients, smaller practices may offer more personalized care, as doctors have more time and flexibility to attend to individual needs. Research also indicates that physicians in smaller practices can develop deeper relationships with their patients, which can be beneficial for patient care and satisfaction.
What are the key themes highlighted in the 2018 Physician Practice Benchmark Survey?
The 2018 survey highlighted several key trends:
- For the first time in U.S. history, fewer physicians own their practices compared to those who are employed.
- Solo practices are on the decline, with an increase in physicians becoming part of larger organizations or hospitals.
- There is a noticeable shift away from small practices towards very large practices and hospitals.
- Direct employment and contracting with hospitals have increased, signaling a tilt towards institutional rather than independent practices.
These trends indicate a larger systemic shift in healthcare delivery, driven by various factors such as regulatory burdens, increasing operating costs, and changing reimbursement landscapes.
