Doctors are Selling Out and Why You Should Be Worried

Essentially, there are two main ways to classify physicians - independent or employed. Today's health care in the US is becoming increasingly consolidated as  health systems and corporate entities (venture capital groups, etc.) are purchasing physician practices. With the advent of the pandemic of COVID-19 and the partial and complete shutdowns in medicine over 2020, the trend of selling practices accelerated. More and more physicians are now employed by someone - either a hospital system or corporation - eclipsing 70% of all physicians.

The era of independent physicians may be coming to a close if these trends don't turn around. The question we should be asking is why is this happening and should we care?

What are the Trends?

The Physician Advocacy Institute surveyed physicians over 2019-2020 and found that there was an acceleration of physicians selling their practices to hospitals and corporate entities. This was not unique to any specific region of the country. You can see their paper here and it is clear that this is a trend that is not going away any time soon. Over the last two years, 48,400 doctors left independent practice and moved to employed status. Nearly half of all physician practices are now hospital or corporate based leaving an ever smaller base of people who can be nimble and innovative in the health care space.

It is important to point out that many I have spoken to over the past two years have left big systems and struck out on their own to be disruptors in the space like Dr. Randy Lovell, Dr. Richard Rosenfield, Dr. Diana Bitner, and others.

Reasons Docs Become Employed

1. Cash out for retirement
2. Avoid overhead/business frustrations like meeting payroll, etc.
3. Market swings
4. Paying off student debt (usually ~$250,000 from med school and undergrad)
5. Perceived stable/reliable income
6. Increasing regulations and reporting for things like value based care. MediCare reporting and data mining.
7. Electronic medical records
8. Audit processes

Why Docs Leaving Independent Practice is a Problem for Us All

1. Increased health care costs
2. Less competition
3. Less innovation in how to deliver care
4. Prescription drug plan restrictions (and increased costs)
5. Worse autonomy
6. Increased utilization of midlevel providers
7. Stagnant pay because no risk taking