Why More Physicians are Becoming Employees

Employed physicians now outnumber self-employed physicians



We are amid a healthcare landscape where doctors are now reevaluating their practice and migrating from physician-owned facilities to hospitals and hospital-owned facilities. While it’s been happening slowly, the highest rates of change occurred from 1988 to 1994 and 2012 to 2018. Given that physician movement was relatively stagnant in between these two periods, what has changed in healthcare to facilitate this most recent shift?


Looking closer at the stats, doctors are going from small practices of fewer than 10 physicians to larger practices of upwards of 50 physicians and are much less likely to start a new practice than join an existing one. It is likely that smaller practices are struggling to keep up with increasing healthcare costs and lowered reimbursement rates, and that starting a new practice is too risky and unpredictable in the current economic climate. Any kind of hospital involvement, whether partial or total ownership, is now more appealing to practitioners than independent practice, especially for young physicians (under 40) and women physicians.


These trends suggest that financial insecurity is the most influential factor that has been driving physicians to consider other employment options. For women physicians, hospitals can offer a host of benefits that support family life, such as paid time off and family insurance plans that are more robust than an independent practice could afford. Among the benefits are guaranteed wages and standardized payment rates that draw in the younger crowd, who struggle with the increased costs of living and rely on such financial security for survival. Independent practitioners already affected by the unstable market are joining hospitals or hospital owned organizations so that they have more of a financial buffer to cover costs of care and are ensured steady patient volumes to keep revenue flowing.


While most physicians still practice in small, physician-owned spaces, the number is dwindling and may continue to do so as hospitals and health systems seek out opportunities to increase their market share, clinical efficiencies, and geographic coverage. Even with the recent popularity of megamergers, physician practices and organizations are the primary targets for M&A activity within the next year.