AMA Finds that the Medical Field is Shifting Away from Private Practice and Towards Larger Practices

The American Medical Association (AMA) recently released a new analysis of physician practice arrangements. According to the new analysis, it seems that physicians are currently less likely to work in private practice now than 10 years ago. Between 2012 and 2022, the share of physicians working in private practices dropped by 13%, from 60.1% to 46.7%. This is largely due to economic, administrative, and regulatory burdens that drove physicians to shift traditional business models for medical practices.

Additionally, the percentage of physicians in practices with 10 or fewer physicians fell to 51.8% in 2022 (down from 61.4% in 2012) and the percentage of physicians in practices with 50 or more physicians increased to 18.3% in 2022 (up from 12.2% in 2012). The number of physicians in midsize practices (between 11 to 49 physicians) remained pretty stable over the decade. 52% percent of physicians in private practices are in practices with fewer than five physicians, compared to 17.4% of physicians in hospital-owned practices. Additionally, while only 10.5% of physicians in private practices have a practice size of 50 or more, 31.4% of physicians in hospital-owned practices have such a practice size.

Not only has there been a redistribution of physicians from smaller to larger practices, but also in practice type. 42% of physicians worked in single specialty practices and 26.7% in multi-specialty practices in 2022. Over the last decade, the shares of physicians in multi-specialty practices with a direct employment or contracting relationship with a hospital have each grown by about 4 percentage points while the shares of physicians in solo practices and in single specialty group practices each decreased by around 4 percentage points.

The percentage of physicians working in hospitals as direct employees or contracts also increased during this time, from 5.6% in 2012 to 9.6% in 2022. The share of physicians working in a practice that is at least partially owned by a hospital or health system also increased over the decade, from 23.4% in 2012 to 31.3% in 2022.

The data was collected from 2012 to 2022 through the Physician Practice Benchmark Survey and helps the AMA to understand the changes in the ownership and organization of physician practices and the reasons that private practices are often sold to hospitals or health systems. The data found that about 80% of physicians indicated the need to better negotiate favorable payment rates with payers as either a very important or important reason in the sale of their practice to a hospital or health system. About 70% of physicians found the need to improve access to costly resources and the need to better manage payers’ regulatory and administrative requirements as either a very important or important reason.

“The AMA analysis shows that the shift away from independent practices is emblematic of the fiscal uncertainty and economic stress many physicians face due to statutory payment cuts in Medicare, rising practice costs, and intrusive administrative burdens,” said AMA President Jesse M. Ehrenfeld, M.D., M.P.H.