Employed vs independent doctors: Numbers don't tell the whole story

June 5, 2019

Why independence is not a thing of the past. Rather, it is the future of medicine.

The news comes as no surprise: “For the first time in the United States, employed physicians outnumber self-employed physicians,” says a new study released this month by the American Medical Association.

Let’s set aside for a moment that this finding, which the AMA deemed a “milestone,” as if this were an accomplishment, was based on a pretty small batch of doctors: only 36 percent of the 3,500 doctors surveyed responded. That those 1,260 doctors represent the nearly 1 million doctors in the United States may be a statistical stretch. That said, other reports say that only one in three doctors today is independent.

Regardless, the rate of doctors forgoing their independence for steady paychecks is, by all accounts, continuing.

And the trend is not healthy for doctors. It’s not healthy for patients. And it’s not healthy for America.

Why we should worry
When hospitals or private equity groups buy up doctors, costs skyrocket, quality goes down, and, if the hospital doing the acquiring is nonprofit, communities suffer financial harm because all the taxes that independent practice once paid come off the tax rolls.

What’s more, when doctors become employees, they suffer burnout much more often than their independent counterparts. Today, the suicide rate among doctors is the highest of any profession; one doctor dies by suicide in the United States every day. The corporatization of medicine is part of the problem.

Yet hospitals continue to roll up practices for one reason: Money. The more doctors that hospitals or private equity companies own, the more market share they capture, the more bargaining power they have with insurers, the more facility fees they can charge (added costs hospitals charge for outpatient services that independent doctors don’t), and the more referrals they can be sure get driven into their systems.

This adds up. According to a 2019 report from Merritt Hawkins, hospitals make on average $2.4 million a year net for every doctor they employ. No wonder they want – and can afford -- to lure doctors into indentured employment. Doctors sign away their autonomy to escape an increasingly burdensome regulatory environment – and often regret it later.

Though many employed doctors will privately tell you they want out, strict non-compete clauses in their employment contracts keep them in shackles.

A pendulum swing
However, this story has another side, a brighter one. While the trend toward doctors becoming employees continues, it has slowed. Meanwhile, another trend is afoot: Doctors are also leaving employment at record rates.

Let’s get back to the numbers for a moment. The AMA study found that 47.4 percent of all patient-care physicians in 2018 were employed while 45.9 percent were their own bosses; this tipped the employed doctors over the halfway mark, by AMA math. The study also noted a 6 percent increase in employed doctors and a 7 percent drop in self-employed doctors between 2012 and 2018.

However, the AMA also reported that more than half of the shift toward employment occurred in the first two of those six years, between 2012 and 2014. Since then, the trend has slowed considerably.

At the Association of Independent Doctors, we believe this is partly because word about the negative impact of hospital/medical group mergers is getting out. Since our association started being the voice for independent doctors six years ago, we have been enlightening consumers, lawmakers, businesses and media about why the survival of independent doctors is so essential, and why consolidation is so harmful.

We are witnessing the move toward employment slowing, and the tide beginning to turn.

Last fall, 88 doctors in Charlotte, NC, ended their 25-year employment relationship with Atrium Health and re-invented themselves as Tryon Medical Partners, an unapologetically independent practice. “As an independent practice, we can better control how we practice medicine and our destiny,” said Dale Owen, MD, the group’s CEO.

Buoyed in part by that success, another large group in the Charlotte area announced in January that they were leaving their hospital employer, Novant Health. The head of the 42-physician group said the doctors wanted to “use their new-found independence to improve the quality of their own lives and the care they provide patients,” according to the Charlotte Observer, further citing the need to make health care affordable.

More recently, in northeast Wisconsin, 15 cardiologists severed ties with ThedaCare, a major health system in the region and the group’s employer since 2011, and started an independent practice in April. Again, they gave as their reason, “a desire to have more control over all aspects of their work.”

In addition to those mass exits, I hear almost daily from doctors who are converting their practices into direct pay models. By opting out of the strangling triangulation that comes from dealing with third-party payors, they are bringing costs way down, greatly eliminating the burdens of data collection, and, unlike their employed colleagues, are happier in their profession.

Beyond an ardent desire to practice medicine without worrying about meeting an employers’ quotas, all of these recently liberated doctors have something else in common: the certainty that they are at the forefront of the new trend in medicine.

Numbers only tell part of the story. The rest of the story is that independence is not a thing of the past. Rather, it is the future.

Marni Jameson Carey is the Executive Director of the Association of Independent Doctors. You may reach her at marni@aid-us.org.