Is the physician exodus to hospitals being exaggerated?

October 10, 2013

A new report challenges the theory that the small medical practice is nearly extinct

Finding a way to track employment and practice ownership among the physician population is tricky. Recent reports claiming that physicians are moving swiftly away from private practices into hospital employment are based on years of inaccurate data, according to a report released by the American Medical Association (AMA).

In its 2012 Physician Practice Benchmark Survey, the AMA reports that 60% of physicians work in physician-owned practices, and about 53% were self-employed. Conversely, only 23% work for practices partially owned by hospitals and nearly 6% worked solely for a hospital.

Why is AMA’s data so different from other reports that document physicians’ fleeing to larger groups and hospital systems? The association points to flaws in physician surveying, including its own, and the quickly changing healthcare landscape for years of imprecise data.

Basically, nobody’s asking all of the physicians the right questions to understand their work environment.

“Needed innovation in payment and delivery reform must recognize the wide range of practice types and sizes that exist today so all physicians can participate in the move to a more patient-centered system that rewards high-quality care and reduces costs,” says AMA President Ardis Dee Hoven, M.D. in a statement about the survey.

Gaps in data collection
The statistics from AMA’s recent survey seem to contradict other reports of shrinking private practices and solo practitioners being swallowed by large hospital groups.

The AMA debunks the American Hospital Association’s (AHA) data showing that physicians employed by community hospitals increased from 160,000 in 2000 to 212,000 in 2012, a 32% increase. The AMA also questions an Accenture report that states thst the number of physicians working at an independent practice would dwindle to 36% this year.

“While these shifts in practice have been reported in certain locations, whether they are a part of a national trend is unknown because of a lack of recent, nationally representative data on physicians,” the authors of the AMA study states.

The AMA also points to the Medical Group Management Association (MGMA) Physician Compensation and Production Surveys that state almost half of physicians worked for hospital-owned practices in 2011. The AMA says that the MGMA’s membership of predominately large practice groups skews the numbers.

Liz Boten, public relations coordinator for MGMA, explains that the data collected from the physician compensation survey was not gathered to measure ownership trends in the industry. “That particular data is demographic information based on respondents to our survey. The survey is based on a huge pool of respondents, over 60,000 providers, and not just our members. We didn’t work with the AMA on this representation of our data,” Boten says.

The AMA also explains gaps in its own surveying over the years. Previous AMA surveys failed to ask about specific employment arrangements. After revamping survey methods, the AMA realized that it needed to ask more detailed questions about employment. Now the association says it asks all respondents whether their practice is solo, single-specialty group, multi-specialty group, faculty practice plan, hospital, ambulatory care facility, urgent care facility, HMO, or a medical school.
“This structure allows us to differentiate between physicians directly employed by a hospital and those working (as an owner or employee) in a practice owned by a hospital, something not possible in earlier physician surveys,” the AMA states.

Trying to quantify a trend
New payment and healthcare models that focus on collaborative and team-based care are the assumed cause of physicians fleeing to hospitals, the AMA says.

The AMA survey finds that practice ownership is down by 8 percentage points from 2008, but the decline started before the passage of the Affordable Care Act and other payment model changes. Between 1983 and 1994, practice ownership fell 18% and solo practices fell by 11%.

According to a 2011 study by the New England Journal of Medical Journal (NEJM), hospitals began buying primary care physician (PCP) practices in the 1990s in order to ensure flow to specialists within the hospital. “Whereas hospitals prioritized PCP employment in the 1990s, they are now targeting both PCPs and specialists; many organizations are constructing what could effectively become closed, integrated healthcare delivery systems,” NEJM stated. “Today, aggressive hiring of PCPs is returning, in part because hospitals fear physicians’ becoming competitors by aggregating into larger integrated groups that direct referrals and utilization to their own advantage.”

The AMA acknowledges market research suggesting the link between primary care physicians and hospitals in the 1990s. The trend of private practice physicians going to hospitals, the AMA says, may be a result of a regional trend since there is no way to quantify a shift on a national level. Because of “lack of comparable data,” from previous years, the AMA says an analysis compared to today’s data would “understate the degree of integration between physicians and hospitals.”

The specialists’ role
Another flaw in studies about physician practice ownerships lies in leaving out specialists, according to the AMA. The study finds that surgeons, anesthesiologists, radiologists and gynecologists report ownership of more that 50% of practices in their respective fields. Ownership numbers are lower in pediatrics (37.3%), emergency medicine (38.4%), and family practices (39.8%).

“Researchers looking at single specialty groups in the late 1990s and early 2000s were struck by the almost complete absence of research into the organization of specialty practice,” the AMA says.

Internal medicine subspecialists own more than 62% of their practices, while general internal medicine physicians own almost half of their practices. Trying to quantify shifts between employers among internists is difficult, says Charles Cutler, MD, FACP, chair of the Board of Regents of the American College of Physicians. “Some internists practicing primary care may also be certified in a subspecialty and have a blended practice and that’s not uncommon. It may be a confusing number,” Cutler says.

He agrees that location is one of the biggest factors in whether a physician decides to own a practice or work for a group or hospital. “Many doctors like the lifestyle that goes with owning a private practice. This extends beyond a specialty. In large cities there are university and academic networks and that’s a great opportunity. In rural areas there might be no or limited opportunities for the group practice employment model,” Cutler says.