The Employment Trend

Employed physicians now outnumber self-employed physicians

FOR THE first time in the United States, employed physicians outnumber self-employed physicians, according to a newly updated study on physician practice arrangements by the American Medical Association (AMA). This milestone marks the continuation of a long-term trend that has slowly shifted the distribution of physicians away from ownership of private practices.

Employed physicians were 47.4% of all patient care physicians in 2018, up 6% since 2012. In contrast, self-employed physicians were 45.9% of all patient care physicians in 2018, down 7% since 2012. Changes of this magnitude are not unprecedented. Older AMA surveys show the share of self-employed physicians fell 14% during a six-year span between 1988 and 1994.

Given the rate of change in the early 1990s, it appeared a point was imminent when employed physicians would outnumber self-employed physicians, but the shift took much longer than anticipated. The AMA’s research notes this example and suggests “caution should be taken in assuming current trends will continue indefinitely.”

Physician Ownership
The majority of patient care physicians (54.0%) worked in physician-owned practices in 2018 either as an owner, employee, or contractor. Although this share fell from 60.1% in 2012, the trend away from physician-owned practice appears to be slowing since more than half of the shift occurred between 2012 and 2014.

Concurrently, there was an increase in the share of physicians working directly for a hospital or in a practice at least partly owned by a hospital. Physicians working directly for a hospital were 8.0% of all patient care physicians, an increase from 5.6% in 2012. Physicians in hospital-owned practices were 26.7% of all patient care physicians, an increase from 23.4% in 2012. In the aggregate, 34.7% of physicians worked either directly for a hospital or in a practice at least partly owned by a hospital in 2018, up from 29% in 2012.

Younger physicians and women physicians are more likely to be employed. Nearly 70% of
physicians under age 40 were employees in 2018, compared to 38.2% of physicians age 55 and over. Among female physicians, more were employees than practice owners (57.6% vs. 34.3%). The reverse is true for male physicians—more were practice owners than employees (52.1% vs. 41.9%).

As in past AMA studies, physicians’ employment status varied widely across medical specialties. Surgical subspecialties had the highest share of owners (64.5%) followed by obstetrics/gynecology (53.8%) and internal medicine subspecialties (51.7%). Emergency medicine had the lowest share of owners (26.2%) and the highest share of independent contractors (27.3%). Family practice had the highest share of employed physicians (57.4%).

Small Practices
Despite challenges posed by dynamic change, most physicians still work in small practices. This share has fallen slowly but steadily since 2012. In 2018, 56.5% of physicians worked in practices with 10 or fewer physicians compared to 61.4% in 2012. Psychiatry, at 28.1%, had the highest share of physicians in solo practice, a share well above that in other specialties. The next highest share was 19.9% in general internal medicine.

A separate study by the Physicians Advocacy Institute and Avalere Health found that more than half of all physicians in the Midwest are employed by hospitals. More than one-third of Midwest physician practices were hospital-owned in 2016. Rates of employment are lowest in the South, where 37% of physicians are employed by hospitals, and in Alaska and Hawaii at a 33% employment rate.

For physicians, the trend brings challenges but can alleviate certain burdens of independent practice. Government and private payer payment policies increasingly favor integrated health systems and make it challenging for physician practices to remain independent. When physicians are employed by hospitals or health systems, they perform more services in a HOPD setting than independent physicians. The higher proportion of services performed in a HOPD setting increases both costs to the Medicare program and financial responsibility for patients, the report said.