A study released by PAI and conducted by Avalere Health shows that hospital systems and other corporate entities continued to drive consolidation in healthcare by aggressively acquiring physician practices throughout 2019 and 2020, especially during the last half of 2020 at the height of the COVID-19 pandemic. The study’s findings include:
- Only 30 percent of physicians in the United States practiced medicine independently at the beginning of 2021. 70% of U.S. physicians are employed by hospital systems or other corporate entities such as private equity firms and health insurers.
- 48,400 additional physicians left independent practice and became employees of hospitals or other corporate entities, and 22,700 of that growth occurred after the onset of Covid-19 (a 12% increase in employment).
- There is a steady trend toward increased employment and hospital ownership of practices in every region of the nation, with some differences in the types of acquisitions driving regional consolidation.
What is the Impact of these Trends?
- Unchecked consolidation has been shown to reduce competition in the healthcare marketplace, drive costs and spending higher and undermine medical practice innovation.
PAI and Avalere have also examined the higher health care spending implications of care delivered in the hospital-owned setting versus physician office setting and “site of service” payment policies that contributes to these consolidation trends.