The Future of US Healthcare Private Practice
This is the third in a series of articles exploring the state of healthcare in the US. Here, we tackle the question "are our perceptions concerning the growth of private healthcare practices accurate?"
An excerpt is included below. Download the PDF for the full version.
Co-Founder & CEO,
Most of the time, the whole truth is not as outlandish as a version of or half of the truth. The media is infamous for its capitalization on the sensational parts of a story; consequently, the public falls victim to misinformation and partial coverage. The topic of healthcare is not exempt from these biased practices.
As previously discussed in our paper Healthcare is Not Broken in America, various news outlets prioritize capturing their viewers or readers rather than promoting the distribution of factual information. The social effect created as a result of selective reporting “enhances social coordination as individuals more readily accept the information if they believe others have also accepted it.” (1) As journalists hook their audience with staggering headlines, they further deceive by singling out “shocking” statistics without first giving context. For example, a recent claim highlighted that “2016 marks the first time that physician owners are not the majority,” (2) leaving readers with the impression that private practices across America must be in rapid decline. Nevertheless, the same article then goes on to evaluate the distinction between small and medium to large-sized physician-owned practices, and how the varying sizes of said practices are what is changing, not the rejection of healthcare privatization as a whole.
Private practices are not in decline. They are evolving / metamorphosizing.
What Is Actually Going On?
Although single-owned private practices are not as widespread as they once were, it is not disappearing as quickly as the media claims. Instead, the more favored form is corporate practice, or medium to large multi-site conglomerates. This shift mostly took the form of mergers between smaller practices or the consolidation of many practices into a larger entity. As highlighted in the table below, a significant portion of this has been aided by outside capital from investors such as the private equity community, family offices, large insurance payors, and even public markets.
Over the past two years according to Physician Advocacy Institute (5) the growth of corporate-owned practices has skyrocketed. The rate of growth of physicians employed by these provider segments has increased by 11.5% between January 2019 and January 2021; roughly 7 in every 10 physicians now fit into this corporate/hospital-employed bucket. Furthermore, this has all been fueled by increased acquisition activity of physician practices by hospitals and or corporate entities. From 2019 to 2021, acquisitions in this space grew nearly 25%, resulting in relatively equal percentages of corporate and hospital-owned practices. This acquisition pace now nearly accounts for 50% of the market share.
Footnotes and sources are included in PDF.
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Webinar Replay: The Art of Physician Practice Consolidation
Roy Bejarano, Co-Founder & CEO, SCALE Healthcare
Brennan Clements, Analyst, SCALE Healthcare
Eileen Dai, SCALE Intern, Columbia Mailman School for Public Health
Isabella Hanna, SCALE Intern, Monmouth University
Alex Tuck-Sherman, SCALE Intern, New York University
Nicole Zef, SCALE Intern, Harvard University