Dive Brief:

• Almost three quarters of U.S. doctors now work for hospitals, health systems or corporate entities, up from 69% a year ago, according to new data from Avalere, in a study sponsored by the Physicians Advocacy Institute. What had been a steady growth rate of corporations buying up independent physician practices before the pandemic has accelerated since the onset of COVID-19, Avalere said.
• PAI contends the pressures of the pandemic have forced many independent physicians to make the difficult decision to sell their practices. "This study underscores the fact that physicians across the nation are facing severe burnout and strain," PAI CEO Kelly Kenney said in a statement.
• Avalere found that 108,700 physicians became employees of larger health organizations or other corporate entities over the three-year period between Jan. 1, 2019, and Jan. 1, 2022. Of that total, 83,000, or 76%, made the switch after the pandemic began.

Dive Insight:

Entities such as private equity firms and health insurers have been the primary force behind the acceleration in physician practice buyouts, Avalere said. These corporate entities acquired 31,300 practices during the study period, a nearly 90% increase in three years. In 2021 alone, corporate entities acquired 13,600 physician practices, according to the report.

Hospitals, by comparison, bought up 4,800 physician practices during the three-year period.

Avalere's data dovetails with a recent report from PwC that tracked a surge in dealmaking in the healthcare sector in the 12 months through Nov. 15, 2021. That report found the number of transactions involving physician practices more than doubled over the period, compared with the year before.

PwC attributed the wave of deals targeting physician groups to difficult economics faced by doctor practices, with challenges including labor shortages and supply chain disruptions, at a time when private equity and other corporate funding to support M&A activity has been plentiful.

The M&A focus on physician practices has attracted the attention of the Federal Trade Commission, which last year asked six leading health insurers for patient claims data that the agency will analyze as part of a broader effort to understand the impact of the mergers on competition and labor markets.

In one study, published in the journal Health Affairs, the acquisition of independent physician practices by hospitals was linked with a 0.8% dip in average doctor income. That report looked at a period between 2014 and 2018, when hospital ownership of physician groups rose by nearly 89%.

Concerned by what it sees as a threat to the independent practice of medicine, the Physicians Advocacy Institute said it supports policies that allow physician-owned practices to compete with corporate and hospital-owned entities.

"Regardless of practice ownership, it is important to preserve the patient-physician relationship and maintain physicians' clinical autonomy," Kenney said.