Independent Doctors Are Worth Saving

Physicians are losing their independence, according to a new report from the consulting firm Avalere and the Physician Advocacy Institute.

Almost 70% of American doctors are now employed by a hospital, a health system, or some other corporate entity, like a private equity firm or insurer. Less than one-third of doctors’ practices are independent.

The practice of medicine has been growing more and more corporate for years. But the trend accelerated during the COVID-19 pandemic.

And it could be to the detriment of patients.

Independent practices tend to allow for richer, more personalized relationships between doctors and patients. They also promote competition in the healthcare marketplace, which improves quality and drives down prices.

The recent uptick in physician practice consolidation has been staggering.

According to the Avalere study, between 2019 and 2020, the share of doctors employed by a corporate entity shot up by more than 30%. The share employed by a hospital increased by 5%.

Much of this shift can be explained by the coronavirus pandemic.

With so many patients forgoing care at the onset of the pandemic, many independent physician practices’ revenues plummeted. In the second quarter of 2020, health spending at physician offices fell more than 13% compared to the previous year.

This fall-off in revenue made it difficult for many physician practices to continue operating independently. So it’s understandable why they agreed to be acquired by larger organizations.

But it’s not necessarily a good thing. A healthcare system in which most physicians are salaried employees isn’t conducive to the kinds of close doctor-patient relationships that are essential for high-quality medical care.

A patient should be free to shop around for a doctor that’s right for them and to develop a degree of mutual trust with that provider over the course of years.

Such long-term relationships enable doctors to understand the medical histories and personal idiosyncrasies of their patients — and to recommend courses of treatment based on that understanding.

Independent physician practices are ideal environments for forging such connections. They give doctors immense control over nearly every aspect of care.

And they help ensure the provider’s main allegiance is to the patient — not his or her employer.

By contrast, practices owned by corporate entities can threaten the autonomy of doctors and lead to far more transactional relationships between physicians and their patients.

We need to expand access to primary care — not limit its supply through consolidation.

A 2017 survey found that 28% of men and 17% of women didn’t have a primary care doctor. A 2019 study found that one-quarter of Americans lacked a source of primary care.

There is also a strong economic case against provider consolidation.

Fewer independent doctors’ practices results in less competition. And this, in turn, leads to higher prices.

A recent study in the Journal of Health Economics found that an increase in hospital acquisitions of doctors’ practices between 2007 and 2013 was followed by a 14.1% increase in the average price of physician services.

A separate study of California’s provider market found that, as the share of physicians employed by hospitals grew between 2013 and 2016, insurance premiums on the state’s marketplace increased by 12%. At the same time, prices for outpatient services rose by 9% for specialists and 5% for primary care doctors.

There’s also evidence to suggest that consolidation leads to lower-quality patient care. Consider an analysis published last year in the New England Journal of Medicine, which found that hospital acquisitions were “associated with modestly worse patient experiences.”

The United States should strive for a health sector that promotes strong doctor-patient relationships, wide-ranging physician autonomy and, perhaps most of all, fierce competition between providers.

The recent shift toward doctor consolidation is in opposition to these goals. As a result, patients may soon find themselves paying more for lower-quality care.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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