As More Hospitals Buy Practices, Now Might Be a Good Time to Sell

According to the Physician Advocacy Institute, research indicates that the market is in favor of sellers. In fact, between July 2015 and July 2016, hospitals acquired 5,000 physician practices and employed 14,000 more physicians.

Is now the time to sell your small practice?

This new report updates a prior study with an additional year of data, which examined national and regional changes in physician employment trends from July 2012 through July 2015, finding a consistent trend towards hospital acquisitions of physician practices and a dramatic increase in physician employment. The latest numbers show a continuation of that trend.

Per the report, both physician employment and hospital ownership of practices increased for the fourth consecutive year. From July 2015 to July 2016, the percentage of hospital-employed physicians increased between 5 and 22 percent across the country. Likewise, the percentage of hospital-owned practices increased between 8 and 47 percent.

Throughout the reporting period, hospital-employed physicians increased by more than 63 percent. Additionally, all regions saw an increase in hospital-owned practices, increasing from 83 to 205 percent.

Between July 2012 and July 2016, the number of physician practices employed by hospitals grew by 36,000 practices; a 100 percent increase over four years. As of the latest study period, 29 percent of physician practices were owned by a hospital, with the hospital acquisitions resulting in a 107 percent increase, more than doubling the ownership percentage over a four-year period.

Why the rise in hospital-owned practices is significant 

According to the report, the “shift towards employment has significant implications for physicians, patients and the healthcare system as a whole.” For physicians, “the trend brings challenges, but can alleviate certain burdens of independent practice,” and “government and private payer payment policies increasingly favor integrated health systems and make it challenging for physician practices to remain independent."

According to Robert Seligson, Physician Advocacy Institute CEO, "payment policies mandated by insurers and government heavily favor large health systems, creating a competitive advantage that stacks the deck against independent physicians, who are already struggling to survive under expensive, time-consuming administrative and regulatory burdens." 

With the trend continuing to rise, there is a real likelihood that hospitals will continue buying private practices. 

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Scott Rupp

Contributor

Scott E. Rupp is a writer and an award-winning journalist focused on healthcare technology. He has worked as a public relations executive for a major electronic health record/practice management vendor, and he currently manages his own agency, millerrupp. In addition to writing for a variety of publications, Scott also offers his insights on healthcare technology and its leaders on his site, Electronic Health Reporter.

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