The Rise In Physician Employment Not Totally Unexpected

The most recent edition of the American Medical Association (AMA) Physician Practice Benchmark Survey shows that, for the first time in history, the number of employed physicians is greater than the number that own their own practices. The numbers are surprising, but not in the way most people would expect.

The fact that employed physicians outnumber private practice owners is not at all unexpected. What is surprising is that it took so long to get to this point. According to the AMA, the number of private practice owners fell a striking 14 percentage points during the six years between 1988 and 1994. That trend made it clear that private practice ownership was in decline.

It was then assumed that the decline would occur more quickly than it actually has. Not only did the rate of decline steadily fall after 1994, but it fell enough that it took an additional 15 years to get to a point many expected would be reached by the end of the last century.

Clinician Employment Among Hospitals

The AMA survey showed that 47.4% of America’s doctors are employed while 45.9% still own a practice. As for where the employed doctors are working, hospitals and hospital-based practices seem to be the big winners. The survey indicates the following:

  • 54% of employed doctors work for other doctors in their practices
  • 7% of all patient care physicians work in hospital-own practices
  • 7% of clinicians work either directly for a hospital or a practice with at least partial hospital ownership
  • 70% of clinicians under the age of 40 are employees.

The final statistic says a lot about the perceptions of younger doctors. Where older doctors would not have given much thought to employment upon first entering the workforce, younger doctors tend to think of employment first. They are more willing to be employed than their older counterparts.

Locum Tenens Clinicians

The report does not address locum tenens in contrast to standard employment or private practice ownership. However, we do know that locum tenens continues to grow. Clinicians unwilling to own practice or work under the traditional employment model turn to locum tenens as an opportunity to enjoy the best of both worlds.

The locum is self-employed under the law. Even if he or she utilizes staffing agencies to find contracts, the locum still ultimately decides when and where to work. It is up to the locum to negotiate an acceptable contract and to fulfill the terms of that contract. So in that sense, locum tenens is still a form of self-employment.

On the other hand, locums have an obligation to fulfill the terms of their contracts. In so doing, the clinician has a fiduciary responsibility to the facility at which he or she is working. It is an obligation similar to traditional employment.

No Indication of the Future

In the summary of the survey, the AMA is clear that their data is not necessarily an indicator of the future. They do not believe the most recent drop in the total number of private practice owners is indicative of similar drops down the road. The AMA recognizes that healthcare trends come and go as demonstrated by differences in the rate of decline since the 1980s.

It could very well be the private practice ownership continues to dwindle until there are no private practices left. But it is also possible that our new emphasis on value-based health care will cause hospitals to change direction. Such a change could spur a revitalization a private practice ownership within the next decade.