Physicians are Today Mostly Employees as the Healthcare Provision Landscape Rapidly Corporatizes
As far back as the 1980s, there was some talk of the coming “proletarianization” of physicians. However, only in recent years does the phenomenon seem to have truly taken hold.
Or, at the very least, we can say that the self-employed physician — at one point the archetype of the profession — is rapidly disappearing, at least in most specialties (private practice psychiatry is a presumed significant exception).
A recent report from Avalere, a healthcare consulting company, found that, as of January 2024, 77.6% of US physicians are employed by either hospitals or corporations — up from 62.2% in 2019.
This is similar to an estimate that colleagues and I published using a distinct data source, published in Milbank Quarterly:
There has also been a good deal of recent press about physician practices in numerous specialties being gobbled up by private equity firms. A 2023 report, Monetizing Medicine: Private Equity and Competition in Physician Practice Markets, found that in some regions, PE firms now own substantial market share:
At the local level, we find that individual PE firms are acquiring competitively significant shares of physician practice markets. In particular, in 28% of metropolitan statistical areas (MSAs), a single PE firm has more than 30% market share by full-time-equivalent physicians, and in 13% of MSAs, the single PE firm market share exceeds 50%.
PE firms, however, invest for the short-term, extracting profits for investors and then quickly heading for the exits, often leaving firms stripped of assets and headed down the drain (and their patients in the lurch). We are having a (large and unpleasant) taste of that now in Massachusetts, with the deeply distressed PE-acquired Steward Healthcare network, which owns some 10 hospitals in the state. The fate of the hospitals is unclear. However, last month, Steward announced that it is selling off its entire physician network to Optum, the healthcare delivery arm of insurance giant UnitedHealth. UnitedHealth already employees or is affiliated with a staggering 10% of all US doctors. Perhaps this becomes the norm (or one model) for PE-acquired healthcare investments: after being strip-mined, they are rolled up into giant corporate entities like UnitedHealth, which is also a massive insurer and pharmacy benefit manager.
There is nothing wrong with physicians being employees: in fact, I far prefer it, and have zero interest in running a small business. The problem is the context in which this shift to employee-status is occurring: it is part and parcel of a broader and unprecedented corporatization of healthcare delivery. Pharmaceutical companies and private health insurance have, of course, long been corporate-owned. But now that is increasingly true of almost every provider sector. The consequences — both for medical workers and patients alike — could be grave.