Physician Employment in America: Private Practices Dominate Despite Increased Hospital Employment

Abstract

Objective:

A common perception is that physician-owned practices are in decline in the United States. However, there has been a lack of recent academic research to comprehensively characterize these trends. Our aim is to assess the current trends in physician employment over the last 2 decades to assess the interplay between private practices and hospital employment.

Methods and Procedures:

We analyzed data from the United States Census Bureau’s Statistics of U.S. Businesses (SUSB) and the Bureau of Labor Statistics’ Occupational Employment and Wage Statistics (OEWS). Industry classifications were defined under the North American Industry Classification System.

Results:

In 2022, the United States had 760,000 physicians, a 22% increase over the past decade. Hospital employment rose by 33%, while private medical practices grew by 17%. Currently, 55% of physicians work in private practices, down 3% from a decade ago, and 27% are hospital employed, up from 25% from a decade ago. Government employment decreased from 14% in 2013 to 12%. University employment remained stable (3%). There were 213,000 private medical practices in 2020, with 73% being small practices. There has been an increase in large practices(≥50 employees), while small practices (<50 employees) decreased by 16% over 2 decades.

Conclusion:

Private practices continue to be the dominant employment for physicians. Hospital employment over the last decade increased to just over one-quarter of employed physicians. Small private practices continue to be the most common type of private practice, despite an increase in larger private practices over the last decade.

INTRODUCTION

In recent years, there has been a notable evolution in the landscape of physician employment in the United States. Traditionally, the trajectory of physician employment has been closely tied to the prominence of physician-owned practices. Data from the past thirty years shows that physician employment has continued to rise.¹ However, a prevailing perception suggests a decline in such practices, prompting a critical examination of this phenomenon. Baseline data from Avalere health consulting firm has espoused that by January 2022, 74% of all physicians were hired by a corporate or hospital entity, a number that has increased since 2019 from 62%. This suggests that the COVID-19 era of 2019 through 2021 has accelerated this recent trend.² Contributing to this perception is the growing number of large hospital systems, with 68% of all hospitals belonging to some larger hospital system, including the 703,246 system-affiliated beds in the United States, out of the nearly 920,000 total, which may raise concern over growing monopolization of healthcare in the United States.³ Data on ownership is more sparse, with some estimates saying 44–46% of all practices are owned by physicians,^4,5 yet with estimates of 131,463 physician practices being owned by hospital or corporate entities, this means that there would be 234,755 practices in the United States²—yet data suggest that there are actually 338,8999 physician group practices, which are defined separately from solo physician practices.⁶

Despite this perception, a gap in recent academic research comprehensively characterizes the trends in physician employment. There remains to be significant contradictions and a lack of cohesiveness in the available data from private sources. The aim of this study was to analyze the trends in physician employment and private practices in the United States. Our hypothesis is that private practices and offices will continue to dominate despite growth trends in hospitals.

METHODS

We analyzed publicly available data from government and bureau census data. Physician employment, distribution and salary data were collected via the Bureau of Labor Statistics’ Occupational Employment and Wage Statistics (OEWS).⁷ Offices of physicians, office distribution and establishment data were collected via the Census Bureau’s Statistics of United States Business (SUSB).⁸ Industry classifications were defined under the North American Industry Classification System. Occupations were defined under the Standard Occupational Classification System.⁹ Industry-specific OEWS data are limited to the years 2013–2022, however, nonindustry specific OEWS data, including statewide data, such as general salary and employment can be extrapolated since 2007. State-wide specific SUSB data are limited to the years 2007–2020, whereas general SUSB data such as the number of physician offices and their size can be extrapolated since 2003. Establishment is defined as “a single physical location at which business is conducted or services or industrial operations are performed” per the Census Bureau. Firm is defined as “one or more domestic establishments in the same geographic area and industry that were specified under common ownership or control” per the Census Bureau.¹⁰ Small practices are defined as practices who have 50 or less employees. Large practices are defined as practices who have more than 50 employees. Physician offices are defined as “establishments of health practitioners having the degree of MD (Doctor of Medicine) or DO (Doctor of Osteopathy) primarily engaged in the independent practice of general or specialized medicine (except psychiatry or psychoanalysis) or surgery [who] operate private or group practices in their own offices or in the facilities of others.”¹¹ Analysis was performed in Microsoft Excel.

RESULTS

Physician employment has grown 22% since 2013 from over 620,000 and as of 2022, physician employment totaled over 760,000. Physicians were employed 55% (419,000) of the time by offices of physicians and 27% (206,000) of the time by hospitals. Only 3% (26,000) of physicians were found to be working in academic settings such as colleges, universities, and professional schools. The remaining 109,000 employed physicians were employed in all other industries. Hospitals employed 33% more physicians in 2022 (205,580) than they did in 2013 (156,700). Physician offices employed 17% more physicians (418,930) than in 2013 (358,330), indicating the rate of employment is double that of hospitals compared to physician offices (Figure 1). Despite this, the percentage of physicians working in physician offices in 2022 was 55%, which is down 3% from 2013 (58%) (Figure 2). Most physicians were found to be working in private sectors, with only 12% working in the public sector in 2022. There was a 2% decrease of government-employed physicians when compared to 10 years prior (Figure 3). Academic employment distribution saw no change from 2013 to 2022.

Figure 1.

Shows the employment of physicians across 3 different industries coded by the North American Industry Classification System (NAICS) over 10 years from 2013 through 2022. NAICS defines Physician Offices under NAICS-621111 coding, Hospitals under NAICS-622110, and all other industries referring to unspecified industry data.

Figure 2.

Percent of practitioners having the degree of MD (Doctor of Medicine) or DO (Doctor of Osteopathy) employed by private or group practices over a 10-year period. The statistical significance of the negative trendline is P < .005, 95% confidence interval.

Figure 3.

Total amounts of physicians by federal, state, or local government entities or privately-owned entities in all NAICS industries over a 10-year period.

Physicians overall earned $294,985 in 2022 and 84% more than they did 20 years ago ($160,406). The OEWS provides limited data between specialties, however there is wage data collected for surgeons and nonsurgery performing physicians distinctively in 2022. Overall, surgeons earned an annual mean salary of $338,000 between all industries. However, surgeons earned 11% more working in private practice ($354,000) than in hospitals. According to these estimates, surgeons earned the highest mean annual salary when employed by outpatient centers ($385,000). Outpatient centers include freestanding surgical, trauma and nonhospital emergency centers, family planning centers, outpatient community centers, HMO clinics, outpatient mental health and substance abuse centers and kidney dialysis centers. Surgeons were paid more by both hospitals and private practices when compared to nonsurgery practicing physicians, at 53% and 26% more. Overall, surgeons experienced a 10-year salary increase of 48%. Salary earned in 2022 is organized by the only 4 collected surgical subspecialties in Figure 4. Nonsurgical physicians overall earned an annual mean salary of $252,000 between all industries. Nonsurgical physicians earned 35% more working in private practice ($282,000) than in hospitals and earned the highest mean annual salary working in technical and scientific consulting services ($458,000). Annual earning is organized by the 12 collected subspecialties in Figure 5. Subspecialty data was only collected for 2022, given the difficulty in collecting consistent year-to-year specialty-specific data.

Figure 4.

Annual mean salary of 4 surgical subspecialties, as collected by OEWS, when employed by hospitals vs physician offices.

Figure 5.

Annual mean salary of 12 nonsurgical subspecialties, as collected by OEWS, when employed by hospitals vs physician offices.

Physician distribution in the United States was collected to analyze the change in the number of physicians along with the change in their annual salary from 2007 to 2022. California had the most significant increase of 140,100 physicians in this period along with Florida, New York, Pennsylvania, and Texas having notable increases (Figures 6A and 7). Generally, physician annual salaries increased across all states with Montana and North Dakota having the most dramatic increase of $188,920 and $169,266, respectively. In 2007, the average annual salary in Montana was $132,898 and in North Dakota, $158,248, then in 2022, physicians’ yearly salaries were $321,818 and $327,515, respectively (Figures 6B and 8).

Figure 6.

(A) The change in total employment of all physicians employed by federal, state, or local government or privately-owned entities in all NAICS industries in each state over a fifteen-year period. (B) The change in the annual salary of all physicians employed by federal, state, or local government or privately-owned entities in all NAICS industries in each state over a fifteen-year period. (C) Distribution of establishments of private or group practices in the United States in 2020. Establishments are all stand-alone physician offices. Family-owned, private-equity-owned, and other types of ownership are not specified.

Figure 7.

The change in total employment of all physicians employed by federal, state, or local government or privately-owned entities in all NAICS industries in each state over a fifteen-year period.

Figure 8.

The change in the annual salary of all physicians employed by federal, state, or local government or privately-owned entities in all NAICS industries in each state over a fifteen-year period.

In 2020 there were 224,583 physician offices across the United States. Distribution varied widely across the United States in 2022. California had the highest overall number of physician offices (2,954) and New Jersey had the highest number of physician offices per 1,000 households in (2.3). North Dakota held the lowest overall number of physician offices and by household density (180, 0.5) (Figure 6C). The number of physician offices increased by 2% (4,597) from 2007 (219,986) to 2020. Thirty-one states saw a decline in physician offices, when including mental health specialists, over this period with New York, Ohio, Illinois, Massachusetts, and Pennsylvania seeing a decline in over 500 establishments. Physician offices in New York accounted for 26% (2,747) of the total loss in physician office establishments nationwide (2007 to 2020). Nineteen states and the District of Columbia saw an increase in establishments. Texas, California, Florida, and Georgia accounted for a 26% (3,788), 20% (2,954), 18% (2,570), and 9% (1,276) increase in private practice establishments, respectively (Figure 9).

Figure 9.

Change in the number of physician-office establishments per state over 13 years (2007–2020).

When excluding mental health specialists, there were 213,000 physician offices in 2020. Small practices of physician offices (<50 employees), when excluding mental health specialists, have decreased by 10% over the past 20 years (2003–2022) from 170,467 locations to 154,787. In 2020 small practices consisted of 73% of the total number of physician offices (212,957), which is 16% less than 2003 (192,653). Large physician offices (≥50 employees) have increased by 162% from 22,186 to 58,170 offices nationwide (Figure 10).

Figure 10.

Number of establishments of private or group practices in the United States from 2002–2020 stratified by small medical practices (less than 50 employees) and large medical practices (greater than 50 employees). These values exclude mental health specialists due to lack of employee size data. The significance of distribution between small and large private medical practices is P < .00001, 95% confidence interval, using a Mann-Whitney U test.

DISCUSSION

Over the past 20 years the nation has seen significant growth in the three measures of healthcare provider success in all industries. Overall, physicians are employed more, earn more, and have more offices than 20 years past. Physician offices dominate in the employment of physicians, including their salary, as physicians are both more likely to earn more working for physician offices over hospitals. Additionally, while surgeons are more likely to earn more than nonsurgical physicians in both hospitals and private practice, nonsurgical physicians occupy the highest range of earnings for all MD and DO degree holders. Despite this, there remains grim estimates and concerns over ownership of practices. Interestingly, data collected in 2022 from the Avalere group suggests that corporate entities acquired 31,300 more physician practices after the onset of COVID-19, compared to only 4,800 practices acquired by hospitals during this same time period.² Further examination of employment status revealed that the number of physicians as partial owners in their practice decreased by 9% in 2022 from 53% in 2012.¹² Perhaps the landscape of healthcare is not facilitating physician ownership, or perhaps newer physicians have no desire to be owners. New York is of particular interest, as we found that there was an increase in physicians hired but a decrease in physician offices in this state which could position the state as a desirable location for physicians looking to be employed rather than be owners.

It is important to note these databases from Avalere, the American Medical Association, Definitive Healthcare, and many others from which these numbers are extrapolated from are private with public inaccessibility.^2,4–6 In order to allow the opportunity for scrutinization of data and a transparent discussion of where we are as an industry, a major objective of this paper was to utilize publicly available data. Additionally, while Avalere, Definitive Healthcare and Beckers ASC maintain proprietary databases with limited transparency of their methods and data collection, the American Medical Association has published robust reports of their data and collection methods. Despite this, the data are solely survey based, with a small sample size surveying 3,500 physicians which is not representative of the nearly one million physicians employed in the United States.

Overall, we largely achieve a well rounded and robust analysis of general trends of private practices and physician healthcare hiring. One limitation of United States Census and Labor Statistics data involves a lack of information on ownership stake. Data on ownership status is only reported by private firms with proprietary databases. Therefore it is difficult to say whether or not these private-practices are “physician owned” or not, which only serves to highlight the mystifying state of the solo-physician practice owner. Another limitation of the data are its variability in which medical specialties are distinct, with year-to-year data trends for specific specialties, nationally and by state, currently unobtainable or inconsistent. It is reported that specialties such as Ophthalmology are more often privately owned by physicians than other specialties which face a greater threat of hospital integration, however the data explored in this study is unable to address these discrepancies.¹³ In the broader scope of the discussion of healthcare trends and medicine, we strongly encourage the adoption of open access healthcare databases and encourage the advancement of more rigorous and complete Census data in order to gain these valuable insights.

The definitive value of 213,000 medical practices in the United States does not include offices of mental health specialists due to no data available regarding the size distribution of these practices. According to the Census Bureau, there are approximately 10,000 institutions with this distinction. It is important to note that these practices require practitioners with MD and DO qualifications, and that these practices were included in statewide distribution analysis only. Smaller practices still dominate physician office distribution in the United States, with most physician offices being small practices. Yet there is a large boom in large practices and steady decline in small practices suggesting that larger physician groups may be absorbing smaller practices. The distribution of practices in the United States is seeing some mobility from New York and Ohio, to popular moving destinations like Georgia, Florida, Texas, and California. Despite this movement, rural states such as Montana, North Dakota, Idaho, Wisconsin, Minnesota, and Nebraska experienced the highest increase in salary earnings for physicians, regardless of their relatively dismal increase in employment and practice density. This observed dichotomy is a potential research point in the future, to examine shifting trends of rural and urban dominated states in the scope of healthcare, as well as what factors outside of salary could be contributing towards these migration patterns. Educators, owners, and neophytes together should benefit from access to comprehensive salary, job prospects and institutional trends.

It is important to understand these trends which dominate healthcare, as targeted strategies to different areas of the United States experiencing coming shortages or migration of physicians and healthcare providing offices can help mitigate these coming issues. Current literature suggests that for both physicians and nurses, shortages will dominate the 2030s. It is estimated by 2030 that 23 states in the United States will experience a significant physician shortage, as well as 30 states will experience a significant nurse shortage, particularly western regional states.^14,15 Our data suggest that while physicians are being paid more generally, this does not appear to correlate to employment or their distribution, suggesting that earning a higher salary does not generally influence where a physician decides to practice. This is problematic for these very regions facing this issue. One idea involves not looking at physician density, but perhaps accessibility to physician care to address the coming shortage, due to the fact that midwest density may vary greatly from more metropolitan dense states.¹ Political packdrops and state laws may also influence distribution, as one study found that physicians occupy a unique voter group in key states such as California, Texas and New York, which are states of interest in this paper and in national voting.¹⁶ Another solution to increasing rural accessibility is in fact increasing accessibility of rural care to students first.¹⁷

CONCLUSION

Physician offices such as standalone establishments and private-practice dominate medicine, despite hospitals and even larger physician firms increasing in employment and numbers. Physicians that are across the board paid more, however a physician is more likely to earn more in private-practice than working for hospital firms. The distribution of physicians in the U.S. and their associated earnings suggest that physicians prefer to work in more urban areas than rural, despite the higher salary observed in rural area employment. Small private practices continue to dominate, yet trends between small and large practices suggest these 2 groups will intersect in 29 years (2051). Measures influencing distribution need to be examined more, including political, economic, and communal motivations for young physicians. Medical education can address ownership decline by increasing programs offering business education alongside medical curricula.