PRIVATE PRACTICE IS DYING

In 1974, when I entered private practice, the vast majority of physicians were independent practitioners. The few physicians who were not independent were employed as emergency room physicians, hospital medical directors, medical educators/researchers, or were corporate employees of insurance companies or pharmaceutical manufacturers. Hospitals did not own practices nor did they employ physicians to “man” those practices. My guess is that fifty years ago more than 95% of physicians were independent practitioners in “private practice.” They owned their practice and oversaw every aspect of it. But back then the “business of medicine” was much less complicated than now so most of their time was spent on actual patient care.

Fifty years later, all that has changed. The American Medical Association published a policy perspectives paper titled “Physician Practice Characteristics in 2024: Private Practices Account for Less Than Half of Physicians in Most Specialties.” In it, they reported that in 2024, 42.2% of physicians were independent practitioners in private practice, a decrease of 18% from 2012, the earliest year such data was available. That’s a huge drop in recent years, but a mammoth decrease in the past 50 years! Today, the majority of physicians are employees, not independent practitioners. 

Why is this happening? The article cites three reasons; the same reasons that drove me to become an employed physician. I have written about this subject several times since my transition in 2007. The reasons are purely economic and pertain to the financial viability of a business. The “drivers” of this change are the following:

     1. Inadequate payment rates

     2. Costly resources

     3. Burdensome regulatory and administrative requirements

In layman’s language, those items translate into the following realities:

     1. Medicare and private insurance companies pay so little the business can’t survive

         financially

     2. The cost of business overhead is so high, payments received are not enough to pay bills

     3. The hoops and red tape doctors encounter to provide care impede the delivery of care

In other words, what doctors get paid and the hurdles they must deal with don’t pay the bills or keep a practice afloat. 

This trend has raised concern among health care economists because it threatens to decrease access to care and has already resulted in numerous physicians changing their practice model,  working part-time, or retiring early. The lack of access to health care worries those in charge of insurance companies, HMO’s, and Medicare. They formulate all types of policies to improve access, but without physician participation, these policies are powerless. If physician practices were treated as small businesses, were encouraged to exist, and were compensated far better than they currently are, access would improve, quality of care would improve, and patient satisfaction would exceed expectation. But the Center for Medicare and Medicaid Services has absolutely zero interest in the preservation and promotion of private practice medicine. In fact, these policies, and indeed, the policies of the U.S. government, are exactly the opposite.

References: Payerchin R, The Worrisome State of Independent Practice Medical Economics 2025 July/August:12-14.