Physician Compensation In Physician-Owned And Hospital-Owned Practices

Abstract

Physician practices are increasingly being acquired by hospitals and health systems. Despite evidence that this type of vertical integration is profitable for hospitals, the association between these acquisitions and the incomes of physicians in the acquired practices is unknown. We combined national survey data on physician practice ownership with data on physician income to examine whether hospital or health system ownership of physician practices was associated with differences in physician income during 2014-18. During the study period, hospital and health system ownership of physician practices increased by 89.2 percent, from 24.1 percent to 45.6 percent of all physicians in our sample. Among physician practices overall, vertical integration with hospitals or health systems was associated with, on average, 0.8 percent lower income compared with independent physicians after multivariable adjustment. In analyses by physician specialty, vertical integration of physician practices with hospitals or health systems was associated with lower income for nonsurgical specialists, no difference in income for primary care physicians, and slightly higher income for surgical specialists. Although vertical integration of physician practices is a rapidly growing trend, physicians might not directly benefit financially.

EXHIBIT 1. Percent of US physicians in practices owned by hospitals or health systems, by specialty group, 2010–18

SOURCE Authors’ analysis of data from SK&A Office-Based Physicians Database (now IQVIA). NOTES Specialist physicians included cardiologists, hematologists/oncologists, orthopedists, and radiologists. The percentage of physicians in practices owned by hospitals or health systems was calculated at the county level and then population weighted to create a national estimate for each year.

EXHIBIT 2. Association between hospital or health system ownership of US physician practices and dollar differences in physician compensation, by selected physician, hospital, and market characteristics

SOURCE Authors’ analysis of 2014–19 income survey data from Doximity and 2013–18 SK&A Office-Based Physicians Database (now IQVIA). NOTES Figure plots point estimates and 95% confidence intervals for the association between hospital or health system ownership of physician practices and dollar differences in physician compensation, and how this association varies by physician specialty, hospital profit status, and hospital market concentration. Regression results are in appendix exhibit 8 (see note in text).

EXHIBIT 3. Association between hospital or health system ownership of US physician practices and percent differences in physician compensation, by selected physician, hospital, and market characteristics

SOURCE Authors’ analysis of 2014–19 income survey data from Doximity and 2013–18 SK&A Office-Based Physicians Database (now IQVIA). NOTES Figure plots point estimates and 95% confidence intervals for the association between hospital or health system ownership of physician practices and percentage differences in physician compensation, and how this association varies by physician specialty, hospital profit status, and hospital market concentration. Regression results are in appendix exhibit 9 (see note in text).

EXHIBIT 4. Association between US physician income and length of time relative to practice acquisition

SOURCE Authors’ analysis of 2014–19 income survey data from Doximity and 2013–18 SK&A Office-Based Physicians Database (now IQVIA). NOTES Figure presents results from an event study analysis that compares incomes of physicians who happened to have their incomes surveyed before versus after their practice was acquired, under the assumption that the timing of when a physician was surveyed and reported their income was unrelated to the timing of that physician’s practice being acquired. Regression results are in appendix exhibit 10 (see note in text).