Fewer physicians are owning practices. Here's why.

Medical practices are getting larger, and physicians are less likely to own them, according to a report from the American Medical Association.

Carol Kane, AMA's director of economic and health policy research, compiled the report released Wednesday by analyzing data from the association's biennial Physician Practice Benchmark Surveys from 2012 to 2022. The most recent survey was conducted in late 2022 and included data from 3,500 post-residency physicians.

Here are five key changes among physician practices in the past decade.

1. Physicians are less likely to own practices.

Nearly 47% of physicians worked in private practices in 2022, compared with 60.1% in 2012. Last year, 9.6% of physicians worked as hospital employees or contractors, up from 5.6%. More than 31% worked at practices at least partially owned by a hospital or health system, compared with 23.4%. a decade ago.

Women are less likely to own practices. In 2022, 35.7% of women physicians were owners versus 48.6% of men.

Last year, 44% of physicians owned practices, down from 53.2% a decade ago.

2. Payer relationships are driving the shift to hospital-owned practices.

About 80% of respondents said the need to negotiate better payment rates was a big reason behind selling their practices to a hospital or health system. Other frequently cited reasons  were the need for support on regulatory and administrative requirements (71.4% of respondents) and the opportunity to access costly resources (69%).

High rates of consolidation continue across the healthcare industry among organizations of all sizes, from individual practices to large health systems. Mergers and acquisitions slowed during the COVID-19 pandemic, but they have rebounded among hospitals and physician groups.

3. Practices are getting larger and shifting toward multispecialty care.

Last year, 18.3% of physicians worked at practices with 50 or more doctors, up substantially from 12.2% a decade ago. Just under 33% worked at sites with fewer than five doctors, compared with 40%.

Nearly 27% of physicians worked in multispecialty practices last year, an increase from 22.1% in 2012. Meanwhile, 41.8% of physicians worked at single-specialty practices versus 45.4% in 2012.

4. Some specialty care physicians are largely sticking to private practice.

Nearly 56% of OB/GYN physicians worked at single-specialty private practices in 2022, followed by 52% in anesthesiology and 51.5% in radiology. Internal medicine had the smallest proportion of physicians, or 27.8%, at single-specialty practices.

5. Private equity investment is an area to watch.

In 2022, 4.5% of physicians worked with private equity-owned groups, up slightly from 4.4% in 2020, when the AMA added that category to the survey. Private equity investments in general began years ago in areas such as urgent care and dermatology, but have since expanded into other high-level specialty services like cardiology or neurology.