Physicians in the United States are in the midst of a historic shift toward hospital employment. Between 2000 and 2010, the percentage of physicians who went to work for hospitals increased by one-third, and the rate appears to be increasing in the years since. Today, fewer than half of U.S. physicians are self-employed, down from over three quarters in 1983, and in 2014 it is estimated that three in four of all physicians hired will go to work for a hospital. What is driving this trend toward hospital employment, and is it good or bad news for patients?
A number of forces at work in contemporary health care are pushing physicians toward hospital employment. For one thing, they face rapidly increasing regulatory and administrative burdens, which weigh disproportionately heavily on physicians in solo and small-group practices. A related issue is the shift toward the use of increasingly sophisticated and expensive information technology, which again favors larger organizations that can support sizable IT staffs. These changes are making the old Marcus Welby model of medical practice increasingly untenable.
Another set of factors driving physicians toward hospital employment is financial. One is downward pressure on physician incomes. In many cases, hospitals can offer physicians more money than they are currently making, and employment contracts often guarantee income levels for a period of three to five years. A related factor is malpractice insurance costs, which pose an increasing financial burden for self-employed physicians but are typically covered by hospitals when physicians become employees. At least in the short term, these factors make hospital employment seem attractive.