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Evidence Mounts: Physicians Leaving Private Practice for Hospitals

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Louisiana’s medical society reports doubling of hospital employment in four years

NEW ORLEANS, La. – Growing evidence, including a survey from the Louisiana State Medical Society, suggests many doctors are giving up on private practice for employment in hospitals. Physicians and industry representatives offer varied explanations, including greater market power of hospitals, onerous regulations, and different generational preferences.

The LSMS conducts a biennial survey of its 6,500 members, and its most recent survey showed that between 2005 and 2009 the proportion employed in hospitals more than doubled from 3.6 to 8.2 percent. While the survey elicits responses from less than a third of members, employment proportions had been steady from 1998 to 2005.

Consistent with the shift, the American Medical Association’s 2007-2008 survey found doctors under 40, compared with those over 55, were twice as likely to work in an institutional setting. Merrit Hawkins, America’s largest physician recruiting firm, says that 51 percent of their 2010 physician clients were searching for hospital placement. That’s up from 19 percent in 2005, so as the profession ages fewer are set to work in private practice.

Sadie Wilks, LSMS director of communication, is unwilling to provide a firm explanation, given limited measurement criteria. Anecdotally, her impression is that generational values are changing away from independence in favor of a hospital safety net. Consistent with prominent policy concerns, though, she acknowledges that increased regulatory compliance costs, which foster economies of scale, may also play a role.

“This signals the further decline in the free practice of medicine,” says Dr. Thomas Kendall Sr., a South Carolina spokesman for the Association of American Physicians and Surgeons.

“Although innovation and modern medical advances require the intensivist and hospitals domain, the political principles that evolved and are now in place preclude the historical benefit that is at the core of the physician/patient relationship. The ‘bailout’ mentality and the legislative ObamaCare restrictive bondage will not ultimately prove financially sound.”

Sally Pipes of the Pacific Research Institute, a San Francisco-based non-profit, agrees and believes the latest reforms, contrary to public claims, will exacerbate the reported trend. Pipes specifically identifies the law’s electronic records requirements, and she fears that the greater market power of hospitals will raise insurance costs even higher.

“It is almost unheard of now, a new graduate starting their own solo practice,” says Christina Piron, a New Orleans-native and senior medical student about to enter pediatric residency.

“I think the biggest driver of this is money. We are graduating with ever increasing education debt and malpractice insurance is steep. Combine that with the cost of starting a new business and it’s virtually impossible to start a new practice.”

Piron acknowledges that “we will always need the community doc. They are the backbone of healthcare,” but in her view many industry changes are working against them. Like Pipes, she cites electronic records systems as impeding rather than aiding the ability of community doctors to maintain a relationship with patients after referrals.

(Piron, now looking at both Tulane and LSU schools of medicine for residency, gave a longer interview. Click here for a transcript of her in-depth perspective.)

Fergus Hodgson is the capitol bureau reporter with the Pelican Institute for Public Policy. He can be contacted at fhodgson@pelicaninstitute.org, and one can follow him on twitter.

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