More physicians join the ranks of the employed
Hospitals key buyers of practices
By Ruth Colby
Vice President-Account Management
Sachs Group
Evanston, IL
An increasing number of physicians are employed. Our research shows that 21% of physicians were employed by institutions in 1988, and in 1997 that percentage had risen to 32%. In contrast, 8.1% of employed physicians in 1988 were in physician-owned groups, a figure that climbed to 10.2% in 1997.
Hospitals continue to post the fastest rate of physician acquisitions. Of the 615 acquisitions during mid-1997 to mid-1998, 71% of physician practices that were purchased were purchased by hospitals. Only 12% were purchased by physician practice management companies, and 12% were purchased by medical groups. The fastest institutional growth was in for-profit systems. In a single year (1996 to 1997), for-profit systems posted a 22.2% increase in the number of physician practices they either acquired outright or were managing.
Although 80% of the systems acquiring physician practices lost money on those practices, physician practices overall generate as much as 25% of hospitals’ gross revenues through office visits and hospital referrals. Because hospitals are still losing money on physician practices, retention and acquisition of new patients for owned practices is equally important to the hospital owner.
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