Physician income declines when hospitals acquire practices, study shows

Those employed by health systems had about 49% lower Medicare billing, worked more hours per week and were in practice for fewer years.

December 9, 2021 / Jeff Lagasse, Associate Editor

Hospital acquisition of independent physician practices is linked to a small drop in physician compensation, with a 0.8% drop in average income, according to new findings published in Health Affairs. This suggests hospitals may not benefit financially when hospitals buy their practices.

From 2014 to 2018, hospital ownership of physician practices increased a full 89%, and the data from this time period began to uncover differences in compensation among various specialties. Non-surgical specialists, for example, saw their average income dip more than $9,650 annually, or 2.4%, while surgical specialists saw their incomes rise a modest 2.1%, or about $10,700 on average. 

Primary care physicians also saw an increase, though at 1.2% ($3,179) it was much more modest.

Deeper dives into the numbers uncovered more detrimental effects to physician compensation than just average annual income, however. Compared to independently practicing physicians, for instance, those employed by health systems had about 49% lower annual Medicare billing, worked an average of about three more hours per week and were in practice for fewer years.

Yet many physicians are also seeing incentives to integrate with larger hospitals or health systems, such as overcoming concerns about losing referral privileges, and seeking help with implementing complicated electronic health records. 


Chris J. Stewart

Chris currently serves as President and CEO of Surgio Health. Chris has close to 20 years of healthcare management experience, with an infinity to improve healthcare delivery through the development and implementation of innovative solutions that result in improved efficiencies, reduction of unnecessary financial & clinical variation, and help achieve better patient outcomes. Previously, Chris was assistant vice president and business unit leader for HPG/HCA. He has presented at numerous healthcare forums on topics that include disruptive innovation, physician engagement, shifting reimbursement models, cost per clinical episode and the future of supply chain delivery.

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