Fewer Than Half of U.S. Physicians in Private Practice

The share of U.S. physicians working in private practice continues to decline, dropping from 60.1% in 2012 to just 42.2% in 2024, according to the American Medical Association’s latest Physician Practice Benchmark Survey.

This trend reflects the growing influence of hospitals and corporate entities over the U.S. healthcare delivery system and presents an ongoing challenge for the medical professional liability (MPL) insurance industry, which depends on independent physicians as its primary customer base.

“The share of doctors working in practices wholly owned by physicians is unraveling under compounding pressures,” said American Medical Association (AMA) president Bruce A. Scott, M.D. “The cumulative impact of burdensome regulations, rising financial strain and relentless cuts in payment poses a dire threat to the sustainability of private practices.

After adjusting for inflation in practice costs, Medicare physician payment has fallen 33% over the past quarter century, which has severely destabilized private practices and jeopardized patients’ access to care. Payment updates are necessary for physicians to continue to practice independently.”

The biennial AMA survey, which this year expanded to include 5,000 respondents, also found that — for the first time — fewer than half of physicians (47.4%) work in practices with 10 or fewer physicians, down from 61.4% in 2012 and around 80% in the early 1980s.

The portion of physicians in practices with 50 or more physicians increased from less than 5% in the early 1980s to 12.2% in 2012 and 18.3% in 2024.

Single-specialty practices still accounted for the largest share of physicians at 37.2%, though this marked a significant decline from 45.4% in 2012.

Meanwhile, 27.8% of physicians worked in multi-specialty practices, an increase of about 6 percentage points over the same period. Multi-specialty practices also tended to be larger in size, with 40.6% of physicians in such settings reporting they worked in groups of 50 or more physicians and 29% in practices with 10 or fewer.

By comparison, just 10.5% of physicians in single-specialty practices reported being in practices with 50 or more physicians, while 62.8% were in groups of 10 or fewer.

The shift away from physician ownership was especially pronounced. Only 35.4% of physicians reported having an ownership stake in their practice last year, down from 53.2% in 2012.

At the same time, 57.5% of physicians were employed, an increase from 41.8% in 2012, and 7.1% were independent contractors.

The shares of employees and owners shifted by approximately 8 percentage points upward and downward, respectively, since 2022 — larger changes than those seen in previous two-year periods. This unusually sharp shift occurred across most age groups, specialties and gender, with no single segment driving the trend.

Hospital-owned practices now account for 34.5% of physicians — up from 23.4% in 2012 — and 12.2% of physicians are directly employed or contracted by hospitals — more than double the 5.6% in 2012.

Private equity ownership, which was first measured in 2020, rose from 4.5% in 2022 to 6.5% last year.

While private practice remains common among certain surgical specialties — 70.4% of ophthalmologists, 54% of orthopedic surgeons and 51.2% of surgical subspecialties remain in private practice — no other specialty group surpasses the 50% threshold. Less than one-third of general surgeons were in private practice in 2024.

Primary care fields like pediatrics, internal medicine and family medicine all have private practice rates in the high 30% to low 40% range.

Only 33.2% of emergency medicine physicians work in private practice, a notably lower share compared to anesthesiologists (46.4%) and radiologists (46.9%). The share for obstetricians/gynecologists in private practice was 46.3%.

The AMA report also sheds light on why physicians are leaving private practice. Among those whose practices were acquired in the past decade, 70.8% said inadequate payor reimbursement rates were an important or very important reason for the sale.

Access to costly resources (64.9%) and relief from regulatory and administrative burdens (63.6%) were also frequently cited.

Private equity acquisitions appear to be a newer trend. The survey discovered that 38% of physicians in private equity-owned practices said their practice was acquired after 2019, compared to just 10% of physicians in hospital-owned practices.

While 47.2% of physicians in hospital-owned practices said they had been acquired prior to 2015, only 17.1% of physicians in private equity-owned practices said the same.

Practice size and structure vary significantly by ownership model. Nearly half of physicians in private practice work in offices with fewer than five physicians (49.2%), compared to just 16.1% in hospital-owned practices and 12.9% in those owned by private equity.

In contrast, nearly one-third of physicians in hospital-owned (31.3%) and private equity-owned (32.6%) practices work in groups of 50 or more, while only 11.8% of private practice physicians do.

For the MPL insurance industry, the shrinking share of private practice physicians presents a significant challenge. Independent practitioners are the primary purchasers of MPL coverage, securing their own policies through insurance agents or directly from insurers.

In contrast, physicians employed by hospitals or corporate entities are typically covered by self-insurance vehicles or captive insurance arrangements managed by their employers.

As more physicians move into employment-based models, traditional MPL carriers face a shrinking customer base and growing pressure to diversify their product offerings or adapt their underwriting strategies to serve large institutional buyers rather than individual providers.

SA