Hospital System Acquisition of Physician Practices

Area of Science:

• Healthcare Management
• Health Services Research
• Physician Practice Management

Background:

• Physician employment by hospital systems has surged, with over 50% now employed compared to 20% in 2010.
• Hospital acquisitions of physician practices are a primary driver of this shift.
• These acquisitions raise concerns about increased healthcare costs and mixed impacts on care quality.

Purpose of the Study:

• To investigate the motivations behind hospital acquisitions of physician practices.
• To understand the perceived impacts of these acquisitions on patient care and operations.
• To gather insights from hospital system leaders and physicians involved in these transactions.

Main Methods:

• Qualitative research design utilizing semistructured interviews.
• Data collected from December 2024 to April 2025.
• Purposive sampling of 3 hospital systems, interviewing 18 hospital leaders and 19 employed physicians.

Main Results:

• Physician practice acquisitions were frequently initiated by physicians concerned about financial viability.
• Both leaders and physicians believed acquisitions improved patient care through integrated electronic health records and co-located services.
• Operational challenges included hospital leaders' concerns about physician productivity and physicians feeling sidelined in decision-making.

Conclusions:

• Physician practice acquisitions are often driven by physicians exiting independent practice.
• While acquisitions can enhance patient care, successful integration is hindered by persistent issues of physician productivity and autonomy.
• Resolving operational challenges is crucial for realizing the full potential of physician practice acquisitions in improving healthcare delivery.