The Impact of Corporatization in Health Care

By: Rathin Shah The healthcare industry has changed dramatically over the past decade as practice models evolve from self-employed independent physicians to large practices encompassing several hundred physicians. A report from the American Medical Association published in Medical Economics found that the percentage of doctors with an ownership stake in their practice declined from 53% in 2012 to 47% in 2016. (Gopal, 2021) Similarly, The Physicians Advocacy Institute reported an 86% increase in the number of practices owned by hospitals or health systems. (Larson & Beattie, 2018) The reason for this trend is multifold. Doctors in smaller practices do not command the volume of patients that enable optimally negotiated contracts with major health insurance payers like Blue Cross Blue Shield or United HealthCare. Another reason includes the greater flexibility, structure, and benefits that well-resourced corporations offer. Dr. Amee Majmundar, an allergy immunology physician, was in solo private practice for fifteen years before she joined Duly Health & Care. Her new employer offered healthcare benefits that were too expensive to provide for herself or her employees. “I really enjoyed running my own practice, but I was unable to enjoy disability or healthcare benefits. After joining a large practice, I instantly had colleagues and coverage for vacations.” Another consideration in comparing the two practice models is overhead; the cost to run a practice including salaries, rent, and office equipment. Data from the MGMA (Medical Group Management Association) shows overhead expenses on average consume 60% of a practice’s revenue. (Tinsley, 2010, 38-43) “I was able to run a lean practice on my own because I could control costs, but now, I no longer worry about a broken printer, or obtaining quotes for a fridge that needs to be replaced. These problems are taken care of by my practice manager so I can focus on practicing medicine, the thing I enjoy most,” remarks Dr. Majmundar. The impact of this new paradigm in healthcare impacts not only the physician but the individual consumer as well. As large companies push for greater productivity and revenue, thoughtful strategies will be needed to optimize a healthy relationship between the healthcare consumer, the healthcare provider, and the corporate systems that drive the industry forward.

The Impact of Corporatization in Health Care