Earnings gap in employed, self-employed healthcare professionals narrows

• The earnings gap between self-employed healthcare professionals and those employed by organizations tightened from 2001 to 2015, a new report published in JAMA found.
• The researchers uncovered that fewer physicians are self-employed in recent years than in 2001. The weighted percentage of self-employed doctors decreased from 35.2% in 2001 to 24.7% in 2015 while doctors employed by hospitals and health systems increased from 52.4% to 64.2%. Physicians employed by a government agency dipped from 12.4% to 11.1%.
• The study authors said large provider groups “may be better able to deal with the increasing complexity of today’s healthcare economy and therefore better able to pass down this advantage in the form of increased wages to healthcare professionals.”

This study, which reviewed information from 175,714 healthcare professionals from the American Community Survey, is the latest that confirms a move away from self-employment.

A recent report from Avalere conducted for the Physician Advocacy Institute found a 100% increase in hospital-owned physician practices. The study also reported a 63% increase in the total number of physicians employed by hospitals between July 2012 and July 2016.

PAI CEO Robert Seligson said recently that one reason for the move is that reimbursement policies favor large systems. The current payer environment “stacks the deck against independent physicians” through “administrative and regulatory burdens,” he said. Hiring physicians allows health systems to gain market share and lets providers get more leverage during payer negotiations.

Another reason for the trend is population health and the move to value-based care. Hospitals can only control so much of a patient’s health once the person leaves the facility. This makes value-based payment structures difficult for hospitals to control. Employing more physicians helps them gain more influence on costs and patient outcomes after the person leaves the hospital.

However, the JAMA report shows that self-employed physicians make more money than those employed by a hospital. The researchers found that employed doctors’ unadjusted annual median earnings increased from $179,350 in 2001 to $200,253 in 2015. Self-employed doctors’ earnings grew from $223,805 to $249,767. Physicians employed by the government saw their annual median earnings increase from $146,309 to $164,017.

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