America’s doctors are rapidly disappearing into hospital systems. And government distortions, through Medicare’s payment rules, are a big reason why. Higher premiums and out-of-pocket costs for patients are the ultimate result.
According to a new study from the Government Accountability Office, the share of the country’s doctors employed by or affiliated with a hospital system rose from 29% in 2012 to 47% in 2024.
It’s a troubling trend. Greater consolidation of physician services is a recipe for less competition, higher costs, and lower-quality care.
The federal government is only making the problem worse. For years, Medicare has paid more for services and procedures provided in a hospital than in a physician practice. This discrepancy has enriched hospitals and strengthened their ability to acquire physician practices.
Adopting site-neutral payments — that is, paying hospitals and private physician offices the same amount for the same care — would allow independent physicians to compete on equal terms with hospital-affiliated doctors. Such competition will ensure that patients have choices in where they can seek care and cut premiums and copays in the long term.
