It took just over 20 years for physicians to witness the erosion of the once prosperous profession of medicine. With the institution of managed care, physician benefits such as compensation, autonomy, lifestyle, job security, and career satisfaction have all but disappeared.
Tectonic shifts including the internet, increasing competition from globalization, technological disruption, shifting marketplace dynamics, generational differences, and unsustainable business models have forced the medical field to evolve from a profession devoted to serving patients into a profit-driven business controlled by insurance, business executives, lawyers, and politicians. “Black swan” events such as 9/11, the 2008 financial crisis, and the ongoing COVID-19 pandemic have precipitated a worsening of this trend.
The current model of healthcare in the U.S. has been unsustainable for decades with costs out of proportion to the level of care provided.
As we’ve witnessed firsthand, hospitals continue to be overwhelmed. They needed greater provider support but could not afford nor protect them. Yet, many hospitals recorded huge profits from federal stimulus programs last year.
The following are 5 disturbing trends that signify the end of “job security” in healthcare, and potential solutions to address the problem:
Losing the healthcare workforce. In addition to typical retirement at the end of a long career, the profession is losing a large portion of its younger workforce due to burnout, lack of career fulfillment, and career exodus from physicians less than 5 years out of training. According to the American Association of Medical Colleges, the U.S. is predicted to have a massive shortage of physicians estimated between 37,800 and 124,000 physicians by 2034. Staffing shortages are leading hospitals to replace physicians with nurse practitioners and physician assistants. In other cases, hospitals are closing or merging with larger entities.
Increasing physician unemployment. To combat the predicament of a physician shortage by 2034, new medical schools are opening across the country, and existing schools are increasing their enrollments. However, residency-completion and board-certification are prerequisites for practicing, and the Accreditation Council for Graduate Medical Education (ACGME) is increasing the number of residency positions and programs at a rate significantly less than the total number of residency applicants each year. Many of these physician graduates carry large student loan burdens and have spouses and children to provide for. Because of this trend, too many graduating physicians will be forced to defer a year or more to obtain a residency, or abandon their dreams of clinical practice altogether.
A model towards hospital-based W2 employment. With the consolidation of healthcare systems and physician practices, the trend for physician employment will be towards large hospitals and organizations as opposed to the solo private practitioner model. Smaller entities will not be able to sustain a competitive advantage in today’s healthcare marketplace. From a tax liability standpoint, a W2 income statement offers the least benefits, and severely limits a physician’s choices in terms of practice location and choice of employer.
Replacement of physicians by other providers. While the reasons for this trend are multifactorial, an increasing number of physician assistants and nurse practitioners are being employed to provide patient care in roles typically held by physicians. The long-term effects of this trend have started to raise questions among physicians from a financial and patient care standpoint.
Buyout of physician practices by private equity. With the for-profit business model in U.S. healthcare, a number of private equity firms have targeted physician group practices for acquisition. According to a research letter published in JAMA in 2020, the number of physician practices acquired increased from 59 to 136 from 2013 to 2016. Anesthesia and multi-specialty groups were targeted as the most attractive, followed by specialties such as emergency medicine, family medicine, and dermatology. While these numbers remain relatively small, this trend is concerning since these practices have the potential to be solely controlled by the interest of shareholders and Wall Street in the future. This places shareholder interests above those of patients and providers.
We are on a fast-moving train on a collision course. Our society is in need of a healthy and robust healthcare workforce, but we are witnessing an aging profession, obsolete paradigms, an inability to afford, train, and educate the workforce, increasing regulatory requirements, and an aging population. All of this is happening in the midst of a strained healthcare system brought on by COVID-19. Hospitals have responded by cutting pay, furloughing, laying off workers, increasing requirements, and hiring cheaper replacements, while maintaining their profit margins. These measures serve the business model, while neglecting the underlying provider workforce and compromising patient safety and satisfaction.
Looking back in history, this trend can be seen in the auto and airline industries, among countless others, as a result of clinging to outdated Industrial Age business models. Physicians need a more entrepreneurial mindset and greater advocacy. We need to develop early financial literacy and create multiple streams of passive income independent of our clinical practice so that we can practice medicine on our own terms as opposed to being at the whim of hospital-based decisions. Physicians must wake up and do something about the dire future of the healthcare landscape.
Christopher H. Loo, MD, PhD, is a retired physician, author of “How I Quit My Lucrative Medical Career and Achieved Financial Freedom Using Real Estate,” and the host of the Financial Freedom for Physicians Podcast.