According to the Physician Advocacy Institute, the number of physician practices owned by hospitals and health systems rose 86 percent from 2012 to 2015. Hospital and health system employment of physicians also increased by over 50 percent during these years.
Obviously, these are big numbers. Privately owned and operated medical practices are becoming rarer, as physicians feel the squeeze of ever-increasing mandates and declining reimbursements. Because of this, signing on with a large delivery system that can help a practice get better rates with insurers and takes some of the management headache off of the practice is understandable.
In many cases, selling a medical practice to a hospital system and becoming an employed physician is the lifeline a practice needs. But other times, a physician who was accustomed to practicing independently regrets that choice and wants to go back to private practice. But once a practice is sold, can a physician take it back?
Returning to private practice after selling is a complicated business. Every contract is different, but typically, if a physician is able to withdraw from their contract, they face several important challenges.
Reimbursements go down: One of the major advantages of a large delivery system affiliation is the bargaining power. A private physician will not have the same leverage and will likely see reimbursements from third party payers decrease.
Non-compete clauses: Many contracts mandate that a physician who leaves the delivery system network cannot open a practice within a certain geographic radius of the system. This can make it near impossible to retain loyal patients. Most people are only willing to travel so far to see their physician.
Patients "owned" by the system: When a physician sells their practice, they are essentially selling their relationship with patients. Once ownership of those patient files are transferred, it may be difficult to get them back. Oftentimes, the physician has been compensated for those relationships—the exiting physician cannot attempt to retain them by announcing their new office or practice directly to their patients. They will have to start a new practice from the very beginning.