California’s Physician Practice Landscape: A Rapidly Changing Market with Limited Data

Roughly 75,000 physicians are in active practice in California, and their practice settings are many and varied, with a wide range of size, ownership, legal structure, and affiliations. Further, these practice settings are rapidly evolving in a changing market and policy environment.

At the health system level, market consolidation has accelerated, raising concerns about market power, increasing prices, and the erosion of independent practices. COVID-19 has exacerbated challenges faced by providers, especially small independent practices, and accelerated physician retirement and exit.

Physician services account for 20% of total health care spending, the second-largest category behind hospital care, at 31%. Yet information about the structure, characteristics, and financing of physician practices is piecemeal and often not publicly available. In addition, lack of shared definitions and language about the structure and characteristics of physician practices can create confusion, exacerbated by the tremendous variation and complexity in contractual relationships and payment arrangements, including delegated responsibilities between payers and providers.

California’s Physician Practice Landscape: A Rapidly Changing Market with Limited Data reviews available information sources on the physician practice landscape in California with a focus on existing regulatory and reporting requirements. It also begins to create common language and terminology about physician practices and organizations with the goal of enabling a more substantive discussion of relevant policy issues — including gaps in currently available information, and possibilities and prospects for a new Office of Health Care Affordability, which may require additional reporting from many actors in the health care system.

The paper is available for download below.