Employed vs. Independent Practice as a Physician

FEBRUARY 06, 2018
Heidi Moawad, MD
One of the most important decisions a doctor makes is whether to take an employed position or to run an independent practice. There are pros and cons to each choice, and the decision rests on factors that relate to personal preference as well as professional survival.  

Financial Risk 
Independent physicians take in more financial risk than employed physicians. The investment required to rent or buy clinic space, purchase medical equipment and pay staff salaries is an upfront cost of setting up a medical practice — before any patients are even scheduled, and long before any patient care reimbursement is collected.

Depending on your financial and emotional ability to withstand risk, this may or may not be the right choice for you. More and more doctors are opting to take paid positions instead of adding costs — or debt — to their already extensive educational loans. Yet, some consider the investment of owning a medical business and controlling the profit worth the upfront expenditure and risk.

Payer Negotiation 
As contracts with payers have become more complex than ever throughout the past several years, many doctors consider the prospect — or reality — of negotiating payments for a small practice to be nearly impossible. Sometimes larger nearby healthcare systems are granted preferred provider status, or the reimbursement that smaller practices can negotiate for medical services provides minimal, if any, profit margin with which to run a medical business.
 
Yet, on the other hand, some small practices and independent physicians are in a position to negotiate for better reimbursement from payers if, for example, the large hospital systems make trade-offs that result in deeply discounting some specialists’ services. 

The Final Word On Decisions 
Will the office close on government holidays? Are all patients offered same-day appointments? Is it customary to request brand names for some prescriptions? Which days is the procedural suite available for scheduling? These and a multitude of other decisions are more important to some doctors than others.

Employed physicians often have to submit to institutional rules or argue with administration over each detail. Independent doctors usually set their own rules about these details and enjoy the convenience of making their own decisions, while also dealing with negative feedback as a repercussion from those decisions. 

Employee Management 
Some doctors are great bosses. And that is a requirement of running your own practice. Employees, whether other physicians, health care providers or administrative staff, will only work hard if the workplace climate feels right or if the compensation is better than what they can find elsewhere.

If you run your own practice and cannot master people management, then your good staff will leave, and you could be left with mediocre employees for a long time. Yet, many doctors choose the independent route as a way to hire strong workers, compensating well and providing a good work atmosphere that could not be controlled in a larger healthcare system. 

Status
Some physicians consider self-employment to be the ultimate achievement, while others consider being a staff member of a well-known local or nationality recognized hospital to be validating. In fact, for many doctors who define the meaning of being a successful physician as 1 of these 2, the decision about hospital employment versus self-employment may already be made before finishing residency. As a physician trains, she or he often sets the stage for the best fitting practice by selecting fellowships and preferred locations in the country. 

Self-employed vs. Employed Physician 
There are many factors to consider when deciding whether to invest in an independent practice or work as an employed physician. The healthcare climate has made it more and more difficult for doctors to remain independent and self-employed — however, many are able to follow that path and succeed. 
 

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