Though recent survey data suggests fewer physicians are choosing private practice, the data may be misleading. Hospital or private practice employment should only be chosen after carefully weighing the pros and cons of each.
According to a new 2020 American Medical Association Survey, there are more physicians working outside physician-owned practices now than in the past. While almost half of physicians (49.1%) are still working in physician-owned practices, this number is 11% lower than 2012, at which time 60% of physicians reportedly worked in physician-owned practices.
It’s hard to fully understand what this survey actually says about the prevalence of physician-owned practices. I have helped sell many physician practices to hospitals, private equity, and similar investment groups over the past 10 years, so perhaps this type of activity can explain where some of the independent physician practices have gone. However, there are also many physician groups that still look and operate very much like private practices, but which are not 100% independently owned by physicians. This means they were likely not “counted” in this survey and the results may actually be misleading about how many independent physicians there really are in practice.
Many physicians coming out of training today appear to opt to work for a hospital, believing that the administrative hassle will be less and that the hours will be more steady and secure. This may or may not be true, depending on the actual employer and specialty. These same physicians often have expressed to me a disinterest in the business of medicine or in the entrepreneurial spirit that being a practice owner may require, which can explain why hospital employment is the right fit for them. Hospitals are also a particularly good choice for those interested in academics and research, and often can offer loan forgiveness/repayment programs, or service as FQHCs, which can be a priority for physicians coming right out of training. Exiting the COVID-19 pandemic, many physicians are also looking for the security they feel an institutional employer can offer, whether this is an accurate premise or not.
Another great choice for physicians is the independent practice route, and there are many thriving private practices in this country. My impression is that physicians in private practice are generally very happy with their jobs. Working for a private practice is a lot like running a small business. In an independent practice, physicians engage in decision-making and self-governance, they take on developing compensation arrangements that suit their needs, and they decide how best to run everyday operations. Independent practices also have the luxury of developing the kind of practice they want, without the restrictions that an institution can present and without needing their employer’s permission. This approach is especially appealing to those physicians who want more of a say in the company for which they work.
I recently spoke with Dr. Andrew Gordon, President of Northwest Neurology, a large independent practice located in the Chicago area, and I asked him what he thinks of the American Medical Association Survey results and what it says about the decrease in private practice physicians. Dr. Gordon strongly believes that private practices are the better option, stating “private practices often offer better work conditions, greater autonomy, and greater income. Young doctors who are going to health systems and not even considering private practice could be missing out on great opportunities. Many doctors who work for health systems end up going private after they learn the hard way that the institutional job is not what they expected it to be.”
While a physician must work hard to be successful in either the private practice or hospital employment approach, hospitals can often have less flexibility to incentivize physicians or elect to cap compensation (sometimes as a result of legal restrictions and other times due to bureaucracy), which can be stifling for physicians who feel they do not see the benefit of their hard work. Additionally, adding new services and products for patients can be more easily achieved in an independent practice, whereas in the hospital setting the process and timeframe for getting approval for new products and services can be daunting. Finally, while both types of employers can be good lifestyle choices, physician who work for themselves have the luxury of choosing their own hours and workstyle, which many find liberating.
There is no perfect employer, there is only the perfect employer for the particular physician! Some physicians prefer a more corporate hospital setting and others the independence and opportunity a private practice can offer. While we continue to see consolidation and acquisition of independent physician practices across the country, it would be a mistake to believe that independent practices are going anywhere!