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The pros and cons of private practice versus hospital employment


What physicians should consider when choosing their path.

The Medical Group Management Association reports that more than 50 percent of physicians are now employed by organizations affiliated with health systems. In some specialties, like cardiology, that is closer to 75 percent. Given the rapid increase in the number of physicians that have chosen this model does that mean this is the right choice? Are there alternatives? How do you decide?

Like everything else there are both pros and cons associated with employment. Briefly they are:

So how do you decide if it is right for you? Use the points below to help make the right decision.

  • Talk to colleagues - Take time to talk with physicians that are currently employed, especially those that were in private practice. Learn about what works and what doesn’t. Would they make the same decision today?

  • Does your view of the future agree with the hospital? - The healthcare system is about to undergo a major change in incentives. Are you thinking the same as the hospital and, if not, what impact will that have on your practice style?

  • Compensation - How secure is their current offer? What will they use to determine compensation if they move away from production? If you derived a significant portion of income from ancillary services what will they do if payers decrease payments for those services?

  • Can you leave? - What if you decide the arrangement isn’t right for you? They likely own the staff and furniture. Do you have to start over? Can you return to the starting point at some pre-arranged price? Is there a non-compete?

  • Are you looking at retirement? - If you plan to retire over the next few years this might be a way to get paid for furniture and medical records that might not be possible otherwise. Very few physicians are buying the practice of other physicians.

My experience is that your ability to negotiate is very different if you approached them or they approached you. Regardless, don’t assume any deal is "take it or leave it," especially if you are in primary care. Hospital deals are constrained by "fair market value" rules and most systems will use an outside consultant to craft the offer (I know, because I’ve done this). Remember that the consultant is paid by the hospital and not you. Guess where the loyalty sits?

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