Employed physicians on our communities will often complain about compensation issues, things they are being asked to do which feel unreasonable, and more. In these threads, while many members commiserate, there’s always a loud presence from those that are strong advocates for private practice encouraging their colleagues to consider leaving employed positions and joining private practice. While we are huge fans of private practice at Physician Side Gigs, we also want to make sure we accurately represent both the pros and cons of private practice. When you are in private practice owner, you work in a small business, and regardless of whether you’re a partner, you will likely shoulder more responsibility and risk. Despite this, many of our physician members feel that this is a great way for doctors to retain autonomy, have more say in practice operations, and get to practice medicine in a more fulfilling way. In this article we will cover the pros and cons of private practice in general, whether it be that you’re starting a private practice, you are joining as an employee, or whether you’re a partner. We cover the pros and cons of buying into private practice partnership in a separate article.
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Why Private Practice Versus an Employed Position at a Hospital System or an Academic Medical Center?
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Why Private Practice Versus an Employed Position at a Hospital System or an Academic Medical Center?
First off, let’s acknowledge that private practice isn’t the right fit for everyone. We should all make a list of priorities and job characteristics that will allow us to maximize our enjoyment of both our personal and professional goals. If number one on your list of priorities is the ability to get grant funding and publish in the top medical journals, with very few exceptions, private practice will likely not be right for you. If you have no desire to learn the business of medicine, regardless of whether you are an employee or a partner at a private practice, you will likely struggle with the demands of making a small business profitable.Â
While social media loves stereotyping private practice as the most lucrative option, depending on your arrangement, it may not be, so if this is your sole reason for going into private practice, reading the pros and cons of private practice is especially important for you. In addition to the potential for increased compensation, private practice can generally allow more flexibility and customizability of your practice and your work schedule, the ability to be a business owner and all the benefits that come with that (and yes, the heartaches as well), and the ability to have more influence over your work environment, who you spend your time around, and more. Put simply, there is more control and autonomy than you would normally get working in a larger work environment where decisions can be handed from top down with very little input.
This is why so many physicians, despite being groomed in academic environments to love academic medicine and loving working in larger teams and training residents and spending countless hours on research and publications, ultimately opt to go towards private practice.Â
If you’re not sure what you want, cast a very wide net and apply to different practice environments and interview widely. You’ll likely learn a lot about what you actually want out of your career along the way.
Pros and Cons of Private Practice
Let’s go into the individual pros and cons. Keep in mind that these are generalizations, and there are exceptions to every rule. It’s important to ask lots of questions during your private practice interview to ensure that you are truly signing up for a practice environment that fits your needs.
Pros of Private Practice
More control of your schedule
While you don’t want to narrow the scope of your practice too prematurely when practice building, you likely have the ability to shape your practice to reflect the patient population, procedures, and areas of expertise you want to focus on.
When you want to end your schedule early to make your kids’ basketball games or catch an earlier flight to kick off your vacation a few hours early, assuming your private practice is large enough to have coverage or your schedule runs independently of others, you’re more likely to be able to do so. Most private practice physicians learn the value of being a team player quickly, as it allows everyone to have the life in medicine that they want. Â
Though the way your contract is structured will vary from practice to practice and based on whether you’re an employee or a partner, most practices will have a certain salary component and then a larger bonus component, as most can’t afford to take the risk of high upfront salaries as small businesses. This means that to some degree, you control how hard you work and your compensation will reflect that. You can make your own calculations about where the tradeoff between time off and money or longer visits and money play in, and do what’s right for you.Â
More control of the future
Most private practices take into consideration the goals of both the partners and the employees when making major decisions about the future of the practice. This can include things like:
The decision to expand the practice to new locations
The decision to offer more procedures or services
The decision to expand office hours
The decision of who to hire
Decisions about when to cost cut and when to take less profit but optimize working conditions
This control becomes the reason why so many physicians take on private practice positions with the end goal of becoming a partner at the practice. By being partner, you have voting rights that allow you to impact not just the decisions above, but also decisions that you may not otherwise have a say in if you are employed by a large institution or company. For example, you can have a say in mergers and acquisitions, instead of simply being told that your organization has gotten bought out or merged with another system, and everything is changing.
Income
In private practice, as a general rule, the more profit that is generated, the more you make, whereas cost savings or profitable years are rarely passed on to employees at large organizations, or at least not to the same extent.
Typically, larger academic institutions or hospitals will have more administration to make the system work, which contributes to overhead. In private practice, you can ideally streamline efficiencies better and therefore decrease overhead. By having stringent fiscal policies and controlled spending with strict oversight, overhead can be tightly controlled - especially in an era of rising costs. The benefit here is again higher earning potential for the individual physicians actually doing the on the ground work.
Often instead of a fixed salary with a smaller productivity bonus, your income in private practice is more likely to be weighted towards the amount of collections you generate. Therefore, the ceiling is dependent on how hard you want to work, rather than an arbitrary salary database.Â
Potential to become a private practice partner with ownership of the business and rights in the decision making process
Income from the many ancillary revenue streams for private practice owners, including real estate, profits from employees, ownership in labs, product lines, ambulatory surgery centers, credit card points, and more
Tax benefits of business ownership, some of which overlap with 1099 tax benefits
Ability to buy into practice real estate or other assets of the practice and benefit from the increase in valuation of the practice or these assets as the practice grows. For example, if your practice sells to private equity (which we have concerns about, as outlined in that article), you could make a lot of money.
True Influence in Decision Making
Access to enhanced retirement plans such as profit sharing plans, pensions, and defined benefit plans
Sounds great, right? But private practice also comes with its own unique headaches, which we’ll cover next.
Cons of Private Practice
You will have to learn the business of medicine
Unlike some employed positions for larger institutions where you may be paid in an RVU based contract, in private practice, it will behoove you to understand things like billing and coding, because your compensation will directly be tied to how well you do this.
If you are a practice owner, you’ll have to learn the nitty gritty of contracting with insurance companies, all the legal and regulatory requirements you have to comply with, and every line that goes into your profit and loss statement. If your billers aren’t doing their job or your front desk operations are turning patients off, you’ll have to understand how to optimize those operations, how patients think, how patient reviews work, how marketing and SEO work, and so many other things.
Involvement in all business decisions or issues, whether you want to be involved or not
It doesn’t matter if you don’t care about the flooding in the bathroom. It will impact you in some way, whether you’re on a committee that appropriates funding, chooses your vendors, or simply that the money for the repairs is in part paid by you. Even if you’re not a partner, something happening in the practice that somehow affects your patients will likely be something you have to deal with.
Hiring and firing of staff and employee issues will likely involve you in some way. The smaller a practice, the less likely HR will just ‘deal with it.’Â
More responsibility towards the success of the practice
You will likely have a lot more after hours responsibilities. This may include meetings, going to events for marketing purposes, or researching the best vendors for a practice need.
The reputation of the practice is going to directly affect your income and reputation. So regardless of whether you’re an employee or a partner, it will be in your best interest to represent your practice in the best way possible, and get involved in the smaller decisions or issues that can make a difference.
Group politics
While ideally you find a practice where everyone is best friends, the reality is that being a partner in a private practice (or even an employee in a private practice) is like being in another marriage. You will not always get along, and when there’s money involved, things can get heated. You may spend a lot of time navigating group politics in order to advocate for yourself or the direction you think the practice should take in regards to a specific decision.
Less financial guarantees, including the possibility of loss
Small businesses cannot afford the risk that large corporations can. This means that you are less likely to have a large salary that isn’t dependent on how productive you are. If you can’t cover your overhead, you probably won’t stick around for long. Your contract will likely offer you less protections in these situations.
If you are a partner and the practice isn’t profitable, guess what? You may not make any money, or you may make less money than you would have if you were in an employed position in your field. You can’t get the upside if you don’t take the risk of the downside.
If there is a lawsuit against the practice, if you are a partner, this will likely keep you up at night.
Conclusion
In summary, private practice medicine remains an excellent way to shape and develop the career you want for yourself, but in order to maximize your financial success and happiness in this role, you should be interested in the business and operational aspects of medicine. If you want a 9-5 role where you never get involved in these issues, this may not be the right fit for you.