A recent Medscape study found that self-employed physicians are more satisfied in their profession than employed physicians (63% vs 55%). However, the Employed Doctors Report 20161 states that twice as many doctors (27% vs. 13%) have switched from independent practice to employed. But why?
When you consider these two observations, it's clear there are both pros and cons for physicians who run their own business and those who opt for employment. Here are points to consider for physicians on both sides of the fence.
1. Hitting Quotas
Self-employed physicians aren’t required to meet specific patient quotas and productivity targets — unless they choose to do so. A reported 4 out of ten employed physicians are required to meet quotas and most aim to treat on average 21 to 25 patients per day.
According to Medscape — with more employers compensating physicians based on performance instead of straight salary — less than half (44%) of employed physicians are satisfied with the direction of the value-based model.
Employed physicians know that building a practice starts with an initial investment. Medical Economics reports that startup costs for a small primary care practice range anywhere from $70,000 to $100,000 plus up to an additional $65,000 for office supplies, equipment, and furniture.
Doctors who work for a hospital avoid private practice startup costs such as rent, self-employment taxes, liability insurance, and payroll.
As an independent physician you are your own boss. If setting your own schedule and calling the shots matters to you, self-employment may be worth exploring. The two biggest complaints from employed doctors are not having control over work-life balance (32%) and autonomy in their professional decision making (27%).
Whichever path you decide to embark on, telemedicine is great way to maintain a balance and reduce the number of hours you’re working at the office. Providing consultations from home also offers a sense of independence and the flexibility to spend more time with family if you so choose.
One of the top drawbacks of being employed by an organization is a cap on pay. Although a high percentage of employed physicians prefer employment security, about half (49%) report being dissatisfied in their income.
However, in medicine, specialty matters when considering compensation. In 2016, employed orthopedic doctors were reported to be the highest paid physicians across all specialties — earning $443,000 annually. While those numbers are impressive, a Medscape report showed that self-employed specialist earned approximately $70,000 more than employed specialists on average.
Potential legal issues are important to consider as a self-employed doctor. With a private practice, comes the responsibility of managing possible malpractice suits independently. Forbes reported the cost of medical malpractice in the United States alone to be about $55.6 billion a year.
Best practices for independent doctors are to properly train staff on HIPAA regulations, pay for malpractice insurance, hire a contracts review attorney, and practice responsibly.
As a self-employed doctor, how you manage administrative and personnel costs can make or break your business. With nurses being paid upwards of $60,000 annually, the costs for staffing can add up quickly and make it even more difficult to remain profitable. In fact, a recent article by Beckers Healthcare states that forty-seven percent of physicians say the most challenging aspect of running independent practice today is the escalating costs and downward reimbursement pressure.
Before opening a private practice, spend at least 6 months planning for administration costs and consider hiring a business consultant to provide professional counsel as needed. Implementing strategies in advance will save you money in the long run and give you peace of mind as a new business owner.