Key takeaways:
- Private practice employment and ownership is declining.
- Owning and working for a private medical practice can allow a physician to have greater autonomy, can be more lucrative, and allows the owner to develop non-medical skills.
- Private practices are important to healthcare, allowing patients and providers to have more options.
Most physicians are employed by one of two practice types — corporate or private. In recent years, corporate practices, like hospitals and hospital-owned entities, have become an increasingly common place of employment.
Despite this shift away from smaller, private medical practices, there are many important benefits that these medical practices offer to employees, owners and partners. If you are considering practice ownership or partnership, understanding the current state of private practice medicine and its key advantages can help you prepare for your next career move.
Trends in private practice medicine
According to the American Medical Association’s biennial analysis, private practice employment is at an all time low. For the first time since the analysis began, private practice employment has dropped below 50%, as the majority of patient care physicians now work in corporate environments.
The trend away from physician-owned practice has accelerated with a drop of almost five percentage points from 2018 to 2020, decreasing from 54% to 49.1% according to the 2020 survey data. This data was collected in September and October of 2020, so the full effects of the COVID-19 pandemic are not reflected in this data. The AMA’s report speculated that this acceleration away from private practice has increased even more since the pandemic.
Along with the employment decrease, the AMA reports an increase in percentage of patient care physicians working either directly for a hospital or for a practice with partial hospital or health system ownership — almost 40% in 2020, up from 34.7% in 2018.
Key benefits of private practice ownership
Despite the decline in employment and ownership, there are many benefits of private practice that appeal to many physicians. Though there are several, we highlight three major benefits below.
Autonomy
One key benefit of owning a private practice is the level of autonomy granted to physicians. Rather than going through multiple layers of organizational leadership, private practices allow individual authority or a smaller, more efficient group decision making when navigating new situations or needs. This autonomy allows physicians to provide the best care by adapting quickly and effectively.
Becoming a partner in a practice will allow a physician the chance to have a bigger say in services to offer, new projects and new hires — an opportunity not ordinarily given to physicians in hospital or corporate settings.
Partners and owners have a greater say in their schedule, while employees in corporate settings often do not have much control on aspects of their schedule such as: when they work, how many patients to see per day, or vacation.
More lucrative and secure
Due to high student loan debt, many physicians, especially young ones, avoid private practice because of the additional monetary burden of financing a practice, but pursuing this route can actually set a doctor up for greater financial success.
According to a 2019 survey by Medical Economics, private practice physicians earn an average of $301,000 annually, while hospital-owned practice and in-patient hospital doctors earn an average of $288,000 and $278,000, respectively. Additionally, despite the steep cost of entry, ownership will help a doctor build their equity and eventually can fund their retirement after a buyout.
Private practice ownership can allow additional revenue opportunities for a physician through ancillary services. These can include commercial real estate, imaging, and ancillary services such as occupational health and physical health.
Partnership or sole ownership can also give a physician greater job security and work-life balance. In most partnership scenarios, partners have to receive a majority vote to be removed from their practices. On the other hand, multi year employment contracts from hospitals and corporate settings could potentially be broken more easily.
Professional growth
Some doctors shy away from ownership or partnership because of the business-focused aspects of the job. There is no denying that this can be quite an adjustment, moving from solely patient care to overseeing administrative work and leading a practice, but it can be extremely rewarding.
If interested in ownership, surrounding yourself with a team of experienced professionals such as attorneys or CPAs can make all the difference, providing you with guidance and advice every step of the way. Locating this team can be difficult, so Panacea Financial offers a connection point between doctors and experts who can help you throughout your career. To learn more about this program, visit the Build Your Team page on our website.
The case for private practice
Private practice medicine is declining, but the physician community is better when private practices are strong. At private practices, patients and providers have more options.
Providers are able to create strong connections with patients, which can lead to better patient outcomes and satisfaction. Panacea Financial supports private practice owners by aiding in financial needs every step of the way.
Whether consolidating loans to pay them off sooner, purchasing your dream private practice, or replacing a dated piece of equipment, Panacea is here for you. To learn more about the ways we help private practice owners, visit our website.
Panacea Financial, a division of Primis. Member FDIC.
