Employed vs. Independent Doctors: Who is Better Off?

Employed vs. Independent Doctors: Who is Better Off?


There’s no clear-cut answer, but here are the main pros and cons to each career path

Health care experts have been predicting the end of independent practices for years now. And their numbers have continued to drop—a report from the American Medical Association showed that the percentage of doctors with an ownership stake in their practice declined to 47 percent in 2016. This is down from 53 percent in 2012, reported Medical Economics, which named “Remaining independent in a time of value-based care initiatives” as one of the top 10 challenges facing physicians in 2018.

But while rising compliance costs and changing reimbursement models have forced some doctors to join larger doctor groups, some willingly choose to become employees rather than practice owners, citing flexibility and other benefits.

What are the pros and cons of independent practice versus working for a larger health care organization?

Millennial doctors prefer employment to private practice

First, let’s look at those doctors who shun the path of going into private practice. According to Family Practice Management, the numbers of independent versus employed physicians vary by state and by age. Citing a 2014 survey, the article stated that 66 percent of physicians 45 years old or younger identify as employed, compared with only 26 percent of those age 46 and older.

In a 2016 Medscape survey, only 22 percent of the medical residents surveyed said they anticipate one day owning a stake in a practice, reported AthenaInsight. Some said it’s because they consider themselves clinicians, not businesspeople, and they would rather work in an environment where they can focus on their strengths.

Fewer overhead costs and administrative burdens, as well as greater mobility, are reasons many doctors prefer working for a health system.

Others said overhead costs and administrative burdens made independent practice unappealing, if not impossible in health care today. “A career as an employee of a health system is the preferred choice of the millennial physician,” stated the article.

Another reason millennial doctors may prefer employment over private practice is that many consider practicing medicine only one part of their career over a lifetime. Ishani Ganguli, M.D., told AthenaInsight that working for an institution enables her to wear multiple hats and “leads to greater mobility.” She spends most of her time as a researcher in health care policy, which she balances with roles teaching at Harvard Medical School and seeing patients.

Why independent practices may make a comeback

While some industry experts think independent physician practices are on the verge of extinction, others say that they are making a comeback. “New alternative payment models are helping physician practices remain profitable–and independent–in the current health care landscape,” according to FierceHealthcare.

As we discussed in a recent post, some doctors are choosing to operate their practices under the direct-pay model. This avoids the hassle of working with insurance companies, which many say is one of the major issues with being an independent practitioner.

The biggest challenge for independent practitioners going forward will be contracting with insurers to be able to see their patients, say solo doctors.

“The single biggest challenge going forward will be contracting with insurers to be able to see their patients. Unless you are part of a big group, those contractual relationships are difficult to get and to manage,” solo practitioner Mark Miller, M.D., told FierceHealthcare. “One way I have been able to overcome that is through participation in an accountable care organization.”

Dr. Miller added that autonomy is a big perk of running his own practice. “I like making my own decisions. I enjoy not having to go through some committee at a hospital and taking six months to get another otoscope. I like being able to–if I can afford to pay for it–put what I want in my clinic. For instance, I can build up a cosmetic practice if I want.”

For a related post, see The Benefits of Adding Cosmetic Services to Your Practice

Which group fares better?

You may be wondering whether independent doctors earn more than employed doctors, or whether one group has higher rates of burnout. In fact, multiple surveys show that in terms of job satisfaction, salary, and other factors, employed versus self-employed doctors fare about the same.

Medscape found that the career satisfaction rate is 72 percent for employed physicians and 73 percent for self-employed physicians. Despite differences in compensation formulas, a slightly higher proportion of employed physicians (54 percent) than self-employed physicians are satisfied with their income. There are no clear-cut numbers to say which group earns more.

As one expert pointed out, “Hard-working entrepreneurial physicians often can make more in an independent practice, but a less productive physician or one who is pursuing a work/life balance might make more in employment.”

A Review of Optometry survey found that full-time optometrists, both self-employed (51 percent) and employed (49 percent), reported an average annual salary of $150,123. Income varies depending on practice setting and location. Overall, 70 percent of optometrists said they are satisfied or very satisfied with their salary, and more than half said they expect their income to increase over the next year.

Your personality may be more important to consider than salary or career advancement when it comes to choosing solo practice or employment.

Perhaps more important than salary or career advancement, Pamela Wible, M.D., suggests that doctors consider their personalities when deciding whether they are better suited to be employees or business owners. Employees tend to be risk-averse and value structure, job security, and social interaction at work, for instance, while business owners are risk-tolerant and more highly motivated than employees, Dr. Wible wrote on KevinMD.com.

There are pros and cons to each path, of course, and there is no one right choice—only the right choice for each individual at that time.

To read more about changing career paths in medicine, read Why More Doctors Are Choosing Non-Clinical Careers. And for those interested in opening their own practice, check out our posts How to Start Your Own Medical Practice: Part One and Part Two.


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