Before committing to one path over another, it’s critical to understand what each option implies. Which workplace best suits your personality and career goals? Will one provide greater financial stability or match your wage expectations more effectively? Reflecting on these aspects ahead of time will help you make a more educated decision, potentially avoiding a job change later on.
What Type of Practice Do Doctors Choose?
A recent investigation by the American Medical Association (AMA) found that physician practice ownership has evolved dramatically over the last decade, with less than half of doctors now working in private practices. Between 2012 and 2022, the share of physicians in private practices fell by 13 points, from 60.1% to 46.7%.
Conversely, the proportion of physicians working directly for hospitals or as contractors increased from 5.6% to 9.6%. Furthermore, the percentage of physicians working in practices partially owned by hospitals or health systems climbed from 23.4% to 31.3%, according to an AMA benchmark study.
One key factor driving this trend is the difficulty of negotiating advantageous payment rates with insurers, which was recognized as critical by four out of five physicians who chose to sell their practice to hospitals or health systems. Furthermore, approximately 70% of polled doctors emphasized the significance of having access to expensive resources and effectively handling the administrative demands and regulatory restrictions imposed by payers.
According to the American Medical Association’s biennial review, economic, administrative, and regulatory pressures have encouraged physicians to reevaluate traditional private practice arrangements in favor of alternatives that provide more stability and support.
According to the Physicians Advocacy Institute (PAI), hospitals or corporate entities held roughly half of all medical practices in the United States as of January 1, 2021, and employed approximately 70% of physicians. The COVID-19 pandemic intensified this tendency, since interruptions enabled hospitals and corporate buyers, such as insurers and private equity firms, to ramp up their acquisition of independent practices and recruitment of physicians.
Between January 1, 2019, and January 1, 2021, hospitals and corporate entities bought nearly 20,900 medical practices, with roughly half of these transactions taking place in just six months—from July 1, 2020, to January 1, 2021. During this time, 11,300 practices were converted to hospital or corporate control, while 22,700 doctors left independent practice.
By January 2021, PAI statistics showed that about 423,800 physicians—nearly 70% of the U.S. physician workforce—were hired by hospitals or corporate organizations, indicating a dramatic shift in practice ownership and employment dynamics in the healthcare industry.
Understanding Types of Private Practice
When deciding on a career in medicine, physicians can choose from a range of practice models, each with its own set of perks and problems. The alternatives range from the autonomy of a solo private practice, in which doctors operate independently and oversee all elements of patient care and business operations, to group practices that provide shared resources and collaborative patient care. Alternative models, such as Direct Primary Care (DPC), provide direct financial interaction with patients, increasing transparency and minimizing administrative hassles, whereas concierge medicine provides premium, individualized services for an additional fee.
Physicians can also pursue flexible, non-traditional employment such as independent contracting, which allows for collaboration without complete integration, or locum tenens work, which provides temporary positions for people seeking broad experiences across many practice settings. Each model offers distinct benefits and trade-offs, ranging from financial risk and earning potential to professional autonomy and lifestyle compatibility, making it critical for physicians to align their decisions with both personal and professional objectives.
Solo Private Practice
A solo practice is exactly what it sounds like: you work individually, with no partners or links with other practice organizations. Solo practices typically have a small team and a smaller patient base, allowing you to build, expand, and develop your business in accordance with your vision, as opposed to bigger practice environments.
The smaller patient base also allows you to develop intimate, personal relationships with both your patients and your staff, allowing you to provide a distinct type of care. However, running a solo practice requires complete personal responsibility for both patient care and business management. This includes arranging for hospital care, assuring weekend coverage, negotiating with insurers, and managing large amounts of regulatory compliance documents.
Your earning potential is directly proportional to patient volume, frequently with no compensation cap. However, this income opportunity carries the danger of sustaining the practice’s operations. If the practice struggles, so will your income.
Solo practices are frequently associated with greater financial risk. The costs of employing staff, keeping malpractice insurance, potential income loss during illness or vacations, and swings in patient loyalty due to insurance changes can all put a strain on finances. Furthermore, school debt can exacerbate this risk. High expenditures connected with private practice include:
- Critical renovations
- Purchasing new equipment
- Insurance premiums
- Electronic health record systems
- Rent and utilities
Location is also important for the success of solo practices; suburban or rural areas are more attractive due to increased medical requirements and less competition. Furthermore, some local hospitals provide financial assistance or access to services such as electronic medical records to help solo practitioners preserve their practices and the hospital’s patient base.
Direct Primary Care
In the United States, Direct Primary Care (DPC) is a primary care payment model that provides a direct financial agreement between individuals and healthcare providers, rather than utilizing typical insurance claims. As an umbrella phrase, DPC refers to a variety of healthcare delivery systems in which patients pay physicians directly, resulting in a plain and transparent billing relationship.
Instead of submitting insurance claims, patients pay a monthly, quarterly, or annual membership fee that covers a set number of primary care treatments. DPC offices offer a variety of services, and some use a hybrid model with a high-deductible insurance plan to pay for non-primary care services.
Because of the smaller patient panel sizes, the DPC approach often provides greater physician accessibility than traditional primary care, which improves patient-doctor engagement. Furthermore, by removing insurance co-pays and third-party invoicing, DPC minimizes administrative complexity while providing more predictable and transparent healthcare costs.
Furthermore, access to primary care is not dependent on insurance status, making DPC a possibility for individuals without traditional coverage. Patients may encounter drawbacks, such as a recurrent membership cost regardless of service use, and limited coverage for services beyond primary care, such as specialty treatments, operations, and hospitalizations, which may necessitate supplemental insurance.
Concierge medicine, sometimes known as retainer medicine, is a version of the DPC paradigm. While they share a membership-based structure, concierge practices frequently serve smaller patient populations and provide additional access and services beyond typical general care. Some concierge models continue to bill a patient’s insurance for covered services, with expenses funded by a combination of insurance and membership fees, allowing for a more flexible approach to primary care.
Group Private Practice
Group private practices are organized in two ways: as corporations with physicians as stockholders, or as partnerships with one or more physicians who employ additional providers. This design allows you to work as an employee or take on an ownership role within the practice, depending on your career ambitions and preferred level of involvement.
Private practices are primarily for-profit and are frequently structured as corporations for tax purposes, with the primary goal of maximizing revenue. As a stakeholder or partner, your income is directly related to patient visits and billing, rather than fixed pay, which may result in larger earnings than hospital employment. As an owner or shareholder, you are entitled to a portion of the practice’s earnings, which allows for increased take-home income as patient numbers grow.
However, owning a private practice entails more than just patient care. You’d also be in charge of ensuring the practice’s success by overseeing marketing, finance, IT, contract negotiation, malpractice insurance setup, value-based selling, and facility management. Climbing to a top leadership position within the practice is possible, but professional advancement may plateau once you reach the highest level of the business.
One important obstacle for physicians transitioning into private practice is that residency training rarely involves formal education in practice management or business. This lack of expertise can make it tough to negotiate the difficulties of owning a solo practice. Fortunately, there are practice management and business courses available if you plan to work in private practice and want to learn the necessary skills.
Independent Contractor
In an Independent Contractor model, some internal medicine practitioners maintain an independent practice (either alone or as part of a group), but share facility space and possibly clinical coverage with other physicians or groups. This model can lower operational costs and allow for more flexible scheduling, but it may limit decision-making autonomy when compared to fully independent solo or small-group operations.
Locum Tenens Practice
Locum Tenens positions, which stem from the Latin for “one who holds the place,” include employing physicians temporarily to cover for absent colleagues or meet short-term clinical needs, generally through contract work handled by recruiting agencies. Locum tenens physicians operate in a variety of contexts, including hospital medicine, primary care, and urgent care, with variable assignment lengths. For example, outpatient primary care may demand a minimum commitment of 2-3 months, whereas hospital medicine may necessitate a set number of shifts per quarter.
Locum tenens employment is intriguing to those who are unsure about their long-term plans since it allows them to get experience in various practice environments around the country without making long-term commitments. This approach is also an option for physicians who want to experiment with alternative practice methods or pursue overseas possibilities. Compensation for locum tenens work frequently exceeds that of equivalent paid positions in group practices, however benefits are typically excluded. Furthermore, malpractice insurance, which is often given as claims-made coverage without tail insurance, may force physicians to obtain supplementary coverage for added protection.
Exploring Hospital Employment
In the United States, hospitals can be for-profit, non-profit, or publicly owned. Most hospitals are non-profit or publicly owned, which means that as a physician, you are often employed by the hospital and paid a set salary, with the possibility of bonuses based on patient volume. Relative value units (RVUs) are commonly used to measure your service’s value.
Your salary is very constant, with only infrequent raises or bonuses. Many people believe this arrangement to be “safer,” as it delivers a consistent monthly payment. However, hospital employment frequently includes a wage cap, which may limit your earning potential compared to a successful private practice. Remember that pay is always negotiable when concluding your contract.
While pay is important, there are many other considerations to consider while deciding on a professional path following residency. Ideally, the work atmosphere should complement your personality and lifestyle preferences.
In a hospital, you’ll have a more organized schedule, which often includes lengthy shifts. While you will not have a say in how the hospital operates, one advantage is that you will not have to bring work home; once you finish visiting patients and filling up charts, your day is complete.
As a hospital-employed physician, your primary role is patient care, with no additional stress of handling the commercial parts of a medical practice. This arrangement is ideal for those who desire to focus on medicine without difficulty managing a practice.
Furthermore, in a hospital setting, you have plenty of opportunities to advance vertically in your profession and potentially enhance your compensation. Hospital jobs include prospects for progression, including administrative duties, departmental management, leadership positions, and even teaching.
However, working at a hospital requires careful adherence to hospital protocols and compliance with hospital laws and regulations. Hospitals must adhere to particular standards and constantly change these protocols, so adaptability is crucial as you negotiate developing metrics, such as those established by JCAHO.
A typical medical school graduate in the United States has an average debt of about $175,000, with monthly loan payments of up to $1,000. Given that beginning a solo practice requires additional debts and financial resources, many newly trained doctors prefer to work at hospitals or Accountable Care Networks (ACNs) as a more financially feasible choice.
Hospitals frequently provide more tempting job terms for new grads, including medical equipment reimbursement and performance-based bonuses for employed physicians. No matter the professional option you are considering, it is critical to undertake extensive study and speak with other physicians to learn from their experiences. With the healthcare scene continually changing, researching all available options will allow you to make an informed selection.
Transitioning Between Paths
It is also important to remember that the type of employment does not have to be finalized. If you become dissatisfied with the business aspects of your job, you can always transition from private practice to hospital. Alternatively, leave a steady position at the hospital and begin increasing your income through a more personalized approach to work organizing.
Choosing to change your professional path from a hospital-based role—whether as a hospital employee or a private practice member—can be an emotionally taxing and challenging decision. This shift necessitates careful consideration of numerous issues, with the realization that it could be one of the most difficult yet rewarding milestones in your career. While developing a successful practice requires tremendous physical, emotional, and financial commitment, a thriving practice can ultimately provide immense personal satisfaction, a sense of accomplishment, and more professional independence.
Making the Right Choice for Your Career Path
When deciding between private practice and hospital work, it’s critical to assess how each environment fits your career goals, values, and lifestyle. Private practice allows you to be your own boss, make autonomous decisions, and create your own practice culture. However, it also includes additional tasks such as managing business operations, securing funds, and arranging insurance reimbursements. For those who value independence and have an entrepreneurial spirit, private practice can be quite beneficial.
In contrast, hospital employment offers a regulated work environment with less administrative responsibilities and more consistent pay. Working inside a hospital network can alleviate the financial and operational stress that comes with owning a practice, allowing physicians to concentrate completely on patients. This choice may also give access to larger, more collaborative teams and advanced medical resources. Individuals looking for security, scheduled hours, and access to a large network of specialists would find hospital employment appealing.
