Private Practice Vs Employed Practice– What Would You Choose?

Private Practice Vs Employed Practice– What Would You Choose?


Healthcare reforms in the industry have transfigured the traditional model of practicing medicine.  Ample scope awaits the physicians to choose between employed practice and private practice. Nevertheless, the benefits enjoyed by each of them are quite different, projecting the latest trend in the employed practice. A physician with entrepreneurial traits, a team player willing to take risks, a visionary on future and market values may take a step ahead to invest in private practice. Enterprising a private practice is a multi-dimensional approach involving expert individuals in each area headed by a physician. To build the private practice the physician is idealizing requires hand-picking of infrastructure, human resources, IT services, legal security measures, and marketing strategies. It doesn’t end with a successfully running private practice making profits, to accommodate for competition; the physician needs to be concerned with continuing professional development.


Private practice, Employed practice, Autonomy, Human Resources, Patient Management Software, Cloud Computing, Customer Relation Management Software

At a Glance

  • Introduction
  • Disparity in practice- Employed vs. Private
  • Barricades in private practice- Obama Care
  • Tips for a going to be hospital-employed practitioner
  • Pillars of a private practice
  • Continuing professional development
  • Personal tips for a private practitioner
  • Summary


Robert Frost’s, “The Road Not Taken” conveys that there comes a hang-up in every person’s life. There comes a point in every physician’s career when they have to take a call on a self-employed private practice or an employed-practice at a hospital. Both of these are a combined package of strength and weakness; anyhow a physician with an entrepreneurial spirit will always look for an opportunity to start a private practice.

According to the reports published by Accenture, as a sequel, by the end of 2016, one out of every three American physicians will stick to private practice. The reports interpreted from the survey conducted by Accenture in 2012, revel 8% decline in the self-employed physicians from 57% in 2000 to 49% in 2005. The numbers are expected to come down to 33% in 2016.

                                             Figure 1: Physician percentage based on type of practice

Source: American Medical Association’s, Physician Practice Benchmark Survey, 2012

According to the survey conducted by Jackson Healthcare, the rationales behind majority of physicians to adopt employment in hospitals deserting their private practice are:         

Figure 2: Reason for physicians to choose employed practice

Source: http://www.jacksonhealthcare.com/physician-trends/other-articles/physicians-continue-to-leave-private-practice-for-employme

Disparity in practice- Employed vs. Private

The roots of this effect on self-employed physicians can be tracked down to the basic difference in the model and functioning of the hospital and private practice.

                                             Figure 3: Benefits in private and employed practice

               CriteriaPrivate practiceEmployed practice
Security  Yes
Lifestyle Yes
No Administrative burden Yes
Uncertain incomeYes 
Ancillary incomeYes 
Control over environmentYes 
Immediate patient base Yes

1. Security: A physician interested in guaranteed income without any impact from changing healthcare trends can choose an employed practice over a private practice. According to Modern Medicine’s report 2014, The MGMA Physician Placement Starting Salary Survey, published the first-year income of an employed practitioner ($192,554) and that of a private practitioner ($185,000) which had a remarkable difference.

2. Payroll: There is barely any difference in the compensation derived from a private and employed practice. The compensation spins around pay-for-performance and patient satisfaction; however self-employed physicians have an edge regarding auxiliary income derived from extended hours of working, no expenses of administrative staff, imaging, diagnostic tests, etc.

                           Figure 4: Satisfaction levels after shifting to employed practice

Source: http://www.beckersasc.com/asc-turnarounds-ideas-to-improve-performance/physician-employment-vs-private-practice-14-statistics-on-pay-satisfaction-more.html

3. Pilot administrator: A private practitioner with administrative skills is proven successful when compared to an employed practitioner because they have to take care of the human resources, billing, and other daily operations. It is not necessary for an employed practitioner to have an understanding of HR, marketing, IT, management of revenue cycle, etc.

4. Work-life balance: Young generation of physicians and residents show an inclination to secure a job in the hospitals having specified working hours, without night duties and immediate patient exposure, allowing them to continue the lifestyle of a normal employee. This could be the biggest reason for the private practitioner’s family to complain.

5. Autonomy: Private practice offers the highest level of independence in decision-making and course of action, which is reflected in the patient care. At the same time, a private practitioner is all by himself overburdened by taking care of large volumes of patients, coping with competition, unable to cater for emergency patients, and close down the practice if out-of-town.

Figure 5: Employed physicians satisfied with the level of autonomy

Source: http://www.beckersasc.com/asc-turnarounds-ideas-to-improve-performance/physician-employment-vs-private-practice-14-statistics-on-pay-satisfaction-more.html

Barricades in private practice- Obama Care

Down the road, healthcare reforms due to The Affordable Care Act (2010) have disfigured the private practices. The drop in the rate of Medicaid and Medicare reimbursement compels the private practitioner to deliver quality care at low costs. Medicare compensation for a fifteen-minute visit to a physician is $124 in a hospital, whereas it is $70 for a private physician addressing the same procedure.

The introduction to Electronic Health Records (EHR) in healthcare system along with automation of billing, coding, and processing of claims demand strong knowledge in technology. To hire personnel with technical skills is a hardship for a private practitioner. As an aftereffect, many private practitioners will fall short in meeting the demands of the law and opt for less risky, attractive salary-based employment in hospitals after selling their practices.

Tips for a going to be hospital-employed practitioner

A survey in 2012 revealed that 40% of physicians exited private practice, but the numbers have gone up to 56% in 2015.

Before landing in hospital-physician-partnership, both the parties need to accept prospect and liabilities. Physicians look for judicious working hours, improved lifestyle, and guaranteed income, much as, hospital administration call upon increasing volume and market share. A partnership can deliver integrated, quality, and cost-effective care to the patients.

Tally the list before signing an agreement:

  • Decide salary
  • Talk to co-professionals
  • Clarify terms of partnership
  • Discuss ancillary benefits
  • Explore provision for termination
  • Be informed of legal issues

                            Figure 6: Practitioners supporting private practice

Source: http://www.beckersasc.com/asc-turnarounds-ideas-to-improve-performance/physician-employment-vs-private-practice-14-statistics-on-pay-satisfaction-more.html

Despite the threat to private practice, there is a sigh of relief among the healthcare analysts observing the disposition to level-off the departure from private practice. According to the reports of Healthcare Finance News, a survey conducted on 2094 respondents who own private practice reveals that most private practitioners are not interested to sell their practices.

Figure 7: Private practitioners planning to sell their setup

Source: http://www.jacksonhealthcare.com/physician-trends/other-articles/physicians-continue-to-leave-private-practice-for-employment/

Pillars Of A Private Practice

1. Infrastructure

Why? Track down a location. Though it sounds simple, it is the most challenging task. The moment we catch Las Vegas, we picture the city well-known for gambling, shopping, fine dining, and nightlife. The same goes for patients who picture the clinic, ambiance, compensation for procedures, etc. based on the location that consecutively reflects in the crowd a physician would be seeing.

Which? By then ask yourself these questions that will navigate you to the correct location.

Is it a direct access state?  Yes
Is there scope for practice?  Yes
How is competition from peer practitioners?  Healthy and unsaturated
Compensation for physicianGood
Cost of living  Moderate/high (depends on physician to physician)
Connectivity  Good
Chances of referralsHigh

Experts advise atleast nine months lacuna between choosing a location and starting a private practice.

The specifications for an office space that is best suitable for designing a private practice can be assessed by cross checking the following priorities.

AccessibilityStay close to the patients. Accessible by walk or public and private transport. Confirm whether the premise meets the requirements of Equality Act (2010)
VisibilityEasy to locate. Choose wisely before designing the set up based on the community of clients you expect in the clinic. If most of the clients are wealthy, go for contemporary interiors and update with the latest equipment.
ParkingAdequate parking lot
RestroomsSuitable for all kinds of patients, most importantly baby boomers
Waiting areaClean, comfortable, relaxing and smells good. Keep plenty of different kinds of magazines, toys and games.
Sign boardsExcellent position, visible and attractive to a majority of population in that premises
Security measuresGet the premise under insurance cover as the clinic space has valuable equipment, patient records, and financial records. Double check on the locks, alarms, passwords, and fire proof cabinets. All the requirements mentioned in the Data Protection Act must be addressed.

How? The office for private practice depends on the design of clinic a private practitioner desires to start. To play on the safe side, obtain an office for rent/ lease/ sublease rather than investing in the property at the very beginning of practice. A practitioner can start searching on the web for office spaces that meet the requirements or hire a real estate agent if one needs to spend time on other issues.

The office of a private practitioner already in practice willing to expand is quite different from an office of a brand-new practitioner. In the nascent stage of practice, it is advisable to pay rent for a small set-up and later invest in large space. If feasible, obtaining an office space from an established private practitioner on sublease can be considered on alternative, especially if a private practitioner chooses to work on part-time basis.

Rental/ lease agreement: An agreement should include exclusive use clause, limitations on triple net leasing, payment of rent, tenure, etc. A private practitioner has a broad range of payment options to choose from such as pay per hours, pay by percentage, and monthly payments. It is favorable for a radical private practitioner to invest in short-term rather than blocking the investment in a long-term lease with monthly payments. Last but the most important task is to seek advice from the attorney regarding the lease agreement.

                                       Figure 8: Success of practice based on rent/ lease

                                                                     Source: www.lurj.org

Technology and communication devices: It is essential to keep in touch with the patients and peers for the benefit of the business, therefore, investing in business line systems or VoIP is essential. However, it may be a financial burden to a private aboriginal practitioner, so spending on a good mobile with access to social media and EHR is never a bad option.

After Affordable Care Act, automation and digitalization took an upswing in health care or for client education and motivation, a computer, be it a desktop/laptop/tablet is a primary requisite for the practitioner. Adoption of these gadgets eases the physician with time to focus more on patient care.

In addition to these, the clinical equipment, furniture, interiors adding up the value and beauty of a clinic rely purely on the budget and the interests of the private practitioner.

2. Human resources

The frequently put up question by most of the striving private practitioners is, “how many and what kind of staff members do I need to hire?” A billing professional, nurse, office assistant, front office people, and medical assistants are a part of staffing model.

The success of a private practice lays majorly clinical staff rather than non-clinical staff. The lucrative practices showed evidence of the high ratio of staff to physician and appended staff per full-time equivalent physician. Adding to it, a lean staffing model can prolong waiting hours; defame the good will, cut down the referrals, and the revenue of practice. Investment in maintaining adequate and efficient support staff is a key point to pull up the revenue of practice.

The next question a private practitioner comes up is, “How can I hire employees who can prove to be an asset to my practice?” Guidelines to find the right employee:

  • Advertise in a local newspaper, job center, or employment agency with job title, location, role, pay and incentives, qualification and experience, personal qualities, application form, last date of application etc.
  • Shortlist candidates for face-face interview.
  • A written employment contract containing information about the working hours, duties and rights of employee, payroll and benefits, leaves and holidays, termination and dismissal etc must be listed and consent obtained from the employee.  The employee can sue or resign for constructive dismissal if there is a breach of the agreement.

In recent times, retention and motivation of the efficient employees are the toughest task for a physician. The innovations a practitioner needs to make in practice culture are-

  1. Draw feedback from the employees about their likes and dislikes in the workplace and adapt the practice culture as required.
  2. Staff receiving good remuneration expresses high levels of motivation in comparison to the poorly motivated staff. Attractive incentives can encourage the staff to work efficiently in achieving the practice goals.
  3. Recognizing and rewarding for performance will enhance loyalty in the staff.

As the practice size increases, the number of assistants a practitioner needs to hire increase as well. In the very beginning of practice, a physician can handle many of the nonclinical works such as filing, documentation, and planning, etc. At the same time, a successful practitioner would engage most of their time in patient care leaving a freelancer or a virtual office assistant to deal with nonclinical tasks. An accountant can be a valuable resource for private practice offering a wide range of services such as advising on taxes, filing of tax returns, VAT, and annual accounting apart from support for business expansion.

3. IT services

It is exhausting as well as time-consuming for a practitioner or an office assistant to run through a pile of files to find a patient’s details, then, verify the payment records in the billing books, invoicing the patient, etc. It is best to invest in software that can create a database for clients, manage appointments, invoicing, billing, and payments.

Patient management software is one such software available in tailored prices based on the size of the practice. A practitioner using different software for each action separately can also upgrade to this software.

Under the Data Protection Act and Privacy and Electronic Communication Regulations, it is the responsibility of the private practice to protect any details of a client being shared on web particularly e-mails. Encryption software can help the practitioner to keep the contents of a message and the attachments safe during conveyance.

Customer Relations Management (CRM) Software: A practice oriented towards continuous interaction with the clients on social media and market expansion can invest wisely in CRM software. It includes all three domains providing contact, sales and marketing, and accounts management. It allows an opportunity to send contact specific mails to target market and analyze the results of market strategies and plan for further business expansion.

Telemedicine facilitates patient education and consultations, referral to specialist services, and videoconference interaction with the patient when there are geographical barriers.

Cloud computing servesas storage for client records and help comply with HIPPA Omnibus and American Recovery and Reinvestment Act. It protects the patient records, facilitates easy sharing among referrals, provides adaptability to EHR/EMR, and eases retrieval of information and reduction in cost. It is ideal for a practitioner to invest in the future of medical record maintenance with cloud computing technology.

4. Marketing

Market research: Before starting the private practice get to know the market that a practitioner is targeting. It is important to know which section of the audience is best benefited from our services, which people are profitable for our business.

Business Layout: It is the outline of what a practitioner pictures his/her practice should be- sole proprietorship, partnership, limited company, and community interest company.

Branding: The moment a practice begins, it is branded but the image a practitioner carries into the public is the actual branding.

  • Increase public appearances
  • Write for papers
  • Blog on websites
  • Build contacts in social media
  • Share views with peer professionals
  • Networking with referrals
  • Provocative business cards
  • Influential website

5. Administration

Precise investment in infrastructure and IT software has calm-down the administrative burden of a private practitioner to compile, store and use files, data of clients. Furthermore, the time spent on this has come down allowing the practitioner to improve the quality and size of the practice.

6. Finance

Both investment and returns are directly proportional to the size and model of practice the physician has chosen.

Purchasing insurance

a. Professional liability insurance: It is mandatory for the physicians to safeguard their interests in case of a malpractice suit. Professional liability insurance also known as malpractice insurance allows the physician with a privilege of not having to pay the complete cost of legal proceedings in defense.

Most of the private practitioners are interested in purchasing a claims-based policy that covers the claims for incidents occurred during the period of the policy. It is advisable for the insurer to buy tail insurance at the end of the claims-based policy that provides additional coverage for the claims on the incidents occurred when the policy was active. Appropriate maintenance of client records will protect the physician from client neglect claims.

b. Public liability insurance: It covers the claims for the financial loss occurring due to injury to the public resulting from the neglect of a private practitioner.

c. Employer’s liability insurance: It covers the claims for the loss due to an injury to an employer at the work place.

d. General premise insurance: It covers the claims on rented or owned office for damage occurred due to fire, explosion, natural disorders, riots, etc.

e. Contents Insurance: It covers the claims on damage or loss of possessions in the clinic.

It is not feasible for a practitioner to purchase all types of insurance though it is advised. So, at the beginning of practice invest in the suitable insurance that minimizes the losses incurred.

7. Legal security

Frame a legal business structure for payment of taxes and accountability for debts, losses, and lawsuits.

  • Seek legal advice from an attorney to register under S-corporation (pays only tax on personal income) or under C-corporation (both on personal income and entry level taxes)
  • A healthcare attorney may assist the practitioner in legal proceedings for incorporation, partnership agreement, employee identification number, and registration under state and local government taxation.
  • Before starting the practice, obtain a state license, National Provider Identification Number, DEA number from U.S. Drug Enforcement Administration, and certification by clinical laboratories improvement amendment.

It is advisory to communicate terms and conditions at the very first visit of the client. It includes date, time, and duration of the appointment scheduled; the remuneration for the procedure; payment modes; and cancelation policy.

Continuing professional development

A successful physician is required to update knowledge, skills and expertise with recent advances in the expert field. Continuing Professional Development (CPD) accreditation is an added asset to the practitioner’s profile. Grab the opportunity for updating through online or offline training, seminars, workshops, and clinical supervision.

Personal tips for a private practitioner

The success of private practice is the direct reflection of patient’s perception of a physician. The physician should:

  • Be well-dressed
  • Have a pleasing personality
  • Accept critics
  • Be patient
  • Be polite


It is not easy for a physician to decide between an autonomous self-employed private practice and a secured hospital-employed practice. The decision-making is driven by money and lifestyle of the practitioner, at the same time, orientation to achieve the professional goals. A physician looking forward to establishing a private practice should seek professional advice regarding the important components of a practice. A smart private practitioner should customize the practice to the requirements of clients. The success of the private practice is hooked on the physician’s ability to captain their team to indulge in patient care because “Competition can’t undersell goodwill.”


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