After years of dedication to the specialty area and with just a few months left in residency, it is a good time to start planning a transition into professional life. The first big career choice for most doctors is whether to operate in private practice or a hospital, and the choice can be a difficult one for doctors of all specialties.
One might think that working at a hospital is the logical next step, but hospital employment is not the only option. Each doctor would have their preferences based on their preferred working style.
Both environments provide unique opportunities to succeed; therefore, it’s important to understand all elements of the environment — and weigh the pros and cons of working in both environments rather than just one. There is no simple answer here, as in most things in life.
What are the current trends?
The number of doctors working in hospitals has increased over the last few decades, while private practitioners have decreased. How physicians’ practice arrangements have changed was recently described in Policy Research Perspective (PRP) released by American Medical Association (AMA). The PRP includes AMA’s 2020 Benchmark Survey data, which was fielded in September and October 2020.
The data from 2020 are broadly consistent with patterns observed since 2012, but the scale of the changes since 2018 suggests that the moves toward larger practices and away from physician-owned practices have accelerated. 2020 was the first year in which less than half (49.1 percent) of patient care physicians worked in private practice.
One explanation for this change is that healthcare reform has increased uncertainty for physicians in private practice. Furthermore, several doctors today choose to concentrate exclusively on treating patients rather than dealing with the many logistical and operational problems that come with operating a private practice.
Here are some things to think about when choosing whether to work for a hospital or start your own practice in today’s dynamic medical landscape.
How do hospitals vs. private practices operate?
Private practices are structured in one of two ways: as a corporation with physicians as shareholders, or as a partnership of one or more physicians who hire other physicians or providers. Private practices are almost entirely profit-driven and are structured as corporations to benefit from tax advantages as well as to shield the owners from liability decisions.
Hospitals may be for-profit, nonprofit, or publicly owned. In the United States, for-profit hospitals account for less than 20% of all hospitals. Physicians are usually paid a guaranteed salary with an incentive package that rewards them for seeing more patients and/or becoming more efficient based on work relative value units (RVUs).
Physicians in private practice are not bound by someone else’s rules, practices, or compensation. They will have complete control of how the practice is managed, including the ability to choose and implement the practice models that they believe are best for the practice. Working in private practice will allow them to be the decision-maker, which is attractive for those who like the idea of being their own boss.
Doctors in private practice have greater flexibility in their daily schedules. They can easily find a supportive atmosphere for suggesting new ideas and business projects with their colleagues, as well as having the freedom to create their own schedule. They also have the freedom to select which patients they accept and the number of appointments they make.
Although daily flexibility in the private sector is a huge plus, it becomes more difficult to be flexible when booking longer vacations. To begin with, there are fewer colleagues available to cover private-sector transitions. Furthermore, patients who visit a private practice doctor are normally more reliant on scheduling appointments with them.
Despite the fact that private practices typically operate on a nine-to-five schedule and are seldom open on weekends, administrative requirements will necessitate long, demanding hours and strict schedules. Hospital workers may be much more flexible, with various changes available to accommodate those who find typical working hours to be too constraining.
Many doctors are often frustrated by the limitations of operating in a hospital. The hospital has the right to decide where they conduct surgery, what instruments they use, and what supplies they have once they sign a contract. Hospitals are required to follow very specific protocols; therefore, routine and frequent adjustments to changing metrics will become critical to practice effectively.
However, whether you choose a hospital or private practice, there will of course be protocols to follow for legal compliance, such as HIPAA compliance policies, and for the safety of patients, doctors, and staff. For either work environment, get familiar with their whistleblowing system, as it can protect you and the organization.
What about financials?
Doctors in private practice are entitled to a portion of the income as the owners of their practice. They will have full control over how successful they can be; more patients mean more experience and more financial incentives. There is no cap set on the salary. To guarantee that all doctors are paid equally, hospitals can have a quota or a rotating scheme in place — private practitioners, on the other hand, frequently do not.
Since private practices are privately owned, the burden of meeting certain financial obligations falls onto the physicians. For example, the physicians are individually responsible for paying for all costs associated with running the practice. Their salary also takes a cut whenever they need to purchase new equipment or make improvements to the practice.
Private practices can be costly and daunting at times due to expensive facilities, rising insurance premiums, computers and software for patient health records, and mountains of paperwork, as well as the expense of rent and utilities. Physicians will make less money any time a new non-revenue producing job is introduced or when equipment needs to be replaced; expect them to be reluctant to respond to capital spending needs, particularly if they cannot see how the cost will generate new revenue.
Physicians who work for a hospital are normally paid a salary, putting them in a better financial position than those who run their own practice. Most physicians are attracted to the hospital because of the competitive pay and prospects for advancement. Hospitals, on the whole, have more capital to level at doctors. Pay is not only better but also assured, in comparison to a private practice, where money must be used for a number of logistical purposes.
Although the original financial compensation can seem to be excellent, hospitals have the ability to adjust their production-based compensation formulas. A legal and firm agreement on the protection of an offer of employment should be made.
Private practices will suit the entrepreneurial professional because they will be able to use both their medical skills and their business acumen. In a private practice setting, physicians get to do everything, and they will be responsible for marketing, finance, IT, contract negotiation, value selling, facility management, and more in addition to the medical side and caring for their patients.
Since they are already at the top, there will be no chance of progressive movement and an internal career path. On the other hand, in the absence of hospital rules and laws, private practices enable doctors to develop their own corporate culture. Medical practices, according to many patients, sound more “family-like” than hospitals.
Despite the fact that medical schools offer practice management courses, many residents may opt to take classes that would help them become more advanced instead. As a result, many medical students graduate with no understanding of how to operate a good private practice, therefore making a job in a hospital or clinic where administrative duties are handled for them even more appealing.
A hospital-owned practice is a perfect option for physicians who aren’t interested in the corporate side of medicine and want more security and order in their work environment. Furthermore, they are relieved of administrative responsibilities such as human resources, accounting, collections, and day-to-day activities. Many physicians are attracted to hospitals that offer to handle all logistical issues, helping them to spend more time with their patients.
Public service often entails a significant amount of documentation. As many individuals with outstanding convictions have been to a public sector hospital, public sector physicians are often asked to write medical records for legal reasons.
Research and support
A private practice could be the right fit if working in a team setting where establishing good working relationships is critical to the success of the individual. But most likely, this will not give the opportunity to conduct research or teach junior doctors. In hospital settings, these chances present themselves, whereas private practice professionals would have to seek out opportunities outside of their own practice.
The services and networks used to conduct research with peers are provided by public hospitals. These facilities also have spaces for teaching. Since several units are housed together in public hospitals, doctors may use the services available to them when treating their patients. This ensures that, unlike private practice personnel, expertise outside of their specialty is almost invariably accessible from other medical practitioners.
There are also people who need a multi-layered approach to treatment, and the assistance of other departments is not as readily accessible in private practices as it is in hospitals. While physicians have autonomy with their patients in private practice, it also means they are lacking wider hospital support.
A hospital-owned practice may give access to the most up-to-date medical technology and educational resources needed for physicians looking to advance their medical skills in a niche area. It is also possible to get support from other hospital departments such as human resources, information systems, and accounting departments.
In private practice, there is money to be saved, more leverage of the daily routine and patient list, and a little more consistency in treatment. However, it is counterbalanced by a less open network and fewer opportunities for research or teaching.
If private practice seems a better fit for you, consider starting as a micro practice (a practitioner with no administrative or clinical support), and focus on best practices in billing and collections which would enable you to maximize profits and cut costs. Trying to learn more about increasing operational efficiencies by partnering or merging with another practice would maximize profits too.
The advantages of practicing in private practice may or may not outweigh the disadvantages, depending on your interests. If they don’t, a hospital could be a better fit.
Hospitals are distinct from private practitioners in a number of areas, not only in terms of the overall scale. At a hospital, a radically new work experience emerges from the increased patient traffic and the various teams. It will provide cover in some aspects of your profession, but there are benefits and drawbacks to remember.
Here are some tips for achieving success in employment:
- Be mindful of the tradeoffs between working for a hospital and having your own private practice, and be willing to accept them.
- Perform due diligence on the hospital you are considering joining, to make sure your objectives are in line with the organization’s values and objectives.
- Make connections with doctors who are currently serving at the hospital and learn about their working conditions.
- Determine if the tradeoff of less autonomy over your private practice in exchange for fewer business and organizational obligations is acceptable to you.
Professionals should, in the end, prefer the setting that best suits their needs. Joining a hospital could be the perfect choice for you if you want to work in a fast-paced atmosphere with access to a larger medical community and research opportunities. Private practice can be right for you if you prefer to concentrate on a few patients at a time and have complete control of their treatment.
It may be difficult to decide whether to work in a hospital or private practice, but you don’t have to make the decision alone. Ask your friends and peers to explain what they like and don’t like about their jobs, before making your decision.