Physicians: Private Practice vs. Hospital Employed

A doctor in private practice may still be treating this child when she is a teenager.
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When Dr. Addison Montgomery of the television show "Grey's Anatomy" joined a private practice medical group in the spinoff "Private Practice," she was swimming against the tide. As recently as 2008, medical practices owned by doctors had dropped from a historical high of about 70 percent to less than 50 percent, according to a March 26, 2010, article in “The New York Times.” The number of physicians employed by hospitals or by integrated delivery systems, such as health management organizations (HMOs), on the other hand, has grown from 20 percent to 50 percent.

Financial Incentives

Medical debt is a major issue for recent physician graduates. In 2011, 86 percent of medical school graduates had outstanding loans, with an average educational debt of $161,290, according to the American Medical Association. Many younger doctors want to have more regular hours than the private practice physician, who may need to take a call or work a 60-hour week to pay the bills. Increasing numbers of physicians are choosing to work for hospitals as salaried employees. Even some older doctors have chosen to sell their practices and join the move to working in a hospital as a salaried employee.

Resources and People Issues

Doctors in private practice don't usually have unlimited resources and may need to count pennies. A hospital, however, can often afford technological advances such as electronic medical records or expensive equipment such as X-ray machines that are too expensive for a single physician. The private practice doctor is juggling the balls of both medicine and office-related issues, such as employee benefits and paychecks. As an employee rather than an employer, the hospital-based physician can focus on patient care without worrying about the billing system or personnel issues.

Benefits and Stresses

Private practice offers the ability to operate independently and to make lifelong connections with patients. A doctor in private practice may care for an entire family from birth to death, especially in more rural settings, where there may only be one or two doctors in a small town. However, private practice can be stressful, as the doctor is not only practicing medicine but is also an employer. Doctors with young children may find it more difficult to juggle the needs of a family in a private practice.

Perks vs. Benefits

From a personal perspective, physicians who work for hospitals have such perks as retirement benefits and health-care insurance, instead of paying for them out of pocket as they would in private practice. What they often lose is their independence. A hospital-employed physician may not have the ultimate say in her clinical practice nor in choosing the staff who will work with her. If the hospital that employs her is sold or merges with another organization, she may need to negotiate a new contract that might not be as good as the original. Earnings are difficult to compare between private practice and hospital employment, as variables such as geographic location, an ownership share of the profits of a private practice and whether the hospital offers incentives for productivity affect earnings potential.

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