Career Trends: Private Practice vs. Hospital Employment

February 1, 2013 at 12:00 am


During the ATS 2013 International Conference, Humam W. Farah, MD, director of the Lung and Sleep Center at OSF St. Joseph Medical Center in Bloomington, Ill., and David L. Hotchkin, MD, a specialist in the pulmonary, critical care, and sleep medicine division of the Oregon Clinic, will discuss practice options for physicians at the Center for Career Development. (See sidebar below for session details.)

In advance of that session, Drs. Farah and Hotchkin share their thoughts on solo practice, group practice, and hospital-employment, and how the Affordable Care Act might affect these models. The two are joined by Paul E. Pedersen, MD, chief medical officer at OSF St. Joseph Medical Center.

Last year, the Medicus Firm surveyed 2,582 physicians and found that of the physicians in training, only 6 percent wanted to work solo whereas 29 percent preferred hospital employment. What does that tell us about how physicians want to practice medicine?

Dr. Hotchkin: These statistics received a lot of press, but they ignore that a majority of respondents wants something other than a solo practice or hospital employment. While 35 percent of physicians in training chose one of these models, the majority chose a different pathway, which leaves a large number who would prefer to work in a group practice or for government, industry, or academia.

Specifically for pulmonary and critical care groups, more are either becoming hospital employees or are moving into professional service agreements (or PSA) to provide physician services to the hospital-medical system, achieving a hybrid between the employed and group practice model.

Dr. Farah: I think the days for solo or small-group practice are coming to an end in the current environment. It is going to be hard to survive and demonstrate value in this setting. The employed pathway will continue to increase.

Dr. Pedersen: Very few physicians want to practice in sole practice at this point. This is as much from the “I don’t want to run a business” point of view as it is the need for dependable coverage. Many physicians now believe hospital employment provides the triad—lifestyle, financial adequacy, and professional direction. Balance seems to be the key here as opposed to emphasizing one versus the other as might be able to be done in independent practice, whether or not it is in a group practice or solo.

What are the benefits of private practice vs. hospital-employment?

Dr. Pedersen: Independent practice will generally allow for more autonomous decision making from both the business and professional sides. In general, this causes a shift away from the lifestyle (work-life balance) as compared to the employment model. On the employment side, one would be expected to have input though not necessarily the power to make the decision. Work-life balance is likely to be a bit more equalized in the employment model.

Dr. Hotchkin: Hospital employment offers a potentially secure and stable source of income, but often does not have the flexibility to respond to changes in physician availability (i.e. sudden illness or death of a partner) due to stricter requirements for hours worked and scheduling that are not required for physician owners. However, in smaller locales that may be less desirable locations to reside, hospitals and medical systems often are better able to recruit new partners because of their larger financial resources.

Despite this stability, one gives up on the flexibility of one’s schedule, and one potentially loses the financial remuneration for working harder and longer hours. Additionally, as smaller health care facilities are being merged into larger systems, some are seeing their salaries drop when contracts are up for renegotiation.

In a non-employed model, there is more flexibility over your schedule, but this often comes at a trade-off with no guarantee of income. There is also the potential for hospitals to employ competing groups potentially leaving the independent practitioner in an unstable situation.

Dr. Farah: If the physician decided to join the private practice pathway, she must decide between employment versus joining a private group with the intention of becoming a partner and shareholder in the practice. If the physician decides to join a private group, I suggest she or she join a big group that can afford to act like an accountable health organization (AHO) or fulfill the requirements for the new pay-for-performance financial model. This may include a large managed care group like MedicareComplete.

Hospitals, especially those that are part of larger health care systems, will be able to provide the value and satisfy the requirements for the pay-for-performance model. This will require case managers, data collection, and analysis in addition to meaningful use of the electronic medical record to demonstrate value, which would be difficult to achieve in a small private practice setting. The drawback is that the physician will lose some of her freedom and decision-making capabilities.

How does the Affordable Care Act affect the conversation?

Dr. Farah: With the introduction of ACA and the AHO, providing quality care at lower cost becomes the only prescription for success. The aging population and the very high cost of health care are bankrupting our economy. The federal government has to work with all the stakeholders in health care to achieve this goal, but doctors and hospitals must be at the center of this.

Dr. Pedersen: One basic concept that I think will be emphasized by the ACA is responsibility (financial and quality outcome) for a discrete patient population. This is a dramatic shift from the fee-for-service model that we have been used to for many years. I think that emphasis favors the employment model or at least very close affiliation with a single system. I believe the days of independent physicians attempting to play one system against the other to the benefit of the physician group and detriment of the hospital system are pretty much over. In order to survive and balance the triad, there will be a need for close relationship to a single delivery system in all but a few instances. These relationships will be based on mutual trust, benefit, and support.

Dr. Hotchkin: ACA seems to be encouraging larger medical systems to develop coordinated care models. For routine care of patients with asthma, COPD, and lung cancer, this will often involve the care of a pulmonary physician. As part of this model, hospitals seem to be expressing a desire for pulmonary physicians to be part of this system, often by employing them. However, physicians that are proactive can often develop a plan of cost sharing with the local Health Care Authority or medical system to either assume cost sharing or capitation, although this seems to come with increased risk.

OSF St. Joseph Medical Center is a health care system that includes eight hospitals and medical centers, one long-term care facility, and two colleges of nursing. The Oregon Clinic is the largest private specialty physician practice in Oregon.

‘Private Practice Careers’ at ATS 2013
Location: Center for Career Development
When: 12:15–1 p.m. Sunday, May 19
Speakers: David Hotchkin, MD, The Oregon Clinic; Humam Farah, MD, OSF St. Joseph Medical Center; Walid Hadid, MD, OSF St. Joseph Medical Center.


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