Cons of large groups
One individual doctor may have relatively little input in decision-making in a large group, and strong leadership may be lacking. One study examining the pros and cons of large group practices found that lack of physician cooperation, investment, and leadership were the most frequently cited barriers in large groups.
Physicians in large groups can also divide into competing factions. Mr. Mertz says rifts are more likely to take place in multispecialty groups, where higher-reimbursed proceduralists resent having to financially support lower-reimbursed primary care physicians. But it’s rare that such rifts actually break up the practice, he says.
Private practice vs. employment
Even as more physicians enter large groups, physicians continue to flee private practice in general. In 2020, the AMA found that the number of physicians in private practices had dropped nearly 5 percentage points since 2018, the largest 2-year drop recorded by the AMA.
The hardest hit are small groups of 10 physicians or fewer, once the backbone of U.S. medicine. A 2020 survey found that 53.7% of physicians still work in small practices of 10 or fewer physicians, compared with 61.4% in 2012.
Private practices tend to be partnerships, but younger physicians, for their part, often don’t want to become a partner. In a 2016 survey, only 22% of medical residents surveyed said they anticipate owning a stake in a practice someday.
What’s good about private practice?
The obvious advantage of private practice is having control. Physician-owners can choose staff, oversee finances, and decide on the direction the practice should take. They don’t have to worry about being fired, because the partnership agreement virtually guarantees each doctor’s place in the group.
The atmosphere in a small practice is often more relaxed. “Private practices tend to offer a family-like environment,” Mr. Miller says. Owners of small practices tend to have lower burnout than large practices, a 2018 study found.
Unlike hospital-employed doctors, private practitioners get to keep their ancillary income. “Physicians own the equipment and receive income generated from ancillary services, not just professional fees,” says Mr. Miller.
What’s negative about private practice?
Since small groups have little negotiating power with private payers, they can’t get favorable reimbursement rates. And while partners are protected from being fired, the practice could still go bankrupt.
Running a private practice means putting on an entrepreneurial hat. To develop a strong practice, you need to learn about marketing, finance, IT, contract negotiations, and facility management. “Most young doctors have no interest in this work,” Mr. Mertz says.
Value-based contracting has added another disadvantage for small practices. “It can be harder for small, independent groups to compete,” says Mike Belkin, JD, a divisional vice president at Merritt Hawkins, a physician recruitment company based in Dallas. “They don’t have the data and integration of services that are necessary for this.”
Employment in hospital systems
More than one-third of all physicians worked for hospitals in 2018, and hospitals’ share has been growing since then. In 2020, for the first time, the AMA found that more than half of all physicians were employed, and employment is mainly a hospital phenomenon.
The trend shows no signs of stopping. In 2019 and 2020, hospitals and other corporate entities acquired 20,900 physician practices, representing 29,800 doctors. “This trend will continue,” Dr. Pearl says. “The bigger will get bigger. It’s all about market control. Everyone wants to be wider, more vertical, and more powerful.”
Pros of hospital employment
“The advantages of hospital employment are mostly financial,” Mr. Mertz says. Unlike a private practice, “there’s no financial risk to hospital employment because you don’t own it. You won’t be on the tab for any losses.”
“Hospitals usually offer a highly competitive salary with less emphasis on production than in a private practice,” he says. New physicians are typically paid a guaranteed salary in the first 1-3 years of employment.
“You don’t have any management responsibilities, as you would in a practice,” Mr. Mertz says. “The hospital has a professional management team to handle the business side. Most young doctors have no interest in this work.”
“Employed physicians have a built-in referral network at a hospital,” Mr. Miller says. This is especially an advantage for new physicians, who don’t yet have a referral network of their own.”
Cons of hospital employment
Physicians employed by a hospital lack control. “You don’t decide the hours you work, the schedules you follow, and the physical facility you work in, and, for the most part, you don’t pick your staff,” Mr. Mertz says.
Like any big organization, hospitals are bureaucratic. “If you want to purchase a new piece of equipment, your request goes up the chain of command,” Mr. Mertz says. “Your purchase has to fit into the budget.” (This can be the case with large groups, too.)
Many employed doctors chafe under this lack of control. In an earlier survey by Medscape, 45% of employed respondents didn’t like having limited influence in decision-making, and 32% said they had less control over their work or schedule.
It’s no wonder that a large percentage of physicians would rather work in practices than hospitals. According to a 2021 Medicus Firm survey, 23% of physicians are interested in working in hospitals, while 40% would rather work either in multispecialty or single-specialty groups, Mr. Miller reports.
Doctors have differing views of hospital employment
New physicians are apt to dismiss any negatives about hospitals. “Lack of autonomy often matters less to younger physicians, who were trained in team-based models,” Mr. Belkin says.
Many young doctors actually like working in a large organization. “Young doctors out of residency are used to having everything at their fingertips – labs and testing is in-house,” Mr. Mertz says.
On the other hand, doctors who were previously self-employed – a group that makes up almost one-third of all hospital-employed doctors – can often be dissatisfied with employment. In a 2014 Medscape survey, 26% of previously self-employed doctors said job satisfaction had not improved with employment.
Mr. Mertz says these doctors remember what it was like to be in charge of a practice. “If you once owned a practice, you can always compare what’s going on now with that experience, and that can make you frustrated.”