The medical industry is currently experiencing a reorganization period as hospitals and other large medical groups are rapidly acquiring private practices at an unprecedented pace. According to an article in the New York Times, the nationwide number of doctors practicing independently dropped to 39 percent in 2012, down from 57 percent in 2000. That number appears to be still in decline in 2016 as more and more doctors are favoring employment above entrepreneurship.
This reshuffling is actually good news for doctors, depending on how one looks at it—while many physicians are losing the autonomy of private practice, salaries across the board are rising due to competition between hospitals for skilled physicians and specialists. In fact, in a survey conducted by Merritt Hawkins looking at 5 select specialties, annual salaries have increased by 10% in the past 12 months. Travis Singleton, senior vice president of Merritt Hawkins, spoke to Medscape and had this to say: “Demand for physicians is as intense as we have seen it in our 29-year history.”
And yet, according to an infographic on Medscape, compensation surveys have shown that physicians in private practice earn more than employed doctors. So why then the flight from private practice to employment?
When speaking to Medscape, Singleton continued, “In a given market, you’re also competing against urgent care centers, federally qualified health centers, direct care, concierge care, and other delivery systems. And they all employ doctors. So you have to be in the ballpark of what they’re paying doctors, and it has leveled the playing field.”
Singleton states that the new employment model has “drastically front-weighted physician compensation,” so that hospitals are now paying doctors handsome salaries to start on the if-come that they’ll recoup value through admissions, tests, and referrals. In a system such as this, he continued, it is not inconceivable that a physician just out of residency earns nearly as much as an established physician in private practice. But, he noted, these salaries tend not to increase much over time.
In fact, many of these employment contracts have bonus structures that are not necessarily satisfactory to physicians. According to a June 15th infographic on Medscape, nearly half of doctors employed by hospitals are neutral or unsatisfied with their bonus arrangements because they may feel the targets are unattainable or don’t pertain to what they do in their day-to-day work routine. In a different slide from the same Medscape infographic, more self-employed doctors report being satisfied with their work than employed doctors. And, continuing on that vein of job satisfaction, employed physicians who switched to self-employment are much more likely (71%) to say they’re happy with the move than self-employed physicians who moved to employment (40%).
Some of the highest tallied responses occurred when respondents were asked what doctors like most about employment and include what one would generally expect: Not having to deal with business of running practice (54%), Guaranteed income/even cash flow (40%) and though many hospitals tout their signing bonuses to doctors seeking employment, only 2% of respondents replied that they most liked their bonuses.
On the one hand, employment offers a sort of blanket protection from risk and uncertainty while reducing the hassle of day-to-day management, but on the other hand, employment limits a doctor’s autonomy and perhaps sets a stricter ceiling on compensation.
On the other side of the equation, however, what doctors disliked most about employment were: Limited Influence in decision-making process (35%), More limited income potential (34%), and Being ‘bossed’ around (22%).
So while being employed certainly has it advantages—perhaps the biggest one being that the fierce competition among hospitals for talent has driven up salaries across the board, including in private practices—ultimately it is up to the individual doctor to decide if losing income potential and autonomy is worth losing some of the headaches of private practice and entrepreneurship.
Based on these studies, we are faced with a somewhat contradictory set of results that are difficult to interpret and probably best left up to the individual. On the one hand, employment offers a sort of blanket protection from risk and uncertainty while reducing the hassle of day-to-day management, but on the other hand, employment limits a doctor’s autonomy and perhaps sets a stricter ceiling on compensation. Ultimately, however, it appears that whatever ease comes with employment does not necessarily translate to doctor satisfaction within the system. Perhaps it is more important for us, as individuals in the medical industry, to personally manage our business decisions and protocols rather than have another dictate them for us.
All that said, physicians and specialists appear to be well-positioned to capitalize on this fierce competition between medical groups, whether in the form of employment opportunity, or in the increased demand for physicians on a whole which continues to drive up compensation for both employed and self-employed doctors.