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5 Facts about Independent Physicians vs. Employed Physicians

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A frequent topic of discussion for the past several years has been the increase in physician employment by hospitals and large practice groups. Earlier this month, Allison Sobczak over at ASCReview outlined “11 things to know about physician independence and employment.”

Here are the first five:

1. Self-employed physicians have higher incomes than employed physicians.

Sobczak derives this fact from a Medscape report last year in which it was found that “self-employed specialists earned $329,000 compared to specialists employed by a medical group or hospital who earned $258,000.”

2. Self-employed physicians are increasingly burdened by malpractice claims and the cost of malpractice insurance.

In fact, Sobczak writes, “75 percent of physicians in low-risk specialties and 99 percent in high-risk specialties [are] facing a malpractice claim. Among office-based solo practices, 70 percent report being sued; 64 percent of physicians in single-specialty groups report having been sued; and 53 percent of office-based multispecialty group practice physicians have been sued. More than half--57 percent--of hospital-based physicians report being sued.”

According to the 2015 Medscape Malpractice Report, 50 percent of these malpractice lawsuits resulted in no payout, and when there was a payout, “20 percent were under $100,000 and 17 percent were $100,001 to $500,000. Only 5 percent were more than $1 million.”

3. As of 2014, self-employed physicians were paying a 15.3 percent self-employment tax in addition to overhead related to their offices and their employees.

CompHealth reported in 2013 that “private-practice employee expenses reach $565,024 on average while office occupancy costs $150,505 and office supplies are typically $69,464 per year.”

4. The changing healthcare landscape has rendered the independent physician practice virtually unprofitable.

“Forty-seven percent of physicians say the most challenging aspect of running independent practices today is the escalating costs and downward reimbursement pressure,” Sobczak writes. “Additional challenges include maintaining referral streams, integrating with accountable care organizations, and implementing new IT equipment and software.”

5. Unlike the small independent physician practice, hospitals and large group practices have the financial flexibility that enables them “to hire specialists to spread out the cost of purchasing equipment, hiring employees, and training personnel.”

Perhaps that’s why in 2015, Sobczak reports, “there were 88 acquisitions, a 46.7 percent increase over the same period last year. Three of the four quarters in 2015 had at least 20 acquisitions.”

We’ll look at a few more of these facts about physician independence and employment in our next post. In the meantime, are you an independent physician who is seeking hospital employment? What are some of the primary reasons for this career move?

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