11 things to know about physician independence and employment

Current data shows physicians are moving away from private practice towards working for hospitals or large group practices. Practitioners point to pluses and minuses for both employment models.

Here are 11 things to know about physician independence and employment.

1. Data from a 2015 Medscape report shows self-employed physicians earn more than their employed counterparts. Self-employed specialists earned $329,000 compared to specialists employed by a medical group or hospital who earned $258,000.1

2. Malpractice insurance costs pose an increasing financial burden for self-employed physicians, with 75 percent of physicians in low risk specialties and 99 percent in high risk specialties 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.2

Half of the malpractice lawsuits physicians experienced in the Medscape Malpractice Report 2015 had no monetary award; 20 percent were under 100,000 and 17 percent were $100,001 to $500,000. Only 5 percent were more than $1 million.

3. Self-employed physicians must also pay for self-employment tax, which was 15.3 percent in 2014, employee and office expenses. According to a 2013 CompHealth report, private practice employee expenses reach $565,024 on average while office occupancy costs $150,505 and office supplies are typically $69,464 per year.3

4. Changes in healthcare in recent years has made it more difficult for independent physician practices to remain profitable. Forty-seven percent of physicians say the most challenging aspect of running independent practice today is the escalating costs and downward reimbursement pressure. Additional challenges include maintaining referral streams, integrating with accountable care organizations and implementing new IT equipment and software.4

5. Hospitals and large group practices can afford to hire specialists to spread out the cost of purchasing equipment, hiring employees and training personnel. For the full year of 2015, 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.5

6. Female physicians and those under 40 are choosing employment in much greater numbers than their male and over 40 counterparts. Medscape's "Employed Doctors Report: Are They Better Off?" reports 78 percent of male physicians are self-employed, compared with 22 percent of female physicians. Seventy percent of physicians older than 40 years old are employed, compared with 88 percent of physicians younger than 40.4

7. Hospitals are acquiring more and more smaller practices, thereby forcing those physicians into employment and away from independent practice. Twenty percent of physicians responding in to a 2014 ProCare Systems survey reported planning to sell their practice within the next decade; 10 percent within the next three years. Forty-four percent anticipate selling their practice at some point, but 73 percent said they'd prefer to remain independent.6

8. About 49 percent of employed physicians work for hospitals or large group practices owned by hospitals, but others are also big employers. Approximately 21 percent of physicians are employed by private groups.4

9. Thirty-eight percent of employed physicians cite financial security as their number one reason for choosing employment. Around 29 percent and 19 percent point to less administrative responsibilities and better work-life balance, respectively.4

10. Self-employed physicians point to the perks of being their own boss and not having to answer to multiple layers of authority as big reasons for their choice. Conversely, 45 percent of employed physicians say limited influence in decision making is a downside to employment.4

11. When asked to rate their levels of satisfaction, independent and employed physicians are equally satisfied, with 65 percent of self-employed physicians being somewhat more satisfied compared to 59 percent physicians. About 70 percent of physicians who moved from employment to self-employment say they’re happier than the 49 percent who chose to take the opposite route.4



1 Medscape Physician Compensation Report 2015

2 Medscape Malpractice Report 2015

3 CompHealth

4 Medscape Employed Doctors Report 2015

5 Irving Levin Associates

6 2015 Physician Independent Physician Outlook Survey: "Physician Migratory Patterns: Threats to Independence and Implications for the Future"

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