What's driving the next generation of physicians to private practice?

Between rising costs, physician burnout and increasing consolidation, physicians are increasingly choosing hospital employment over private practice.

Becker's spoke with 21 physicians on what's driving physicians to private practice over hospitals. 

Editor's note. These answers were edited lightly for brevity and clarity. 

Eugenio Hernandez, MD. Vice President of Clinical Affairs for Gastro Health (Miami): To attract the next generation of top physicians, private practices will certainly need to remain competitive with overall compensation and work-life balance. Beyond compensation, private practice may offer important benefits that other employment models cannot, such as a higher degree of autonomy in clinical decision-making and work schedules. Furthermore, private practices can show value by providing a culture of active mentoring. Experienced physicians can demonstrate how to build relationships with referring physicians, operational management of staff and understanding the financial skills necessary to run a business. Private practices can offer additional income opportunities with partnership in ASCs, imaging centers, pharmacy services, real estate and even potential equity in a larger private practice organization. Given the current competitive labor market and the anticipated physician shortage, the total value of private practice is more important than ever.

Joseph Anderson, MD. Professor of Medicine at Dartmouth Geisel School of Medicine (Hanover, N.H.): Autonomy. Small private practices give physicians the ability to provide the best care for their patients and to adapt to changes quickly and effectively. Small private practices are the lifeblood of U.S. medicine, and their ability to survive is vital to healthcare in this country.

David Johnson, MD. Gastroenterologist in Norfolk, Va.: Private practice"as we know it will progressively evolve with new restrictions as we see the consolidation of practices under equity buyout models. Newer physicians will face increasing pressures on maintaining revenues to meet the equity partners expectation for returns on their investment for buy out.

Bertrand Kaper, MD. Chairman of Orthopedics at HonorHealth Thompson Peak (Scottsdale, Ariz.): Attracting the next generation of orthopedic surgeons to private practice is a daunting proposal. The expanding complexities of managing the business side of a practice will stymie the motivation for most. The cost of doing business has been steadily increasing, especially in an era where workforce recruitment is extremely difficult and therefore more costly.  Offering competitive salaries and benefits to personnel has become the largest cost center in private practice. Meanwhile, insurance companies are becoming more data-driven in regard to surgeon outcomes and costs. Accordingly, it is becoming more difficult to find leverage in contract negotiations for solo or small-group practices. Those who still decide for private practice will most likely find their best option [is] to join one of the super-groups in their locale.   

Michael Moustoukas, MD. Orthopedic surgeon at Kennedy White Orthopedic Center (Sarasota, Fla.): Practice autonomy and ancillary revenue are the main drivers of the next wave of orthopedic surgeons to pursue a private practice. The 'eat what you kill' model incentivizes increased revenue. Additionally, changes in patient care are much easier to implement within a group compared to hospitals. ASCs are becoming more utilized in the surgical treatment of patients. Many orthopedics cases that were once done in the hospital are now being safely performed in the outpatient setting. The opportunity for ancillary revenue streams become eliminated with hospital employment.

Kenneth Rubin, MD. Gastroenterologist at Gastroenterology Group of New Jersey (Englewood): I believe private practice will always exist, but it will continually change and adapt to the changing healthcare landscape. The attraction of private practice is controlling your own destiny while continuing to provide the best in patient care. Smaller private practice models will thrive, perhaps as a concierge model, while larger subspecialty providers will form large group practices with a private equity model. These types of entities will allow private practice models to be much more attractive to future physicians than the salary model and will have prospects for future growth and also provide the personal satisfaction of having a significant role in decision-making moving forward. Obviously, other private practice models will continue to evolve and will allow the best practices to be competitive as healthcare evolves further away from the hospital-based practices to advanced outpatient care …  all of which will be healthy for some form of private practice.

Alok Sharan, MD. Spine surgeon at NJ Spine and Wellness (East Brunswick, N.J.): To date there has been a swing toward physicians becoming employed by hospitals. Initially, joining an academic medical center or hospital system is a great start for physicians coming out of training. Unfortunately, many physicians become disgruntled along the way and get stifled by the bureaucracy of these organizations. Many physicians, and surgeons in particular, are very independent in their thinking. This leads to many physicians leaving an employed position and joining a private practice, either their own practice or a group. Private practice is most suitable for physicians who are entrepreneurial in thinking. Ideally, an individual in private practice has to be creative and original with their ideas, while also willing to take risks. In addition, physicians have to enjoy the business of medicine, a topic they do not know much about. 

Ben Bradenham Jr., MD. Gastroenterologist at Gastrointestinal Specialists (Richmond, Va.): The organizations that are going to attract the highest quality physicians in the future are those with cultures that do more than lip service to create a work environment that understands what it takes to be physician and a parent. Specific examples include: a part-time work model (most important), flexibility at the beginning and end of the day to facilitate child care drop-off and pickup from school/day care, having a ‘hard stop’ at the end of the day to allow parents to know they can make it home by 6 p.m. to take Alex to her soccer game and flexibility in employment track. 

Part-time employment opportunities have been difficult to implement in both surgical fields and procedurally heavy medical specialties. As a gastroenterologist in private practice, I believe that those willing to be flexible in their employment models are the organizations that will thrive and be the most effective in attracting the next generation's best physicians.

Eric Mehlberg. Anesthesiologist at Comprehensive Pain Specialists (Golden, Colo.): The No. 1 draw for private practice has been, historically, remuneration. I am not sure that is really true any more. Going forward, as insurers gobble up providers and hospitals gobble up providers, I believe the biggest attraction to independent practice will be avoidance of moral hazard and autonomy. These are the values we should be concerned about losing as medicine becomes 'Kaiserified.' 

Endrit Ziu, MD. Neurosurgeon in Jacksonville, Fla.: Private practice already has several advantages compared to academic practice. Private practice is more lucrative and better compensated, and the work hours are more suited to physician lifestyle. The disadvantage is that the education of the next generation is missing. Teaching is a choice and not a requirement, and many private practice physicians went into private practice because they do not enjoy the burden of educating the next generation. In order to attract that physician population that has inclines to education but also likes the advantage of private practice, associating the practice with academic institutions and creating a 'privademic' situation will offer an advantage in recruiting the next generation. Hospital-based employment is a different scenario. The biggest problem in the hospital-based scenario is loss of physician autonomy. The daily practice becomes a box check that the hospital imposes on physicians. In a hospital environment, I think hospitals that are run by physicians and are more open to physician autonomy will have an advantage.

Jack Bert, MD. Orthopedic surgeon at Woodbury (Minn.) Bone & Joint: Private practice allows the physician to have some control of his practice hours and, hopefully, eventual subspecialty practice environment, with the additional revenue possibilities of ancillary services, including ASC ownership, physical therapy, MRI, occupational health and medical equipment. Ancillary service revenue can reflect up to 50 percent to 60 percent of a private practicing physician's income, which, unfortunately, short of gain-sharing opportunities or partial ASC ownership, is usually unavailable in large healthcare system-employed practice situations. Some employed physicians, however, have negotiated with their hospital or large healthcare system which employs them, to obtain a portion of the system-controlled ASCs in order to drive outpatient surgeries through their hospital outpatient department or privately managed ASCs. It is critical for the healthcare system-employed physician to understand that a negotiating tactic to increase their salary is to compare their compensation with the private practicing physicians in their community in order to increase their relative value unit reimbursement to reflect the equivalent surgeon pay occurring in their community.

Alyson Engle, MD. Assistant Professor of Anesthesiology and Pain Medicine, Northwestern University Feinberg School of Medicine (Evanston, Ill.): Transparency is essential to the next generation of physicians. They desire transparency in terms of how they will be compensated, the path for promotion, contractual obligations and the financial health of a practice. Other primary determinants of whether they choose private practice or hospital systems will come down to compensation and autonomy. This generation of physicians seeks a better work-life balance with schedule flexibility and autonomy of how they practice clinical medicine. One of the many frustrations of hospital systems is the lack of autonomy, feeling like an employee, and lack of opportunity for higher pay despite academic promotion. Private practices that offer equity, partnership and promotion tracks with the opportunity for higher compensation are and will be the preferred path. 

Henry Backe Jr., MD. Orthopedic surgeon and partner at Orthopedic Specialty Group (Fairfield, Conn.): Practices that are well-funded and aligned with major health systems to ensure a steady and reliable flow of patients will attract the bright and well-educated young physicians. Private equity deals that make accommodations for the younger associates to generate revenue and sustain reasonable salaries will be attractive. Ancillary services and real estate opportunities that augment physician revenue are a key to hiring and retaining physicians.

Chandoo J. Kalmat, MD. Anesthesiologist at Zona Spine and Pain (Goodyear, Ariz.): Many physicians are being absorbed by large hospital groups. Fewer physicians are independent.  Physicians in training should speak to their program directors to see if they can shadow private practice physicians. The freedom of creating your own schedule and having staff answer to you and being your own boss has much value. 

Joe Greene, MD. Co-founder of Louisville (Ky.) Hip and Knee Institute: Ownership is primary. The next-generation physicians have now seen the pros and cons of hospital employment. Many see that the lack of control from an office and clinical setting negatively affects patient care. The ability to control their own protocols and office efficiency has driven many of the training physicians I work with to want to have their own practices. Paramount to the success of those private practices is ASC ownership. ASC ownership has financial gains in itself but also enables a much more productive and happy work experience.  

Elisabeth Lernhardt, MD. Internal Medicine Specialist in Penn Valley, Calif.: I can tell you what attracted me to the practice of medicine was a fascination with the function of the human body and how to fix it. Due to vast improvements in science, we are even more in control of our health today. But as a physician, I am no longer in control of my profession and my daily work. We have become clerks for the insurance industry and the government. Total control has stifled the creative and compassionate side of the profession.

Naveen Reddy, MD. Gastroenterologist at Palm Beach GI (Jupiter, Fla.): The autonomy to shape their practice should be the No. 1 driver of any physician wanting to go into private practice. Private equity offers a big upfront payment when you sell your practice, and an employed model offers a guaranteed salary, but they are both subject to bureaucracies that can make a physician's life miserable. In private practice, you can shape your practice the way you want.

Krishna Mannava, MD. Vascular surgeon at Fairfield Healthcare (Lancaster, Ohio): A shift back to private practice from the recent trend of physician employment will take several things: a progressive practice model with flexible opportunities that range from employment in the practice to a partnership track, opportunities to invest in ASCs, real estate and ancillary services, company culture that is rock solid and has similar feels to some of the tech companies out there, a senior mentor who is engaged and genuinely invested in a new physician's professional, personal and financial development, and a clear short-term and long-term practice vision with transparency.

Rajiv Sharma. Founder of Digestive Health Associates (Terre Haute, Ind.): This is the best time in history to be self-employed and be your own CEO. CEO of your life, own your book of business and manage your time. Time is money. Technology and social hyper connectedness has opened avenues for doctors to promote themselves to the end-consumer of their service, that is, patients. Staying independent and using technology to enhance access to you is the focus.

Robert Szabo, MD. Orthopedic surgeon at UC Davis Health (Sacramento, Calif.): Private practice offers physicians more autonomy, particularly less oversight by administrators who are too distant from the practice of medicine to care about the physician-patient relationship. Medicine is becoming increasingly sensitive to value, and there is no question that when redesign of practices comes about to reduce cost, the least value-added portion of healthcare is administration. Private practice cuts out the multiple levels of administration that exist in big healthcare systems. Already residents have become unionized in these systems to protect them from administrators. Attendings are next!

Steve Lucy, MD. Orthopedic surgeon at Sports Medicine & Joint Replacement (Greensboro, N.C.): The answer is independence — being able to do things the way that you want to do them with a focus on patient care. While doctors are always going to be doctors who hopefully want to take good care of patients, if it's also your business, then there's an added level of customer service. 

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