Physicians Going into Private Practice: Pros and Cons

One of the prevailing trends in the healthcare industry in recent decades has been the change from private physician practices to doctors working for larger healthcare groups, primarily organizations that own and operate hospitals. That trend might be reversing, at least on one front, as Texas-based Steward Health Care has filed for bankruptcy protection and put all of its 31 US hospitals up for sale. The hospital organization’s troubles give physicians a reason to pause and reconsider the advantages of private practice as compared to the challenges of going it alone.

Some of the pros and cons for physicians considering private practice:

Pros

• Autonomy and Flexibility: One of the most appealing aspects of private practice is the autonomy it offers. Physicians can make decisions about their practice management, patient care protocols, and work hours, allowing for a better work-life balance.

• Personalized Patient Care: In private practice, physicians often have more time to spend with patients, fostering stronger doctor-patient relationships. This can lead to better patient satisfaction and outcomes.

• Specialization Opportunities: Private practice can offer physicians the chance to specialize in niche areas of medicine, attracting a specific patient demographic and potentially increasing their professional satisfaction.

• Potential for Higher Earnings: Although starting a private practice involves significant upfront investment, the long-term earning potential can be higher compared to salaried positions in hospital settings, if managed effectively.

Cons

• Financial Risk: Starting and maintaining a private practice requires substantial financial investment and carries the risk of financial instability, especially in the early years or during healthcare policy changes.

• Administrative Burden: Private practice owners often spend a significant amount of time on administrative tasks, such as billing, coding, and compliance with healthcare regulations, unless they hire staff or outsource these activities.

• Isolation: Leaving a hospital or large healthcare system means losing the built-in network of colleagues for referrals, consultations, and moral support, which can be isolating.

• Market Competition: Establishing a new practice means facing competition not only from other private practices but also from other large and diversified health systems vying for the same patient base.

Of course, there are many issues to consider before choosing between starting a private practice and staying with or joining a larger healthcare system. Many of those issues revolve around things that don’t have much to do with delivering healthcare, like hiring and compensating staff, complying with industry- and government-imposed regulations, and operating a profitable business. Physicians considering this path must carefully assess their personal and professional goals, financial readiness, and the healthcare landscape in their community to make an informed decision.

HBK Healthcare Solutions can help. We are a dedicated team of financial professionals who specialize in serving clients in the healthcare industry, including hundreds of private physician practices. While we remain current on the increasingly detailed reporting regulations and reimbursement requirements, we also advise our clients on a wide range of financial and operations business issues, including compensation modeling and outsourcing, so they can focus on their patients and practices.