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Doctors Employed by Hospitals: To Join the Trend or Not to Join the Trend?

Posted by John Peiser on Sep 7, 2011 9:19:30 AM

According the an article in The New England Journal of Medicine published March 30, 2011, more than half of practicing physicians in the U.S. are currently employed by hospitals or integrated delivery systems. A recent survey conducted by the Medical Group Management Association shows that there is nearly a 75% increase in the number of active doctors employed by hospitals since 2000. That percentage is likely to increase with the economic and quality of life realities new doctors will face when evaluating whether or not to open their own practices. Additionally, hospitals are becoming more aggressive in their recruitment efforts. A September 2010 poll indicates that 70% of hospital administrators plan to increase physician employment within the next 12 to 36 months.

An Attractive Proposition?

The hassles of running a practice are vast. Rather than being patient-centric, doctors have to contend with a myriad of other issues that take their focus away from the practice of medicine: insurance companies, mounds of paperwork, employee hiring and firing, billing, salaries, collection, equipment, and on and on. And then there is the issue of quality of life: long hours, minimum flexibility and decreasing income. As an employee of a hospital, all of those headaches go away. The benefits include:

  1. Doctors can focus on patient care rather than all of the distractions of running an office.
  2. The physicians no longer have to concern themselves with reimbursements, the financial viability of their practices, and administrative issues.
  3. Doctors will have a steady, reliable income stream.
  4. As an employee of a hospital, physicians receive benefits and insurance coverage.
  5. The hospital pays for all equipment and technology (such as EMRs).
  6. Doctors no longer pay rent and salaries.
  7. The uncertainty of healthcare reform and how it will affect private practice practices become moot.

Are Doctors Trading One Set of Struggles for Another?

While on the surface, becoming an employee of a hospital looks attractive. Be cautious: looks may be deceiving. While being a business owner has its drawbacks (a medical practice is a business) being an employee comes with its own set of issues and challenges. Here are a few things to consider:

  1. Who is the ultimate decision maker in this new venture when it comes to issue relating to your patients and how you practice medicine?
  2. Are you ready to become an employee?
  3. Who hires and fires your staff? What recourse do you have when your nurse is not working out? Who is the direct supervisor?
  4. How easy will it be to terminate your employment with the hospital if things just don’t work out? Will you be obligated to sign a non-compete clause or? Is there a restrictive covenant?
  5. What if the hospital changes ownership? Where does that leave you and your employment arrangement?
  6. How much say will you have in the hiring of “competitors?”
  7. What happens if the goals of the hospital run counter to your goals?
  8. Will your salary be guaranteed or incentive-driven linked to productivity and clinical behavior?
  9. How will your patients view this move? Will they be concerned that will be offering less personalized care or will they see this as lending credibility and prestige to you and your practice?

Doctors must weight their options carefully and consider all of the ramifications of staying in private practice vs. joining a hospital. Quality of life vs. control? Steady income vs. independence?  Your goals and values vs. the hospital’s goals and values?  The answers to these questions can only come after the physician delves deep into what he or she want for the future, both personally and professionally.

Contact John Peiser at 972-818-5300 or fill in the form below,

With over 30 years of experience in executive and leadership positions in the business and financial arenas, John Peiser, Partner at Goldin Peiser & Peiser, LLP, has the expertise needed in providing strategic guidance to his clients. Whether they are doctors, distributors, manufacturers, retailers, not-for-profits, start-ups or mature companies, John has an exceptional ability to successfully navigate his clients through all of the challenges they face on the path to reaching their goals. His creative consulting methodology is motivated by his sincere desire to see his clients abundantly grow their businesses.

Note: This content is accurate as of the date published above and is subject to change. Please seek professional advice before acting on any matter contained in this article. 


Topics: Medical