With hospitals and health systems consolidating, and physician employment on the rise, coupled with the increasing burdens placed on physicians in private practice, few independent physicians could be faulted to consider joining the ranks of the employed.
The offers sound good and simple. Generally, the hospital will offer you a guarantee equal to the average of your last 3 years of net take-home, after that, your compensation will be RVU adjusted. You get an economic bump because they will let you keep any receivables collected after your start date and take from you all the administrative burdens.
And everyone lives happily ever after. Or do they?
Studies have shown that 70 percent of newly independent, that is self-employed physicians, were happier after they made the move back to independence, while only 49% of those newly employer were happier than when they were independent.
Physicians considering the employment options need to know themselves and their willingness to work for someone, and in the case of a large medical practices, or hospital system, work for an organization that is highly bureaucratic, where your issues are dealt with at a much lower level than the executive that recruited you. That you will have to fit your practice style into what is expected, as well as surrender control over your workplace, and your fellow workers. Having issues with staff performance, even if it is impacting you and patient care, don’t expect that you can quickly change people, or performance.
Autonomy and flexibility are surrendered to structure, and processes, ones you did not create, and likely cannot influence.
The idea that you can “just practice medicine” in an employed situation is a myth.
And while it may be easy to get into an employed situation, the large medical practices or hospitals will likely take over your space, perhaps pay you for your equipment, (Remember they have to pay fair market value, so don’t expect to get much). They may even agree to employ your staff. All you need do is sign the agreement.
That agreement contents the details of the devil. Of course, you need legal guidance to review, but ask yourself how that agreement handles your exit from employment. What if happily ever after don’t happen? How do you exit?
The following provisions need to be watched:
This is a provision that says, if you leave employment you are limited as to where you can re-establish a practice. In other words, after your patients have followed you into this new emplacement situation, you will have to ask them to follow you as you relocate, and that relocation may preclude any of your patients practically form continuing in your care. It is not unusual for the institution to prohibit you from setting up practice within 20 miles not only of your employed practice location but within 20 miles of any of the health systems locations. And the number and locations of that system may grow over the time of your employment. The story is told of the physicians that signed such an agreement, and 8 years later the hospital, which had assigned her agreement to the merged system, had locations all over the lower half of the state she lived in. To leave and practice, she would have to locate her practice over 90 miles away.
Financing the new practice:
When the decision is made to leave employment for independence, how are you going to pay for it? You have no receivables to provide some cash flow towards the cost of getting re-established. Remember, you enjoyed a windfall as you collected the cash from collections that came in after your employment start date.
You have a guaranteed right, so no worries. Well, that guarantee is time limited. And after that what is the basis for your income. Too many physicians find that after the guarantee their incomes are cut, even though they are carrying the same patient load. The issue is collections. Hospitals or large medical practitioners don’t have the best reputation for billing and collecting their own billings, never mind physician billing, and you take the hit for any inefficiencies in the institution’s collection practices.
Prohibition on hiring staff:
Often the agreement prohibits you from hiring your old staff back, or good staff that would also like to leave the independent setting. Even if you could remember large practice generally pay much better than physician practices, with much better benefits, so you may not be able to match the compensation packages. This may also be true for that great PA that would love to join you outside of the institution.
When considering your choice of practice situations, remember that you will be living in that environment every work day, day after day. There is nothing worse than not looking forward to starting a day.
Impact and control come from the autonomy of practice.