2 things docs wish they knew before opening a private practice
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Over time … ownership allows physicians to build equity, diversify revenue streams, and regain control over both income and workload - benefits rarely available in employed settings.
—Brittney Anderson, MD
It is imperative to have a contingency fund for months when insurance may arbitrarily decide to stop paying or Medicare shuts down from governmental issues.
—Jason M. Goldman, MD
Opening a private practice can be rewarding, but it comes at a cost. MDLinx spoke with three private practice physicians about the financial realities of balancing a business and providing quality care.
It can be lucrative—but that takes time
“A private practice can be extremely lucrative and rewarding if done correctly, and [if] the physician has a high tolerance for risk. There are no guarantees in private practice, and each month can have large swings in revenue streams,” Jason M. Goldman, MD, MACP, president of the American College of Physicians (ACP), and an internist in Coral Springs, FL, tells MDLinx.
“It is imperative to have a contingency fund for months when insurance may arbitrarily decide to stop paying or Medicare shuts down from governmental issues. The rewards are there if one is willing to put forth the time, effort, and sacrifice,” Dr. Goldman adds.
If done well, private practice can be lucrative for some.
Medscape’s 2025 Physician Compensation Report found that self-employed physicians reported earning $374,000 on average. []
But experts note that it can take time to reap the rewards of private practice.
“Private practice can be financially rewarding, but it is not ‘easy money.’ The financial benefits typically come after systems are in place and the practice is stable. In the early years, it often requires reinvestment and patience,” family medicine physician Brittney Anderson, MD, tells MDLinx.
Dr. Anderson continues: “Over time … ownership allows physicians to build equity, diversify revenue streams, and regain control over both income and workload—benefits rarely available in employed settings.”
Related: The top 3 financial mistakes doctors make (and how to avoid them)Unexpected costs are a factor
One of the challenging financial realities of private practice is the unexpected costs that physicians may encounter.
“There are so many hidden costs you have to account for in running a practice. Big expenses include staff salaries and benefits, revenue cycle management (ie, billing), rent, and ongoing medical supplies (including costly vaccines), but you can't ignore a long list of things you may not have thought of,” William E. Fox, MD, MACP, the Immediate Past Chair of the Board of Regents of the ACP and a partner at Fox & Brantley Internal Medicine in Charlottesville, VA, tells MDLinx.
“There are multiple insurance purchases and related expenses, including malpractice insurance, office overhead insurance, cybersecurity liability, and regular OSHA training. There are IT expenses, including the electronic health record itself, voice recognition, possibly AI-enabled ambient note technology, internet and phone service, and ongoing network maintenance. There is bookkeeping and tax preparation. There are many smaller expenses, including things like office cleaning, document shredding, and even water cooler delivery. And this list is not exhaustive. How some of these things are paid for depends on whether the services are done in-house or whether they are outsourced to third parties.”
For some in private practice, these costs can mean earning less than they would elsewhere. But for some physicians, like Dr. Fox, the benefits of private practice go beyond income.
“I am under no illusion that independent practice, at least for primary care, is more lucrative than being employed. In fact, the final take-home salary may very well be lower. The reason to have an independent practice is to have a rewarding career on your own terms,” Dr. Fox says.
Related: How can I find the right financial advisor?