In your last year of residency, one of your decisions will be where you want to work after graduation. A hospital or a private practice are both possibilities, with many differences between them.
Employment after residency comes with business issues that you didn’t have to deal with during training, such as contracts, shareholder opportunities, and malpractice insurance.
While you're still a resident, ask as many questions to as many attending physicians as possible for their insights about hospital employment vs private practice.
Most of your residency probably took place in a teaching hospital, where the hospital employed your attendings. You may, in addition, have spent a couple of days a week in a private clinic, where your attending physicians not only saw patients but also spent a lot of time talking about coding and billing.
Before you choose an employment path after residency, consider your personal wants and needs, such as salary expectations, time off, career goals, and personality traits, as there are some stark differences between private practice and hospital medicine.
The business side of things
Private practices are set up in two ways: as a corporation with physicians as shareholders, or as a partnership of one or more physicians who hire other physicians or providers. Therefore, in a private practice, you potentially have the option to be employed or to be part of the ownership.
From a business perspective, private practices are almost always for-profit. They are structured as corporations for tax purposes, as the goal is to earn as much revenue as possible.
As a shareholder or partner, you thus have the potential to make as much income as possible, as your income is based on patient visits and billing, as opposed to a salary.
You would be responsible for not only seeing patients but also helping keep the practice afloat, by diving deep into tasks such as marketing, finance, IT, contract negotiation, malpractice setup, value selling, and facility management. Working for the practice, you can easily move to the top, although once you reach this position, there is often no more room to grow professionally.
Unfortunately, many residents complete their residency training without any formal training in practice management or business. This can make it difficult to thrive in private practice. However, there are practice management and business courses available if you feel this type of work may be in your future.
"If you have an entrepreneurial mindset and are interested in business management, working in private practice may suit you."
— Kristin Fuller, MD
Hospitals in the United States are set up to be for-profit, non-profit, or publicly owned. The majority are non-profit or publicly owned, which means that as a physician, you are an employee of the hospital. You most likely will be paid a fixed salary, with the potential for bonus packages that increase in size the more patients you see. The value of your service is measured by relative value units (RVUs).
Working for a hospital, your sole job is to see patients. You don’t have to worry about the business side of medicine, which may be a good thing for individuals who are not interested in owning a practice or dealing with the business aspects of an all-encompassing practice.
However, although you are relieved of the many administrative duties required in private practice, you still have lots of documentation to do regarding patient encounters.
"In a hospital setting, you have plenty of room to grow vertically in your career and potentially increase your salary."
— Kristin Fuller, MD
You can take on administrative positions, become a director of a department, assume other leadership positions, or teach.
Let’s talk about money
Working in private practice, you have the potential to make as much money as possible, as you most likely won’t have a salary cap. The more patients your practice treats, the more potential for take-home earnings. As an owner or shareholder of a practice, you are entitled to a portion of the practice earnings. On the flip side, though, you assume the risk if your practice cannot stay afloat.
The more patients your practice treats, the more potential for take-home earnings.
The burden of running a practice can fall on the physicians, who can face salary cuts when the practice needs to purchase new equipment or make improvements to the practice. Examples of high costs include expensive facilities, rising insurance premiums, computers and software for patient health records, and rent and utilities.
As a hospital-employed physician, you will have a salary that will not fluctuate unless you get a raise or earn a bonus.
Many feel this is “safer” because you do not have to worry about your paycheck each month. But most likely you will have a salary cap, which can mean earning potentially less than if you were working for a flourishing private practice. Remember that salary is always negotiable when signing a contract.
Although salary is important, there are many equally or more important factors than money when considering your career after residency. Ideally, the employment environment will be compatible with your personality and lifestyle.
Personality and lifestyle
In general, working for a private practice means you see patients five days a week from 9 am to 5 pm, and you may share an on-call schedule with your colleagues. Working out your call schedule is a very important part of your contract negotiation.
On paper, private practice may seem to involve fewer hours than working in a hospital, but it is important to realize that you will probably stay longer after hours to complete all the administrative duties, and you may find yourself taking your work home with you.
Private practice does give you some flexibility in your day-to-day schedule, letting you carve out time to pick up your kids or go to the gym during lunch, and to plan for vacations. You also have the freedom to be a decision-maker in your practice and can have a say in how your practice will run and be structured. You can work for yourself independently in a solo private practice or be part of a team in a group practice. In other words, a private practice may be a good fit if you want more independence and thrive on being a decision-maker with lots of flexibility.
When working in a hospital setting, your schedule will be more structured, and you will have to work long hours.
You will not have a say in how the hospital runs, but you will most likely not take your work home with you. Once you are finished seeing patients and charting, you are done for the day.
However, you are bound to someone else’s rules and regulations while working in a hospital. Hospitals are required to follow very specific protocols. As a result, updates to standard protocols occur constantly, and you must be flexible and adapt to the changing hospital metrics, think JCAHO, to practice effectively.
What this means for you
Choosing to work for a private practice or become a hospital employee after residency is a major decision that can affect every aspect of your life. Therefore, it is important to understand who you are and what you want, and to define your goals for your professional and personal life before making this decision. Do your homework. Understand the major and minor differences between the two environments, and ask your physician mentors and attendings for their thoughts and opinions.