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But Dr. DeMasi does see a downside to employment. “I don’t have as much fun now as I did in private practice,” he admits. “The staff I hired to work in my office had been my patients when I first came out of residency. I delivered their kids.” But the loss of these personal connections has been offset by peace of mind, better reimbursement and the ability to provide for his family.
Family physician Jeffrey M. Stevens, DO, of Rockford, Mich., was in private practice with another physician for four years, watching over “every dollar that came in the door,” before selling to a large multispecialty group practice. “For me, it was a natural transition over,” he says. “I would make that move again tomorrow if I had to.”
Having learned about business the hard way when he was in private practice, Dr. Stevens appreciates the benefits of employment. “My medical liability insurance is completely covered, as are the costs associated with CME. I have paid vacation, health insurance, a retirement plan.
“If you’re in private practice like I was out of residency, you have to set these benefit programs up and fund them, not only for yourself but also for your staff. This was a huge headache for me when I started practice because I had never done it before,” he says.
For Kelli M. Ward, DO, MPH, a family physician in Lake Havasu City, Ariz., it was the high cost of owning an oversized office building that drove her to sell. Dr. Ward and her mother, an osteopathic pediatrician, had started a practice that had grown to include two other physicians and two physician assistants. But after eight years, her mother left to teach at the DO school in West Virginia, the other physicians started their own practices, and the PAs joined another practice group. Ending up a solo practitioner, Dr. Ward was stuck with a custom-built 7,000-square-foot building with multiple examination rooms.
“I rented out part of the building, but it was still so hard to manage with the overhead and all of the stresses of running a business,” she says. “I had a very busy practice, but it was difficult to survive financially. For a couple of years, I didn’t take a paycheck. Practicing medicine became an expensive hobby.
“Luckily, my husband, who is also an osteopathic physician, could take care of our family financially. But there comes a breaking point when you say, ‘I’m not going to keep doing this. I have to make a change.’ ”
Dr. Ward weighed various options. She considered selling the building and renting space from the new owner or moving the practice. But at the time, roughly four years ago, the real estate slump precluded this plan. Selling her practice made the most sense financially.
Proceeding with care
Dr. Ward’s husband, an emergency physician, had worked closely with Flagstaff, Ariz.-based North Country HealthCare, which operates several community health centers throughout Arizona, and knew that the organization was planning to expand. “We knew that North Country was well-run and made a big difference in the communities it served in terms of patient outcomes. So we decided that becoming part of that organization would be good for our community, my employees and my practice,” Dr. Ward says. “I approached North Country and asked, ‘Do you want to open a clinic in Lake Havasu City?’
“It turned out that Lake Havasu was already part of their long-term expansion plan. They liked the fact that I already had an infrastructure in place, essentially a turnkey practice they could walk into. So they decided to acquire the practice and open a community health center in Lake Havasu earlier than they had originally planned.”
The transfer took six months. Among other considerations, Dr. Ward made sure that her employees retained their seniority with the new employer. “They didn’t lose any of their benefits, such as the vacation time they had accrued,” she says. “They also maintained their status of being key, highly valued employees.”
Dr. Ward, who has since left North Country to run for the Arizona Senate, liked being employed because of the steady paycheck, paid vacation and paid CME. “I actually had someone to cover me when I was gone, so there wasn’t a stack of papers waiting for me when I returned from a meeting,” adds the 2010-11 president of the Arizona Osteopathic Medical Association. “Those kinds of things were awesome.”
However, she did miss the freedom she had in private practice. “For example, I could no longer just go out and buy a printer if I needed one,” she says. “If I wanted something, I had to go through a formal process of requesting it.”
Dr. Stevens believes that in most respects the advantages of being employed outweigh the disadvantages, but physicians must take great care in choosing the organization that acquires their practice. It is important to find an employer with a similar approach to patient care and staff management, he says.
Physicians need to be particularly wary of noncompete clauses in employment contracts, Dr. Stevens warns. Some physicians have ended up with agreements that prevent them from practicing within 10 miles of their current office should they decide to resign. In such cases, physicians can lose their patients if they leave.
“Whether you’re considering joining a large group practice or a hospital or whether you are just out of residency and wondering if you should go into private practice, you need to do your due diligence in deciding where you want to be right now and five and 10 years down the road,” Dr. Stevens advises. “If you don’t have the answer figured out up front, you are going to pay the price.”
Dr. Swetech has developed a detailed checklist to help physicians assess prospective employment arrangements. Everything from the physician’s health insurance and medical liability insurance to compensation for office furniture and nepotism policies needs to be addressed, he says.
Whether employment is a better option than private practice depends on a physician’s personality, family status, specialty, locale and debt load.
Some physicians like Dr. Piccinini have a strong entrepreneurial spirit and are willing to work tirelessly and test different business models to make private practice work. A building owner, he leases space to other independent clinicians, with all of them sharing office staff.
While Dr. DeMasi contends that private practice no longer makes sense for the average Ob-Gyn, he believes that certain specialists, such as plastic surgeons and ophthalmologists who do Lasik surgery, can do much better financially on their own.
For primary care physicians, who have strong bonds with several generations of patients, the choice can be particularly difficult. Dr. Swetech, for one, hasn’t decided whether to sell his practice, but he admits to temptation: “I’m keeping all of my options open.”