Physicians detail the considerations leading more of them to choose employment over independent practice
By John Carruthers, staff writer, April 02, 2012
In the current climate of ever-growing health care systems and increasingly complicated regulatory mandates, an increasing number of physicians — both established doctors and those just leaving training — are electing to practice medicine as employees, rather than as independent practitioners. Being an employee can mean many things — becoming a professor of dermatology at an academic center, or an employee at a large dermatology group, or a dermatologist within a multispecialty practice. Whatever the setting, though, a greater share of dermatologists, especially younger ones, are finding themselves enamored of the benefits of life as an employed physician.
In a sweeping survey-driven report published in May 2011, consulting group Accenture detailed the steadily declining numbers of physicians who practice independently. According to the survey, the number of physicians defined as “truly independent” — those running their own private practices, working outside of hospitals, large groups, or health care systems has been declining at a steady rate of around 2 percent per year, even as the total number of overall physicians has increased. Moreover, Accenture predicts a 5 percent annual drop by 2013.
In dermatology, the Academy’s 2009 Dermatology Practice Profile Survey found that 39.6 percent of practicing dermatologists practice solo, 40.5 percent practice in a single-specialty dermatology group practice, 8.9 percent practice in multi-specialty practices, and 8.0 percent practice in an academic setting. Comparing those results to the Academy’s most-recent survey of young physicians and residents suggests a stark contrast between dermatology’s present and its future. Only 5.3 percent of residents plan to practice solo, and only 13.0 percent of young dermatologists (within eight years of residency) currently practice in that setting. Young dermatologists practice in academia at a rate of 24.7 percent, and 29.6 of residents plan to enter that setting.[pagebreak]
While numbers from the Academy’s survey show that dermatologists still trail behind other specialists in practice consolidation, they do seem to be slowing down in their efforts to set up solo practice and instead have been migrating toward single-specialty mid-size group practices, according to William Brady, the Academy’s senior manager of practice management resources.
“This doesn’t mean that the solo derm practice model is becoming extinct. Many have explored other career options before deciding to go it alone,” Brady said. “Largely, it comes down to both objective and subjective factors — entrepreneurial spirit, risk tolerance, sense of autonomy, professional goals, local competition, and insurance climate, with some states more attractive for sustaining the solo dermatology practice model.”
As the business side of providing medical care has become increasingly codified, many physicians find themselves without the time, specialized expertise, or desire to navigate the financial and regulatory minefield of opening a private practice. The ability to focus only on practicing medicine, free of administrative concerns, has led Kaiser Permanente to see a marked uptick in employment inquiries in the past year, according to dermatologist Jeffrey Benabio, MD.
“I can tell you that we don’t have any openings at the moment for dermatology. We’ve got a waiting list of people contacting us and my chief saying they’d like to work for us,” Dr. Benabio said. “I’ve only been here for five years, but this is definitely a new trend. We’re seeing a lot of people who are in private practice who would like to get in, but we just don’t have any room.”
Las Vegas dermatologist Lucius Blanchard, MD, who runs 30 dermatology offices in five states, has witnessed this trend firsthand, and said that the vast majority of young physicians he encounters have a desire to start out their medical careers as an employee, rather than an employer. He attributes the trend to forces in the marketplace. Young physicians, he said, face tremendous difficulties in start-up, such as getting loans from banks in the current economy, negotiating with major payers alone, and navigating the ever-changing current of state and federal regulation.
“I think almost all of the young doctors that we talk to now — and we’re constantly recruiting — want to be employed physicians. Nobody recently coming out wants to open their own practice.” Dr. Blanchard said. “You look at all the challenges, weighed against the advantages of coming into an established practice with no cash outlay and money coming in from the first month. To most people, that’s much more attractive. People want to go where they can have a lifestyle and exchange a little money for security. It’s easier than entering into all the financial obligations of your own practice.”[pagebreak]
Benefits of employment
As a specialty, dermatology is well known for striking an agreeable work/life balance for its practitioners. In much the same way, joining a large group or system affords tangible lifestyle benefits that come with eliminating many of the most common stresses of the private practice owner. Geisinger dermatologist Christen Mowad, MD, said that one of the biggest benefits of her work situation is the disappearance of many month-to-month worries under the umbrella of her employer. While she still indirectly pays the cost of such provided benefits as malpractice insurance, Dr. Mowad said that having it taken care of in the background of her daily practice is a convenient attribute of employment with a health system.
“I don’t have to worry about paying my malpractice, life, and disability insurance. All of that comes as a benefit through the institution. I don’t have to worry about billing, hiring and firing, and the day-to-day management headaches,” she said. “It really allows you to be free of those concerns and concentrate on patient care and teaching. For some people, they prefer the independence to make those decisions and have control of the finances. That wasn’t me.”
Dr. Benabio expressed a similar sentiment, adding that the organizational philosophy at Kaiser was a very significant factor in his choosing that institution from among a host of potential employers.
“My initial interest in Kaiser came from its care model. It really allows you to just focus on medicine,” Dr. Benabio said. “How many patients I’m seeing, am I making enough money, are my employees happy? I don’t have to worry about that. There are no reimbursement questions in particular, as any contract questions are out of my hands. It’s never a concern.”
Likewise, Dr. Mowad and many dermatologists with a pronounced interest in teaching or research have chosen the institutional benefits of joining a large academic organization notably the advantage of nearby colleagues with an interest in continued education and unusual cases.
“The real reason I went [to Geisinger] was to stay in an academic center where I would have the ability to do research and teach residents. But practicality-wise, it’s nice to have those comrades to bounce things off of. We practice side by side, and we get sent a lot of difficult cases because we’re a tertiary care center. If one of my colleagues sees somebody who’s complicated, we often call everyone into the office to put our heads together and see who has any ideas,” Dr. Mowad said. “Teaching the residents is really a lot of fun. They keep you current by asking questions. It’s a little bit more work, but it’s perhaps the main reason that I chose an institution with a residency program.”
An ample supply of colleagues, Dr. Benabio and Dr. Mowad said, also allows for a great deal more flexibility in taking time away from work for overseas medical trips, professional meetings, or vacations. Kaiser’s flexible scheduling, Dr. Benabio said, has given him the ability to work only four days a week.[pagebreak]
While the security of an institution allows for a certain ease in practicing medicine, it also comes with a host of administrators to whom physicians must answer. While his opinions on treatment don’t often clash in any meaningful way with that of his institution, Dr. Benabio said, he’s always aware that should something arise, he won’t have the final say on a patient or scheduling matter.
“I work for a big company, so I can’t always just do what I want. I do have the final say on patient care, but not on my schedule or scope of practice,” he said. “Though I can’t say that very often I come across something that I’d like to do that I can’t with respect to my schedule or scope of practice.”
In addition, many institutional physicians have long dealt with the general assumption that they make less money because they’re not seeing the potential profits of being in practice for themselves.
“Traditionally, institutions and academic centers make less money,” Dr. Mowad said. “We are reimbursed well, however, so I choose this situation understanding that private practice people might potentially make more money.”
Given the current climate, Dr. Benabio, Dr. Mowad, and Dr. Blanchard all predict a continued move toward more physicians becoming employees. Dr. Benabio, who sampled different practice scenarios extensively during training, said that being employed by a large organization offers a combination of lifestyle and medical focus that many physicians find extremely attractive.
“I had an open mind during training. I had an opportunity to work at Kaiser when I was a resident, which was helpful, but I also worked in a number of private practices, including some pretty well-known cosmetic practices in Orange County and Los Angeles, to get a sense for what it would be like with my work and lifestyle,” Dr. Benabio said. “Based on all the information I had from those experiences, I made the decision to work here. It was nice to have those experiences and make a decision that I was truly free to make.”
In addition, Dr. Mowad said, younger physicians tend to gravitate toward facilities that can provide the best equipment and opportunities to stay on the cutting edge. Smaller practices, she said, simply can’t match the resources offered by larger organizations.
“Working for Geisinger has allowed our practice to have state-of-the-art computers and equipment with no direct cost to me. I’m not having to take money out of my practice to pay for EHR, e-prescribing software, or new hardware — all of which are becoming mainstays in every practice. The institution has spent significant dollars, and I’ve benefitted from that,” Dr. Mowad said. “Weighing that with the direction that medicine is moving, we’re going to see much more of a trend of physicians being employed.”
While the ultimate results of health system reform are yet undetermined, it’s clear that for at least the near future, more new and established physicians will be pondering the concept of becoming an employed physician.
Academy resources help members manage practices
Dermatologists who opt to run their own practices don’t have to go it alone. The American Academy of Dermatology offers a variety of resources to help, including courses at its annual and summer meetings, the Practice Management Essentials series of manuals and webinars, and a line of DermSource programs that help members handle their practice-related purchasing needs.
To learn more, visit www.aad.org/member-tools-and-benefits/practice-management-resources.
Both sides of the fence
Las Vegas dermatologist Lucius Blanchard, MD, has explored both sides of the employer/employee divide since completing his fellowship in 1978. He joined a private practice run by two dermatologist partners, and shortly afterward bought out both of their stakes. He expanded the operation to a handful of offices and sold eight years ago to a health system, staying on as an employee. Not long after, the company began having financial troubles, and Dr. Blanchard found himself buying a system of 30 offices and 25 employee physicians. The pathology lab he also operates requires him to hold licensure in six states. Having seen both sides, he shared a number of his personal observations on the pros and cons of employment and employing.
- On the personality required of a successful owner: “If you have the drive, then owning your own practice is one of the most exciting, rewarding, frustrating things you’ll ever do, especially when you’re young and ambitious. It’s a matter of personality. It takes a bit of an entrepreneurial spirit and some risk-taking in your genes to be an employer.”
- On the additional time management skills required as an owner: “One of my requirements, whether it’s running a dermatology business, or one of the other businesses I’m involved in, is that there has to be a manager to run the day to day. And you have to manage them, of course, but I always keep in mind that my main job is always seeing patients. Some doctors want to be administrators or CEOs. Me, I’ve always enjoyed the patient experience. I have a rule, we don’t have any meeting that lasts over an hour. I work probably 12-15 hours a day. Maybe 12 of those are seeing patients, and an hour’s worth of administration time, five and a half days a week.”
- On the differences in medical management since his first stint as an owner: “When I was an owner the first time, the business side of medicine was simple enough that I could understand and manage it. When I came back the second time, there’s no way I could have a full understanding of everything involved. Not only has regulation increased significantly, especially for practices operating in multiple states, but the process of negotiating contracts is much more involved than when I started as an owner. Now, instead of calling up a payer and making a deal, you’ve got to have statistics, cost analysis, and everything about every payer. It’s a lot more technical analysis of a thing that I used to be able to do myself. That’s been the biggest change.”
- On the responsibility inherent in ownership: “When people ask me, I tell them that I wake up every morning knowing that I have to make enough money to pay 450 people and rent on 30 offices. If you don’t make that, you’ve got to cover it yourself.”
Pros and cons
Whether it’s making the decision about where to start one’s career or contemplating whether a change of practice would be beneficial, it’s vital to consider all the elements involved and how they interact with a practitioner’s preferences and experiences. The Academy’s practice management staff detailed the strengths and potential pitfalls of the different practice scenarios dermatologists are most likely to consider.
| ||Strengths ||Potential pitfalls |
|Starting a practice ||Complete autonomy and entrepreneurial freedom, as well as high patient demand in many areas of the country. ||High risk and responsibility. |
Sole administrative responsibility and no income potential during time away from the practice.
Current health system reform environment favors clinical integration and corporate affiliation.
|Joining a small single-specialty group ||Shared patient responsibility, income predictability, and expense sharing. |
Professional camaraderie and the potential to coordinate care.
Can expand market share and increase scope of services.
| Potential for a lack of control, differing personalities, and clashing professional or business philosophies. |
The need for growth may increase pressure to affiliate with ACOs.
|Joining a multispecialty group ||Greater care coordination and reliable in-house referrals. |
High degree of coverage flexibility and professional camaraderie, with income predictability.
Good potential to diversify services in-house.
Capitation and risk-sharing continue to advance as prominent strategies while the government pushes the ACO model.
|Managerial governance can be ineffective if not managed well, and expectations or policies might prove too demanding for some physicians. |
The ACO model remains unproven at this early stage.
The potential for patient backlash resembles many of the HMO complaints of the 1990s.