Which Is Better: Private Practice or Hospital Employment?

By: Deborah Meyer

Deborah Meyer

During the Practice Management Symposium for Practicing Orthopaedic Surgeons, the question of hospital-employment of orthopaedic surgeons was a hot topic. In today’s healthcare market, many hospitals are seeking to employ orthopaedic surgeons, and many orthopaedic practices are facing financial challenges. But is making the switch worth it?

Symposium attendees had the opportunity to hear both sides of the story from faculty members Louis F. McIntyre, MD, Westchester Orthopaedics in White Plains, N.Y., and Ian J. Alexander, MD, of Cleveland Clinic Health System. Both have worked as hospital employees and private practitioners, giving them a unique perspective on the issue and offering attendees the opportunity to hear about the advantages and disadvantages of both practice settings from surgeons with first-hand, “been there, done that” knowledge.

Stay in private practice
Dr. McIntyre, who had been hospital-employed and is now in private practice, presented his reasons for making the switch. “One of the key benefits of a private practice is that, as an orthopaedic surgeon, I maintain complete control of operational decisions, revenue, and patient care,” said Dr. McIntyre.

“Employed physicians must adhere to the rules of their employer,” he continued. “The restrictions placed on the surgeon are often extreme; in many cases, the hospital will dictate what hours you see patients, what services are available for your patients, and even how you decorate your office. As an employed physician, you also lose control over staff size and staff hiring and firing decisions.”

Dr. McIntyre provided several caveats for surgeons to consider when reviewing hospital employment options. He noted that initial hospital employment offers often include high pay per work RVU (relative value units) and substantial incentives, but he cautioned, “once you become an employee, all leverage is gone.”

He pointed out that renewal contracts rarely retain the same perks as the initial contract, which can make contract negotiations difficult and stressful. In addition, contracts may contain termination and restrictive covenant clauses that may make it difficult for an employed surgeon to stay in the area if he or she decides not to renew the contract.

“Just remember,” said Dr. McIntyre, “hospital administrators are process-driven. Surgeons, however, are in the business of caring for patients, and we are outcome-driven.”

Give it up
In his presentation, Dr. Alexander took the opposite view, pointing out the advantages of employment over private practice. Citing recent and pending reimbursement changes, Dr. Alexander predicted a continued decrease in payments to surgeons, which might make it harder to maintain an independent practice.

In addition, Dr. Alexander stated that private practice ancillary income could be in danger because physician-owned ancillaries are likely legislative targets. Hospitals, as the largest employers in many U.S. cities, could experience little or no negative effects from these changes.

“Hospital-employed physicians do not deal with payor contracts or insurance concerns,” said Dr. Alexander. “As an employed physician, I don’t have to worry about billing, reimbursements, and uninsured patient issues; the hospital handles them.” Capital outlays, mortgages, marketing, and patient recruitment concerns are other issues that the employed physician doesn’t have to contend with.

Regardless of what stage an orthopaedic surgeon is in in his or her career, Dr. Alexander sees benefits of hospital employment. Hospital-employed new graduates have sustained income while building a practice. Hospitals place a high value on the patients that mid-career surgeons bring with them, and for late-career surgeons, hospital employment can decrease or eliminate overhead expenses and facilitate an easier transition from full-time practice to a part-time or nonsurgical role. According to Dr. Alexander, “Being an employed physician is not for everyone. Depending on the circumstances in your community and coming changes in healthcare delivery, however, it may be a good idea to hook your wagon to the back of the bus before you get run over by it.”

Help from AAOS
Are you currently evaluating employment options or trying to decide between offers from practices? Turn to the AAOS Practice Management website for a free tool to assist you. The “Practice Evaluation Inventory” is a free, downloadable form that will walk you through the process of finding the best option for you based on criteria that are important to you.

The tool allows you to rank factors such as personal and family needs, schools, location, and lifestyle and social preferences, as well as practice factors such as practice type, call coverage, and patient population. The higher the totals, the more likely the practice will be a good fit for you.

Visit the Practice Management kiosk in Academy Hall B or go online to to download and save the free Practice Evaluation Inventory today!

Deborah Meyer is a member of the AAOS Practice Management group.