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The Pros and Cons of Starting Your Own Practice

Published June 24, 2022

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Financial Planning
Life & Career
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Are you burnt out? You’re not alone, according to Medscape, 44% of physicians have reported feeling that way. If you work in a hospital or a large primary care facility, chances are that half your coworkers are there too. Maybe you’re thinking about going out on your own. Being your own boss offers personal freedom, the ability to shape and control your environment, and the potential for a higher income. It also offers less support, greater responsibility, and less financial certainty. Do these possibilities excite or terrify you? Take a look at some of the pros and cons in more detail and see which camp you fall into.

Pros

Personal freedom

Most people prefer to make their own decisions. Having a sense of personal agency, or control over one’s actions, is a source of stability and happiness for many. Part of that freedom is control over your schedule. Being able to dictate when and where you work instills a sense of stability and control over your life as well as contributing to greater work/life balance. Being the boss puts you in control of your destiny and for some, that is the only reason needed to establish your own practice.

Shape and control your environment

In addition to controlling your work schedule, you can control your work environment and culture. You can create a place where you want to work. A recent study[1] showed that less than 50% of physicians felt that their hospital/health system treated them with respect. Who wants to work in an environment like that?

Many hospitals and health systems are driven by profit motives, which can treat concerns over patient treatment and relationships as an afterthought. As the boss, you can control your relationships with your patients, ensuring they get the attention and treatment you want to give them.

The ability to shape and control their work environment is suggested as one of the reasons for lower burnout rates among private practice physicians. The AMA[2] cites studies that report burnout rates between 45-54% in hospital settings or large primary care practices, while another study[3] found that only 13.5% of providers working in small, independent primary care practices (SIPs) reported being burnt out.

Higher income

If you’re in charge, you reap the rewards of your labor. All things being equal, you can dictate how much you work, and accordingly, how much you earn. As an employee, you’re limited to the terms of your employment contract, as well as whatever additional income you can earn on the side.

When everything goes according to plan, being the boss can provide a greater sense of agency, more income, and ultimately, a greater sense of career satisfaction and fulfilment. That being said, going out on your own also brings with it additional stresses and risks.

Cons

The percentage of doctors in private practice has been steadily declining over the past 30 years. The AMA[4] notes that in 1988, physician ownership was 72.1%, dropping to 60.1% in 2012, and to 54% in 2018. There are a number of reasons for this.

Less support

Being in business for yourself means you have to build and supply your operational and organization support structure yourself and that takes time and money. Starting a new practice takes approximately six to twelve months and will cost anywhere from $100,000 to $500,000, or more. You’re responsible for everything from ordering supplies to scheduling patients to dealing with insurance companies. You can hire people to help you but at the end of the day, the buck stops with you.

More responsibility

Being the boss means you also have to deal with everything that comes with it. And it’s a lot. Seeing patients, managing your staff, dealing with insurers, keeping an eye on the numbers, facilities management, and the list goes on. You can’t just show up and do the job you went to school for. Being the boss involves wearing multiple hats.

Less financial certainty

While being on your own means that you can potentially earn more money, it also means that responsibility for earning that money falls squarely on your shoulders. It’s up to you to bring patients in the door, to market yourself and your practice, and to get paid. All of these activities can take away from the time you can spend with patients and may require you to work longer hours.

In Summary

While being your own boss brings greater freedom and autonomy, and potentially more money, it also brings greater responsibility with less support, and greater uncertainty. The appeal will depend on the person. If the pros get you more excited than scared, it might be time for you to strike out on your own.

 

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[1] The Engagement Gap: Physicians Aren’t As Aligned as Executives Think (And What Executives Can Do About It), Jackson Healthcare Search

[2] https://www.ama-assn.org/practice-management/physician-health/small-practice-less-doctor-burnout-4-reasons-may-be#:~:text=Studies%20over%20the%20past%20several,between%2045%20to%2054%20percent.

 

[3] https://www.jabfm.org/content/31/4/529.full

[4] https://www.ama-assn.org/about/research/employed-physicians-now-exceed-those-who-own-their-practices#:~:text=Nearly%2043%25%20of%20physicians%20belong,down%20from%2061.4%25%20in%202012.

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