Choosing a Physician Career Path: Partner or Employee?
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As a newly minted doctor, you're most likely asking yourself many questions about your pending physician career path — where you want to work, the practice setting that’s right for you, the type of work/life balance that best suits your personality. Often, one of those questions is something similar to "Should I become a partner in a practice or remain an employee?"
In the past, the answer to this question was easy — in fact, there wasn’t much of a question. Physicians worked to become partners within their practices. Today, however, economic distress and medical practice trends have made the decision of whether to become a partner or remain an employee a rather difficult one.
So, what has changed? Today, like in the mid-1990s, hospitals are hiring physicians as employees and buying medical practices. Given the uncertain economic conditions, the financial guarantee that comes with hospital employment (as opposed to a partner) can look very enticing. After all, as an employee, physicians enjoy very little financial risk or managerial responsibilities and can accept other positions as desired. On top of that, hospitals can afford higher salaries for the physicians they hire, which are usually more than the revenue from private practice.
“It’s no longer a common scenario for a medium-sized private practice to employ someone and pay them substantially less than what the partners are earning with the promise of partnership,” said Tommy Bohannon, senior director of recruiting and development training for Staff Care's sister company Merritt Hawkins & Associates, per Medscape Business of Medicine article.
In this scenario, becoming a partner includes the risk of taking on added responsibility for the same — or potentially less — money. If an employee must reduce his or her salary in order to finance a partnership buy-in, he or she could end up earning less money as a partner than as an employee. Also, should the practice become less profitable, partners must continue to pay for overhead costs and the salaries of their employees before paying themselves.
Choosing A Physician Career Path: The Advantages Of Partnership
Under the right circumstances, though, a partnership can offer grand rewards. With a partner, status comes a voice in business decisions. Many physicians also feel that partnership earns the respect of their colleagues and their communities. And, in a profitable practice, partners are not only able to earn a higher income, but they can also build up equity for retirement, whereas employees must rely on their 401k plans.
It should go without saying that the duties and rewards of partnership vary greatly among practices. Practice size, location, specialty, and leadership are all factors that determine what is expected of a partner in a given practice. In general, partners in smaller practices will have a greater role and more responsibilities, whereas partners in larger practices have more leeway in determining their level of involvement. Much like your decision as to which type of practice setting is right for you, the size and atmosphere of the practice you select should be based on what fits your personality and work/life preferences.
If the practice with which you are interviewing has a partnership track, the interview is a perfect time to discuss the length of the track and how their buy-in process works. Typically, a period of two to three years is about average. After the practice presents you with a partnership offer, it is always a good idea for you to enlist the help of an attorney, accountant, or other consultants to review the practice’s books.
Practices vary in their buy-in methodologies, so it is difficult to define a “standard” process. However, it's also important to understand that several things can influence the buy-in price, including tangible assets, accounts receivable, goodwill (depending on the specialty), ancillaries, and/or real estate. Again, these elements will vary by practice.
As the economy and market trends continue to change, so will the advantages and disadvantages of becoming a partner or remaining an employee. For more information about selecting a practice and other relevant career information, sign up for Staff Care's New Physicians Program today.
Adapted from an article originally published on NewPhysician.com.