U.S. Physician Practices Shift From Ownership to Employment — What Now?

Can private practice be sustained as a viable business model?

The CORRelations Chart of the Week, “U.S. Physician Practices Shift From Ownership to Employment,” highlighted that more and more physicians, especially surgeons, are leaving practice ownership for hospital employment. In fact, the number of physicians in private practice dropped from 60% to 47% of all physicians over the past 10 years. Over that same period, the numbers of hospital-owned and hospital-employee physicians increased 8% and 4%, respectively.

I understand the trend and why it’s occurring: Changes to compensation, resource challenges, and increasing regulatory/administrative burdens have made private practice more challenging for orthopaedic surgeons. I should probably say that I don’t just understand the trend, I am part of this movement. Two years ago, after 17 years in private practice, I became a hospital employee.

The ultimate effects of the trend are still to be determined. Hospital-employed physician compensation is in large part based on what the hospital physician could earn in private practice. The downstream revenues from surgeons in hospital employment do not belong to physicians, in contrast to the ancillary revenue that private practice physicians earn. Hospital employees enjoy less autonomy than do private practitioners.

Though there are increasing pressures on the private practice of orthopaedic surgery, it is critical that this model perseveres. I left private practice because I didn’t agree with private equity acquisition and I wanted the opportunity to finish my career by teaching the next generation.

For private practice to be sustained as a viable model, groups need to look for innovative methods to remain relevant in the marketplace. Private practice is far nimbler and more flexible than are most employed models. Private practicing surgeons who put their interests second to those of the group will enable their practices to thrive. Consider aligning with the hospital and contract to perform key services in your area. Make it clear through the care quality your group delivers that the community will be shortchanged if your practice is compromised. Ensure that you are so valuable, through providing call coverage and other essential services, that a future without your private group is inconceivable.