Employed vs Self-employed Physicians: Who's Happier? These Are the Tradeoffs

Leigh Page


June 14, 2016

In This Article

Both Employed and Self-employed Physicians Like Their Careers

There is virtually no difference in career satisfaction or sense of accomplishment between employed and self-employed physicians. Medscape found that the career satisfaction rate is 72% for employed physicians and 73% for self-employed physicians.

Certain segments of employed physicians have different reasons for satisfaction with their career. Younger physicians are said to be quite comfortable with the employment model, and even older physicians who switched to employment late in their careers are unusually content, says Marc Mertz, vice president of GE Healthcare Camden Group in El Segundo, California, where he is involved medical group development and physician/hospital alignment strategies. Although these older physicians may never be comfortable with employment, "they don't get so hung up on it because they're in their golden years," he says.

Meanwhile, physicians who remain in private practice tend to be very committed to the model and are doing well with it, Marc Mertz says. "These physicians are in that model for a reason: They want to have more control over how their practice is structured and operates," he says.

Another survey question found that identical proportions of employed and self-employed physicians (81%) feel a greater sense of pride and accomplishment in their work. This pride is a key part of satisfaction, Marc Mertz says. "Being able to point to cases where your clinical skills really mattered can go a long way toward overcoming some of your dissatisfactions with practicing medicine," he says.

"I haven't met any physicians who went into medicine to provide OK care," he adds. "They want to provide exceptional care to their patients."

Also, more employed physicians are satisfied with their income. The rate rose from 49% in Medscape's 2014 survey to 54% this year.

"Hard-working entrepreneurial physicians often can make more in an independent practice, but a less productive physician or one who is pursuing a work/life balance might make more in employment," Marc Mertz says.

Greg Mertz, managing director of Physician Strategies Group in Virginia Beach, Virginia, says that employed physicians tend to start with higher incomes than self-employed physicians, but self-employed physicians have the capacity to earn more, owing to such factors as being able to charge for ancillary services. (Greg Mertz is Marc Mertz's father, but they have separate careers.)

Employed Physicians Have Concerns About Compensation

Medscape's survey detected a lot of dissatisfaction with income among employed physicians who were previously self-employed. Less than one half (45%) are more satisfied with their income, and that rate is 4 percentage points lower than in the 2014 survey.

Why the dissatisfaction? "Perhaps they didn't understand how their compensation would be calculated," Marc Mertz says. "Or they may feel it's impossible to reach the targets to qualify for higher compensation, such as operational efficiency, billing and collections performance, and use of EHR systems."

Greg Mertz says that getting higher income mainly has to do with working harder. "In both employed and self-employed settings, incomes are basically driven by the same factor: If you do more, you make more," he says.

A key trend is that employers are shifting from paying a straight salary to basing part of the salary on productivity. The percentage of employed physicians who are paid a straight salary fell from 46% in 2014 to 38% in 2016, whereas those paid for productivity rose from 33% to 37%.

Greg Mertz says that the straight salary model will continue to decline, because hospitals are more concerned about productivity and other measurements. "Increasingly, you see incentives for quality, patient satisfaction, and citizenship [which involves work on committees and organizational initiatives]," he says.

Why are hospitals embracing incentive payments? "They're trying to align physician incentives with their own," Marc Mertz says. "In a fee-for-service environment, that means more productivity as measured by visits, work relative value units (RVUs), and procedures—with an eye toward quality and patient satisfaction."

Greg Mertz thinks that the fixed salary might stage a comeback when physicians are paid on the basis of patient management rather than units of service. Then RVUs won't matter anymore.

Despite the changes in compensation formulas, a higher proportion of employed physicians than self-employed physicians are satisfied with their income.


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