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

Leigh Page


June 14, 2016

In This Article

Some Reasons Why Physicians Are Less Happy

As noted already, satisfaction rates for both groups of physicians have declined since 2014, though the drop has been steeper for employed physicians. Why the drop?

"There is a feeling that medicine isn't fun anymore," says Greg Mertz. "All physicians have to deal with increased regulations." Although employed physicians are not as likely to be hassled by payer regulations, they still have to deal with a lot of internal rules

The survey also asked physicians who switched from employed to self-employed and those who went the other way to comment about their satisfaction with work. Whereas 71% of physicians who switched to self-employed status were satisfied, just 40% of those who switched the other way were satisfied. And whereas satisfaction among self-employed physicians increased slightly from 2014, it fell among employed physicians.

What accounts for the gap in happiness? "You really have to be motivated to switch back to private practice, because it's very hard to do so," Greg Mertz says. So if these doctors manage to make the switch, they tend to feel very satisfied, he explains.

On the other hand, physicians switching to employment may have overlooked unpleasant aspects of the job, according to Marc Mertz.

"They may not appreciate how much life will change for them," he says. These physicians "often feel that the hospital wasn't completely open with them about what employment would mean," he says.

Many employed physicians are conflicted about their work, says Marc Mertz. "They usually like the financial security and not having to run their practice, but not their lack of clout in the organization," he says.

There are reasons why somewhat more self-employed physicians than employed physicians—63% vs 55%—are satisfied with their work, says Greg Mertz. Self-employed physicians "are willing to risk losing some income in exchange for more control," he says.

In a private practice, "when the owner speaks, things happen, but when an employed doctor speaks, it has less effect," says Marc Mertz.

Meanwhile, physicians who had been employed and switched to self-employment had a surprisingly high opinion of employment. Even though they had dropped employment, almost one third (29%) said they would recommend it.

Insights Into Employment Demographics

Older physicians may often use employment as a step toward retirement, Greg Mertz says. "Because many private practices can no longer be sold for large sums of money, physicians nearing retirement often shut them down and shift to employment, where they can get better retirement benefits," he says.

"I've seen a lot of older primary care physicians selling their practices to hospitals as they approach retirement," Marc Mertz says. The hospital recruits a younger physician to work with the older physician and ultimately replace him or her, he says.

The traditional pattern was for employed physicians to work in hospitals and large groups, whereas self-employed physicians worked in practices. But those distinctions are blurring. According to the survey, 19% of self-employed physicians work in a hospital, and 36% of employed physicians are office-based.

Hospital-based doctors, such as hospitalists and many anesthesiologists, can be direct employees of the hospital or part of independent groups that contract with the organization, Marc Mertz says. But even when self-employed, "they are part of the hospital culture and they're very clearly aligned with the goals of the hospital," he says.

Lately, there's been a modest trend of hospitals moving from contractual relationships to direct employment of physicians in the hospital. According to the survey, a larger proportion of employed physicians (32%) are working in hospitals now than in 2014 (25%).

Financial security was the most cited reason for employment, but it was cited by just over one third (36%) of employed physicians. Meanwhile, only 15% cited fewer administrative responsibilities; that was about one half the rate in the 2014 survey (29%).

Physicians are much more likely to be employed by hospitals and health systems than by group practices, Greg Mertz adds. "In a large private practice, physicians typically start off as employees and are then offered an equity option, though some of them turn that down," he says. In addition, physicians in some large practices are hard to categorize as employed or self-employed, because they have some aspects of both models.


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