What's Driving the Physician Employment Trend?

Gary Li , MD

Regional Director

Published August 14, 2014

These days, we do not really need to be reminded that the landscape of healthcare is changing rapidly. One clear trend is toward the increasing employment of physicians. This includes employment by hospitals, hospital health systems, medical groups, and other entities.

Merritt Hawkins, a national physician recruitment and consulting firm, recently released its 2014 recruitment survey. The results are astounding — less than 10 percent of recruiting searches from April 2013 through March of 2014 were for independent practice positions, such as solo practice or partnerships. (Contrast that with 2004, when 45 percent of job openings were in independent practices.) Of the remaining 90 percent of searches, a large majority were for employed positions.

What accounts for this trend? It seems there are both healthcare-specific and cultural forces at work. I think these are most conveniently divided into hospital/health system and physician categories.

First, let's look at the hospital side. In an environment of decreasing reimbursement and increasing regulation, hospitals and health systems are under immense pressure to improve operational efficiency, quality and service. They see employment as one pathway to improve physician alignment, which is imperative to reaching these goals. They also see physician employment as an effective means to ensure physician involvement and leadership in team-based care. And in the face of intense competition, they are aggressively trying to increase market share — and they need physicians and their practices to do so.

For today's physicians, too, employment is an attractive option. (By employment, I mean by any entity, whether a hospital, medical group or public company.) Though sociologists would certainly be able to give a more detailed insight, my own observations suggest that young physicians today have very different priorities and goals than those, say, 30 years ago. This mirrors our society in general. Young physicians are much more likely to focus on work-life balance. Most do not want to be married to their work like Marcus Welby, MD, of the classic TV medical drama.

The changing roles of men and women and the increasing percentage of female physicians in the workforce also have an impact on practice preferences. Some physicians see the employment model, which provides legally mandated maternity leave, as more family-friendly. (While this is a common perception, arguably many independent practices have equally robust systems in place to support young families). That being said, the trend toward better work-life-balance isn't gender specific. Overall, both female and male physicians tend to work fewer hours than physicians did in the past.

Anyhow, what this really means is that today's young physicians are much less inclined to embrace the uncertainties of starting and/or running a business, especially in an age where doing so is much more difficult than ever.

Likewise, many older physicians are also seeing employment as the best option because of the risks of becoming redundant — or without work — as healthcare changes. Employed positions may also be seen as offering more resources and support, which enhances physicians' ability to practice medicine effectively.

Despite the rapid increase in physician employment, I think independent practice will remain a viable and successful model. Some physicians desire more autonomy, more ability to influence strategy and care, and more ownership and entrepreneurialism than they can find in most employed positions. Though independent practice does not guarantee more of these opportunities than employment, this is generally the case. Thus though the pool of physicians interested in independent practice may be smaller, this model tends to attract physicians who are well suited to this practice environment.

Another reason I think independent practice is here to stay is that it can benefit hospitals. If contracts and service agreements are structured correctly, excellent alignment of goals can be obtained. Because the independent physicians own their practice, they are even more incentivized and motivated to meet and exceed such goals.

Contracting with independent physicians also allows hospitals to avoid the expense and difficulty of dealing with human resources issues. And if employed physicians were to unionize down the road, hospitals working with independents could bypass an additional complex layer of management.

As a member of a large, multispecialty partnership with extensive resources and practice support, I see this model as a better fit than employment for many physicians. After my residency, I worked for several groups/systems with different employment models, including direct employment, contracting and partnership.

Ultimately, the democratic group model turned out to be the best fit for me. I like having a sense of ownership of my group as well as responsibility for its success. I feel that CEP America hits the "sweet spot" in balancing physician independence with resources and support. Through our Partnership I've had access to excellent mentoring, coaching, professional development and career opportunities, plus the administrative support I need to run my practice. Finally, the practice actually does allow me to have the work-life balance that most of us — not just the "millennials" — strongly desire.

But I also believe that having many options for practice is important in our healthcare system. Physicians are not one-size-fits-all. Having physicians in practice situations that maximize their talents and fit their goals and lifestyle can only be good for everyone, including patients.

I welcome your thoughts and insights.

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