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Medical Practice

Types Of Practices

In the final year of postgraduate medical training (unless you are enrolled in the armed forces), planning ahead for opening a practice is essential. This involves determining the location as well as the nature of your practice. Many considerations are involved in both issues. They need to be carefully considered before making a final decision.

Location considerations include not only personal preferences regarding the type of community — rural or urban — but also how strong will be the demand for your services and for how long. In other words, a pediatrician obviously would not consider an area where the predominant population is made up of retirees. Even if you plan to join an older physician and ultimately take over his or her practice, you need to assess the likelihood of demand for your services down the line if the neighborhood changes.

As to the nature of your practice, it is important to determine if you prefer to start on your own or work for others. There are several options in each of three major categories, solo, group and salaried practice. These will be explored below.

Solo Practitioners

Solo practitioners currently still remain the largest group of practicing physicians, but their numbers are diminishing as the health care system changes. These physicians have direct contact with each one of their patients as the provider of professional services. In exchange for remuneration they are personally responsible for their patients' health. They operate out of their own office or time-share one with others.

There are several advantages to this traditional form of practice, particularly for primary care physicians, internists, pediatricians, and obstetricians/gynecologists. These include establishing long-term relationships, in most cases. (People do move out of the area or are dissatisfied and select someone else.) Another consideration is the independence that solo practice permits. Solo practitioners determine the location of their practice, arrange their office to their liking, hire the personnel they think they need and who they want to employ, select the laboratories that will perform their tests, set their own office hours, fees, and all the many other elements associated with a practice. To a large extent, therefore, they determine the extent of the success of their own practice.

On the negative side, there is the factor of uncertainty of how rapidly their practice will grow and how frequently they will get referrals from others; consequently, the rate of growth of their income will be unpredictable. Initially their income may be less than that of salaried practitioners whose expenses are paid for by their employers. Another major consideration is that solo practitioners assume full liability for the unavoidable overhead associated with such a practice. Another factor is the need to have coverage on days off or during vacations.

With the marked increase in paperwork required for Medicare, Medicaid, and insurance reimbursement, an additional heavy burden and expense has been placed on physicians. This issue adds to the already restricted autonomy of physicians due to federal, state, and insurance company regulations that evaluate the appropriateness of patient treatment and tests and set guidelines for the length of hospitalization.

There are a number of variations to solo practice that try to reduce some of its negative features. The following are some examples:

Solo-HMO Practice

Many established solo practitioners seeking to maintain this form of patient care that they have long been accustomed to, but realizing the changing situation in health care economics, have made a significant adjustment. They have decided to keep their solo practice, but at the same time be linked to an HMO accepting their lower levels of reimbursement and making up for it with a large volume of patients, for each of whom they receive a monthly stipend, if in a capitated HMO, or a reduced fee-for-service payment if in a noncapitated HMO.


For younger physicians, establishing an expense-sharing relationship with another physician in the same specialty can be mutually rewarding. In such an arrangement both physicians agree to maintain their own solo practice and to share office expenses (rent, staff, etc.) in a proportionately acceptable way. The details of this relationship do not necessarily require a formal legal contract, but a written outline in the form of a memorandum of understanding should be signed by both associates. In the case of an association with a senior physician, the benefits for the younger practitioner being in practice with an established physician include an opportunity to obtain easier community recognition, a chance to learn the management aspects of a medical practice, a readily available consultant, and a way to keep operating costs down at a time when income levels are just building up. For the senior associate, such a relationship provides the benefit of having a covering physician readily available, providing an opportunity for more leisure time. It also lowers operating costs at a time when income may be declining, since it occurs in the last phase of professional life. Very often, an associateship can lead to a partnership; in such a case, a contract providing full details of the nature of the arrangement concerning the division of both income and expenses is essential.

Acquiring a Practice

Another way to establish a solo practice is to purchase one from a retiring or relocating physician. One can secure a practice in which the potential can be estimated based upon the practice's past performance. It is important to get an accurate assessment of the value of such a practice, which calls for an analysis of income, assets, and liabilities.

Group Practice

This is the second most popular form of practice. It is defined as three or more physicians, who provide medical care, jointly using the same facility and personnel and dividing the income as agreed to by the group. A group practice may be a corporation, a partnership, or an association of solo practitioners, but the majority of group practices are corporations. This arrangement provides a legal mechanism to protect the assets of the corporation from being seized in the event a member of the group is sued for malpractice and loses and cannot make full restitution from personal assets.

The number of group practices is increasing because they provide several advantages. They allow for a pooling of expenses for facilities, technical support services, and equipment, all of which come from a common revenue base. In other words, where the purchase of a piece of expensive equipment, such as an MRI machine, by an individual radiologist may well be prohibitive, a group can more readily afford it. This is because groups have the financial resources and space, and can use expensive equipment more fully to make it pay off. In addition, patient loads can be juggled easier so that, when one group member is occupied, another can be made available to the patient. The group members can easily schedule night coverage, vacation time, and emergency care.

Members of a group work shorter and more regular hours than solo practitioners. When a group has five or more members, income is on a par with that of physicians who are self-employed. In a successful group, a business manager may be hired to handle the many time-consuming bureaucratic aspects of an active practice and also supervise and coordinate personnel activities. Also, in a group practice, each physician has colleagues available to consult when necessary.

There are some negative aspects to group practice, such as the loss of independence by being a member of a group. Also, major business decisions regarding purchasing equipment, hiring or firing personnel, renovating, relocating, or expanding facilities require a consensus. For a group to practice successfully requires a compatibility of personalities and professional outlooks. Also, as implied above, in groups that are smaller than five—which is very common—income levels may well be lower than those of solo practitioners, since the number of patients may be restricted to space and personnel limitations.

As with most issues, therefore, there are both positive and negative sides to being a member of a group practice. If you are considering it, you need to be cautious and thoroughly evaluate the nature of the practice and determine if you would be compatible with the group members. Certainly you should be the type of person who is a team player before you enter any group practice; however, the rewards of being a member of a successful group practice can readily outweigh its disadvantages.

Salaried Practitioners

These are physicians who work under contract for private hospitals, governmental institutions (hospitals, clinics, or agencies), commercial, industrial, or insurance companies or HMOs (see below), and receive a fixed remuneration for their services rendered over a given amount of time. This type of practice is especially appealing to those just beginning their practice. Over half of those completing their postgraduate training begin this way and many move on to solo or group practices.

The advantages to those starting a medical practice as a salaried employee are clear. The principle reason given by many is to avoid the financial strain of having to cope with a relatively low income for many months when beginning a new solo practice and taking the gamble of succeeding, especially at a time when the new practitioner is perhaps still burdened by heavy student loans. It is extremely challenging under these conditions to have to sign an office lease, order furniture and equipment, engage a staff, and arrange for the many other requirements a new solo practice mandates.

A further element influencing a physician's career planning at an early stage is the knowledge that national economic trends, such as inflation and depression, as well as such issues as personal and professional contacts, can markedly impact on the degree of success in private practice. Achieving an active practice depends on more than one's technical skills as a physician.

Being a salaried physician provides a means of avoiding the aforementioned risks while at the same time realizing many benefits. These include a secure position with reasonably good remuneration and an attractive benefit package that includes health care coverage (medical and dental for both physician and their family), paid vacations, holidays, sick leave, and shorter, defined working hours.

On the other hand, there are significant disadvantages to being a salaried practitioner, including a limit on one's income, which is generally less than that of successful solo practitioners (unless maintaining a limited outside practice is allowed). In addition, there is a loss of autonomy as a salaried practitioner. The latter includes having to respond to directives of the administration for whom one works and having to satisfy one's immediate supervisor. As a result of these liabilities, there is a marked tendency for physicians to undertake salaried appointments initially and, after a few years, move on to solo or group practices. Within six to eight years of beginning practice, therefore, the number of salaried physicians diminishes from well above half to under a third. In addition, the decline in the number of salaried employees varies for different specialties: Naturally, pathologists are 100% salaried with surgeons and psychiatrists being under 50%.

Health Maintenance Organization (HMO) Practitioners

Practitioners working for HMOs can be found in all of the employment options discussed above, depending on the organization's structure. Increasingly, HMOs are becoming a major source of employment for physicians and will undoubtedly become even more important as the health care system changes over the next several decades. Three types of arrangements are possible:

Staff Position

This is a salaried appointment under contract. It is a very common position for a new physician who intends, in a relatively short period of time, to go into solo practice or join a group. It provides an opportunity to improve one's skills, develop self-confidence, and earn enough money to begin paying off debts. Physicians employed under such an arrangement do not share in the HMO's profits (or losses).

Group Member Position

In this case the physician members sign on as partners and as such have a direct interest in the success of the organization whose profits they share. This arrangement is an option for those physicians for whom salaried or solo practices are not attractive because they prefer fixed hours and wish to avoid all the other burdens that a private practice involves, even if it means possibly having a lower income.

Affiliated Position

This is an arrangement where physicians who belong to a group known as an Independent Practitioners Association (IPA) are contracted to serve a segment of an HMO's patient load. The primary activities of such physicians are outside of the HMO and not involved in the organization's business success.

Locum Tenens

After completing residency training, some physicians, albeit a minority, have opted to defer their decision for a while and have elected a more mobile form of practice. They have chosen to serve as substitutes in areas where there is a shortage of doctors. They are called locum tenens, the Latin name for place holder. They usually obtain their position through a placement agency, but some freelance. The locum tenens concept was developed to entice physicians to come to rural areas and to keep them there. They were used to substitute for physicians who wanted time off for vacations and continuing education, or who were ill. To replace them during such intervals, a network of temporary physicians was organized.

Currently, it is estimated that 12,000 physicians in every age group and specialty are working as locum tenens. While the majority of them are over 50 and semiretired, the fastest growing group are recent residency graduates. The reasons for engaging in this work are the desire to travel and the opportunity to explore a variety of different practices. In addition, since this is a way to keep living expenses down, new physicians can use their savings to more rapidly pay off their medical school loans.

For some new practitioners this may prove to be a good transitional phase but they need to be aware of all of the ramifications. An assignment may last for a few days or several months and may vary from steady work in one area to practicing in widely separated locations. In addition, practitioners are responsible for their own health insurance. A major consideration is the impact of relocating one's family, both in physical and psychological terms, and it can prove costly in view of the need to store some belongings and ship others. Naturally, for single people, these problems are less troublesome.

There are currently about 25 agencies placing physicians, with CompHealth-Kron being the largest, but some prefer the freelance route. The key to success using this approach is to arrange a steady flow of assignments using an organized marketing plan. In addition to this substantial challenge, the freelancers must handle all the administrative details, such as obtaining and paying for medical licenses and malpractice insurance, travel and housing arrangements, etc., normally taken care of by the booking agency for a fee, which may be up to 40% of the client's income.

Practicing Abroad

Physicians seeking opportunities to serve overseas can contact the following sources for information:

National Council for International Health
1701 K Street NW Suite 600
Washington, DC 20006
(202) 833–5900
Health Volunteers Overseas
P.O. Box 65157
Washington Station
Washington, DC 20035–5157
(202) 296–0928

St. Joseph Medical Center
P.O. Box 1935
South Bend, Indiana 46634
(219) 237–7637


Free clinics came into being in the 1960s. They primarily served the homeless and the underprivileged. While many still cater to indigent populations, numerous clinics serve working people who lack insurance coverage. What was originally begun as a fringe movement has evolved into a significant — if only partial — way to alleviate the health care crisis.

Free clinics provide physicians a chance to serve patients unencumbered by red tape and insurance regulations. They offer quality medical care that would otherwise not be available, because they operate on the principle that health care is a right and not a privilege. At most free clinics, part-time volunteer physicians (and medical students) offer out-patient primary care assisted by volunteer lay people. Administrative chores may be handled by salaried personnel and care is usually provided on the basis of genuine need. Many patients earn too much to qualify for public assistance, but too little to pay for medical benefits through insurance coverage.

To accommodate their working clientele, free clinics are usually open during the evenings. Most consist of an examining room, a small lab, and a dispensary, and can usually have some lab and X-ray work performed at local facilities. The sites of free clinics vary, some being in donated church basements; others in better facilities. In most cases, clinics need to be accessible to public transportation and an area considered safe by the volunteers. Since clinics usually do not receive governmental support, they are free from paper work and needed funds are supplied by grants, donations, and fund-raising events.

Physicians donate their time in varying amounts ranging from once a week to once every several months. Interns and residents — whose time is extremely limited — offer their services out of a desire to contribute to the welfare of the community. Some volunteer physicians are retirees.

Perhaps one of the considerations causing physicians to be reluctant to donate time is the malpractice liability issue. All states have Good Samaritan laws, but they vary, and not all offer free clinics immunity from negligence suits.

The high cost of prescription drugs presents a special problem: Free clinics try to secure samples donated by physicians or pharmaceutical companies or they distribute generic drugs that they purchase.

At this time free clinics offer a much-needed outlet for worthwhile services that the medical community can provide.

Additional topics

Job Descriptions and Careers, Career and Job Opportunities, Career Search, and Career Choices and ProfilesGuide to Medical & Dental SchoolsMedical Practice - Physician-patient Relationship, Clinical Skills, Diagnosing Disease, Patient Care, Assessing Treatment, Accountability