John has made strides in his career so far as an anesthesiologist. To date, he has only worked as an employee of a group practice affiliated with a hospital system. Now he has enough experience and financial flexibility to consider pursuing his own independent practice.

John is excited about the longer-term prospects of being his own boss but knows there are nearer-term benefits and conveniences he would leave behind as a hospital employee. There is a lot to consider and he’s feeling overwhelmed by this big decision.

Private Practice — Is It Worth It?

John’s career dilemma is not unusual: The urge to pursue your own private medical practice can often increase as you progress in your career. One study1 showed that nearly 70% of physicians under the age of 40 years were employees; though for those 55 years and older, the percentage of employee-physicians drops to 38%. The same study showed that for anesthesiologists specifically, 51% of those surveyed (not age-specific) owned their own practice.

The choice to go independent or work as an employee should not be taken lightly and there are many pros and cons on both sides. Below, we have summarized some issues you may want to think about, side-by-side, as you consider a private practice opportunity:

The Pros and Cons of Starting Your Own Anesthesiologist Practice:

Pros

Cons
  • You are the boss (congratulations!) and have much more control over your destiny and the decisions you make in your career as an anesthesiologist.
  • There is no longer a career track; you are at the top of the company now.
  • You need to develop a new set of skills as you assume the risk and responsibility of managing your own practice. If you are part of a practice group versus a sole practitioner, consider the potential issues of having business partners.
  • You may have more flexibility to set your own schedule.
  • “Vacation days” may need to be spent managing the business side of your anesthesiologist practice.
  • If things go right, you can potentially earn more money and achieve a higher net worth over time as your practice grows.
  • You could take a pay cut initially and may not receive a regular paycheck until your practice is consistently profitable.
  • You also may need to take on debt at first to start up your practice.
  • You can create your own preferred team of people around you and create your own policies.
  • You are responsible for dealing with any personnel issues with your staff members.
  • You can customize your own insurance (health, malpractice, and disability) and retirement plans to best fit your own personal needs.
  • You must spend the time and money researching and buying your own insurance (health, malpractice, and disability), retirement plans, as well as marketing your practice.
  • You can take more pride in and enjoy the day-to-day work in a private practice compared with the red-tape and administrative headaches of a hospital or large medical practice.
  • Competition can be fierce for a small practice. In addition, private equity firms are increasingly buying and rolling up private medical practices, making it harder for small practices to compete.
  • Depending on your income level, you can potentially save more for your retirement every year by setting up a customized defined benefit pension plan.
  • Setting up and managing your own defined benefit plan can be expensive, compared with participating as an employee in a hospital-sponsored plan (for example, a 457(b) plan).
  • Joining or starting a private-practice medical group can help spread overhead costs among medical practitioner partners.
  • If you are part of an independent medical group, your reputation as an anesthesiologist can be affected by the actions of others in the practice.
  • You can invest in your business as you see fit (e.g., buying new equipment or technology).
  • Your practice must fully pay for any new capital expenditures or ongoing operating expenses.

Modera Can Help You Think Through the Best Path for You

At Modera Wealth Management, we strive to be your partner through important life decisions, such as deciding whether to start your own anesthesiologist practice. Our financial planning professionals, including Patrick Runyen, CPA/PFS, CFP® and Karl Graf, CPA/PFS, CFP®,  work with anesthesiologists like you to think through the pros and cons and help you come to  the best decision for you and your overall financial plan. To learn more, please get in touch.

1 https://www.ama-assn.org/system/files/2019-07/prp-fewer-owners-benchmark-survey-2018.pdf

 

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