What percentage of physicians are self-employed? Let’s talk about the different types of employment relationships for a physician, and then how many are self-employed. For any physician, you either have an employee, which is a W2 or an independent contractor, and that physician would receive a 1099. Now, if you are an independent contractor, obviously, you are self-employed if you have an LLC, and if you solely work as an independent contractor, whereas if you’re an employee for a hospital network, maybe a larger privately owned physician group, or conglomerate, you are not self-employed. Now, as far as how many or what percentage of physicians are self-employed, let’s talk about the definition of self-employed.
In my mind, self-employed simply means you are a solo practitioner working on your own without any partners or having shareholder percentage. You are a solo practitioner and statistics show that around 14.8% of all physicians currently practicing in the United States are self-employed physicians. It seems like a relatively low percentage, but if you pay attention to the trends in the healthcare industry, there’s been a huge push from these big hospital networks to kind of gobble up all of these physician-owned practices and then integrate them into their systems, so the percentage of self-employed physicians has continued to decrease over time. I believe, at one point, it was between 30% to 40% 20 years ago. And now, it just slowly decreased over time. Is that a bad thing? I don’t think it’s bad or good.
I think the benefits of, if you’re in solo practice to kind of being bought out by a big hospital network are, one, they’re going to drop the bag, so you’re going to get paid, or at least you should get paid a decent amount of money to sell your practice to the hospital network. But I find the practical advantage for most physicians is they no longer must deal with the oversight of the practice. So, all the administrative duties, all the things that are the headaches of being a small business owner, which I am, and what I deal with on a weekly basis, just worrying about payroll and insurance and dealing with the lease and paying the internet and the electricity, just all the small things, the finances with the bookkeeping, all of that is taken away from you if you’re a self-employed physician and then you sell out to a larger group or hospital network.
Many physicians absolutely love not having those responsibilities. The downside is it’s very likely you will make less money as a physician if you are not self-employed. If you’re self-employed, you simply can do things exactly how you want them. They can be more efficient. You can hire as many people as you want to hire and compensate them in the exact way that you want to compensate them. Many self-employed physicians can do very well for themselves. Now, there are also physicians that are just simply not good business, and this would go for any profession. Some people are great at their job, lawyers included, but might not be the best businessperson.
And so, identifying a physician’s strengths and weaknesses, and then determining what type of employment structure best suits them is certainly important. Around 15% of all physicians are currently self-employed. I mean, it seems like it ebbs and flows over time. I remember when I started out of law school around 20 years ago, most of these big hospital networks were kind of buying practices. And then, five years later, they started investing in them. So, I think it ebbs and flows over time. But right now, we’re in a stage where these big hospital networks are gobbling up all these smaller physician-owned practices.
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