HEADMIRROR PODCASTS:
ECONOMIC PERSPECTIVE ON PICKING A PRACTICE
I’m a practicing ENT physician and now 8 years grounded in a thriving general practice (pediatric and adult) in Lexington, KY. I spent hours planning/war-gaming my first job out of residency, which turned out to be a total non-fit for my family and me. After thorough market research, house-hunting trips, evaluation of payer mix, etc. (all the things you’re supposed to do), my family and I moved to start my first job. Within months, we all realized that we made a big mistake in terms of the community, but not so much the practice, to which we had moved. We went in search, AGAIN, of the perfect practice. My advice on picking a practice opportunity will be from an economics perspective. As an undergraduate, I was an economics major, and I am very analytical, and far less creative/emotional.
Medicine has changed dramatically since I finished my Otolaryngology residency training in 2004. Over the last few years, hospital corporations are employing more doctors. Initially, the primary care doctors were offered employment by hospitals, but increasingly, specialists are teaming up with major health systems. Hospitals view these doctors as gatekeepers for the hospital’s income stream (i.e. referrals, consults, admissions, lab work, radiology). The notion of going out and being a solo ENT practitioner is scary. It is still possible, but will take a substantial cash investment in purchasing equipment and an EMR. In addition, this will require large shifts in referral patterns to get the primary care docs to send patients to you, instead of to whomever they had been sending previously. Shifting referral patterns with hospital-employed physicians can be exceedingly difficult. This type of solo set-up will most likely be possible in the rural setting where there is no ENT at all (small community hospital). This is how I got started years ago.
Another option is joining a group of ENTs. A group would offer you, say $200K, with some productivity bonus. Within 2 years, you would become a partner and make significantly more, assuming that you like them and they like you. Joining an established practice is a far safer first job. Referral patterns are well established and there is some predictable patient/payor mix volume. The downside of the “safe” opportunity is that you will be the junior partner- with less autonomy, less voice in decisions, and less monetary reward. Typically, small group practices do not have the deep pockets that large hospitals have. They will offer less compensation in your initial years of practice.
Alternatively, you could be employed by a hospital corporation or by a hospital corporation partnered with an ENT group. The hospital takes the capital expense (your salary and equipment needs) and the RISK of bringing you into a market. Hospitals can offer a bigger initial salary and supplement a group in bringing you in as the new provider.
In general, a freshly minted ENT physician does not know his/her value. A hospital, however, can recognize the amount of money that you will generate for them (e.g. CT scans, lab work, and sinus surgery). This makes them millions of dollars. The ancillary service income can allow hospitals to pay more than a group would. In a traditional start-up, a young physician must start from scratch and build a practice of patients. The consistent 35 patient per day list and full OR schedule can take months or years to build. A small group practice does not have an OR or CT scanner (usually) to realize that sort of income from their new ENT colleague.
The political landscape of medical communities has changed dramatically over the last few years 2013-2015). Given Obamacare and HCAs, hospital systems are buying up doctors as employees. Now, your referral base hinges on whose hat you wear/what team you are on. The primary care doctors from Baptist Health will refer to the ENTs in Baptist, the “Whoever” Clinic doctors will refer to “Whoever” Clinic, the St. Joseph’s Hospital primary care doctors to St. Joe’s ENTs. Doctors are now employed or affiliated with certain hospital systems and that is where your patients come from. Better pick the right team, huh?
There are many groups in my region who are still independent. But you can see the writing on the wall. With the stroke of a pen at an insurance company, you could find yourself “out of network.” I recently went to a meeting where a cardiologist claimed that his patients would still come to see him even as an “out of network” provider and pay that $25-50 difference. He mentioned the deep, long –lasting relationships that he had established. I looked at him like he was crazy. Because he was! People drive across town to save 3 cents in gas. They will drop him like a bad habit and go to the “in network” cardiologist. (Or ENT in our case).
I am laying out a landscape of initial employment scenarios that will be options in private practice. This advice is not meant to scare you, but to inform you of what choices will be out there. In sum, recognize your economic value when you hit the ground in a certain medical community. Your resident salary and subservient position in the academic environment will have left you without a true sense of your future financial worth.
It is still possible to develop a substantial income and have the practice environment that most suits your personality. You must spend as much time evaluating your personality and basic character strengths, as you do the location of the practice. Are you an entrepreneur? Are you confident and charismatic- able to market yourself in a new community? Do you prefer the stability of a large organization, and are you willing to live with less flexibility? Do you enjoy the business side of medicine? Do you enjoy teaching and the camaraderie of the academic environment? Each practice type has benefits and pitfalls. Socrates was right—“Know Thyself!” It’s still good advice today. Self-knowledge will guide you to the best economic and personality fit for your first job. God Speed.
-Ron Shashy, MD