Weigh all your options before leaving a practice

Question: I have been employed at a 10-physician hospital practice for five years, and now I am thinking about going into private practice. My options are to start my own practice, find a partner to start a practice with me or join an existing practice. Can you provide any guidance as to how I can make the best decision?

Answer: The first questions that need to be answered are: Why are you leaving this situation and what are your goals for the future? Once you have determined why you want to move on, the next step is to evaluate the pros and cons of each option.

Going it alone

A solo practice provides a physician with the most possible autonomy of the three practice alternatives. But there are costs associated with a solo practice -- financial and otherwise. The most obvious is that the physician is responsible for all startup costs and operational expenses. It will be imperative that the physician has the means to pay for startup and three to six months of operating expenses until cash flow is consistent.

Solo practices tend to be more vulnerable in the market -- particularly with negotiating an appropriate fee schedule with managed care companies. There is also the possibility of a hospital opening a group practice with the same specialty in close proximity to your office. This could threaten your ability to maintain good patients and staff, because the hospital group practices typically can offer more services to the patients, and better salaries and benefits to employees.

The solo physician will have to be content without professional colleagues in his or her office and will have to be more proactive to maintain contact with other physicians. This includes attending professional and social events to stay in touch.

As with any business, the owner must spend more time on the administrative side. This is in addition to time spent with patients and on daily operations. To be successful, business owners must constantly monitor all aspects of the practice: financial, clinical, operations, billing and anything else that comes up. This means the potential for less personal time.

Join an established group

There are two kinds of group practices to consider: single-specialty and multispecialty. Both kinds share similar benefits, costs and challenges.

One intangible yet important benefit is the presence of professional colleagues on site who can be readily available to discuss cases, answer questions and provide a limited social outlet. An inherent challenge of being in a group practice is the importance of compatibility among physicians and staff. This is particularly critical when developing and implementing employment agreements, compensation plans, buy/sell agreements and daily office business.

But there are differences. Single-specialty groups tend to be smaller than multispecialty group practices. The potential benefits of working in a single-specialty group practice include higher earning potential than in a hospital or private multispecialty group practice. There would be lighter call than in a solo, hospital or private multispecialty group practice. Yet the potential for some market vulnerability similar to that discussed with the solo practice exists for single-specialty group practices.

Because they are larger, multispecialty groups are more attractive to payers and often can negotiate better pay rates than solo physicians and some single-specialty groups.

Set up a small group practice

Starting a practice with a partner combines many of the considerations in the previous two alternatives. Like with a solo practice, there is more control over patient care, office operations, billing and other facets of the practice. There would be a higher earning potential than with a larger practice, and possibly a lighter call schedule than with solo practice. The startup expense per physician would be less than starting a solo practice.

With the exception of the additional space and staff needed for more than one doctor, the ongoing operational expenses per physician should be similar, if not less than going solo.

But there are other costs associated with starting a private practice with a partner. First is the loss of total control over the practice operations. Along with this comes the typical partnership and compensation issues. This means that you must be compatible with your partner -- sharing similar values and goals.

You also might experience the same market vulnerability as a solo practice. But with more resources, it might be easier to address this issue.

Evaluate yourself

Take a hard look at your own strengths and weaknesses and compare them with the benefits, costs and challenges of each alternative. An initial area to examine would be your financial resources, either cash on hand or your ability to obtain a business loan or line of credit to start and run a practice for six months. The results of this evaluation could immediately eliminate one or two of the alternatives.

Next, you should determine what type of practice setting is most compatible with your abilities, personality and style. On an intuitive level, a detailed "hands-on" person might be better off in a solo practice or with one partner than in a larger group practice. A person who wants to have some say, but not total responsibility and authority, might be a good candidate for a partnership. Someone who wants nothing or very little to do with the business administration aspect of the running a practice might be happier in a group practice.

There is no right or wrong answer. There are so many variables in this decision. The key is to take the time to look at each alternative and make sure you are moving toward your goals and not just running away from a situation you don't like.