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 Selecting Your Career Path: Partner or Employee?
By Jennifer Huddleston, staff writer

As a new physician, you are most likely asking yourself many questions about where you want to work, the practice setting that’s right for you and the type of work/life balance you want. In today’s economy, one of those questions could very well be "Should I become a partner in a practice or remain an employee?"

In the past, the answer to this question was easy—in fact, there wasn’t much of a question. Physicians worked to become partners within their practices. Today, however, economic distress and medical practice trends have made the decision whether to become a partner or remain an employee a rather difficult one, with many factors to consider. So what has changed?

Today, like in the mid-90s, hospitals are hiring physicians as employees and buying medical practices. This is happening at such a fast pace that, according to William Jessee, M.D., president and CEO of Medical Group Management Association (MGMA), within five years, the majority of physicians will be employed by hospitals. 1

Given the uncertain economic conditions and the financial guarantee that comes with being an employee (as opposed to a partner), this trend of hospital employment is making partnership in a private practice look less enticing in comparison. After all, as an employee, physicians enjoy very little financial risk or managerial responsibilities and can accept other positions at their will. In addition, because hospitals can afford higher salaries for the physicians they hire, this growing trend is forcing private practices to offer higher starting salaries in order to recruit new employees. Often these higher salaries are more than the private practice’s revenue. What does all this mean for new physicians? In short, now there’s a smaller rift between partner earnings and employee salaries.

“It’s no longer a common scenario for a medium-sized private practice to employ someone and pay them substantially less than what the partners are earning with the promise of partnership,” said Tommy Bohannon, senior director of recruiting and development training for Merritt Hawkins & Associates, the largest permanent physician staffing firm in the U.S. 2

In this scenario, becoming a partner includes the risk of taking on added responsibility for the same—or potentially less—money. If an employee must reduce his or her salary in order to finance a partnership buy-in, he or she could end up earning less money as a partner than as an employee. Also, should the practice become less profitable, partners must continue to pay for overhead costs and the salaries of their employees before paying themselves.

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  1 Terry, Kenneth J. “Become a Partner or Remain an Employee?” Medscape. May 19, 2009.
2 Ibid.