Thinking about selling your practice? DOs open up on life as an employee
As a psychiatrist fresh out of residency in the mid-1990s, Robert G.G. Piccinini, DO, chose to seek employment rather than open his own practice. “I was young and didn’t have a patient base, so the security blanket of being an employed physician was very nice,” he says.
Dr. Piccinini negotiated a three-year contract with his employer that specified a bonus based on production, as well as an annual salary. After a couple of years, it became clear that he could make his production bonus three months before the year ran out and that his earnings were essentially capped. So he approached his employer to see if he could share in the additional revenue he would bring in during the last quarter of the year.
Doctors, what do you think?
“They said, ‘No. Our contract is our contract,’ ” Dr. Piccini recounts. “So I gave notice and have been in private practice ever since.”
Today, however, the reverse situation of starting a practice and later selling it to become an employee seems to be far more common among experienced osteopathic physicians. Many DOs have become overwhelmed by the ever-increasing challenges of running a business and complying with regulatory and insurance requirements. Those who have become employees or are seriously considering doing believe that the benefits of employment outweigh the drawbacks but warn that contracts need to be worded meticulously, with all contingencies anticipated and addressed.
Some solo practitioners, such as Stephen M. Swetech, DO, feel engulfed by new mandates, changes, choices and expectations as they struggle to meet overhead and make a living amid inadequate reimbursement. “There are too many demands on us, such as electronic health records,” he says. “I have 60,000 paper charts. To put those on a computer would be very difficult.”
Health system reform, the weak economy, the move from ICD-9 to ICD-10, pay-for-performance and other quality measurement incentives and penalties, and increasingly stringent recertification requirements compound the pressures on independent physicians. “It’s nearly impossible for the solo practitioner to do it all. I’m busting my tail,” says Dr. Swetech, a family physician in Clinton Township, Mich. “You need to become part of a bigger group to get out from under all of this.”
Compounding his challenges is Dr. Swetech’s service to the profession. More than ever, he finds his commitment to organized osteopathic medicine harder to meet. “When I attend the AOA House of Delegates and other meetings, I have to shut down my practice,” he says. “Time away from the office is a major difficulty for solo practitioners, and the problem is worsening with the need for additional and more specific continuing medical education credits to maintain board certifications.”
No going back
Small private practices may face more stressors today, but pressures are nothing new, notes AOA Trustee Joseph M. Yasso Jr., DO, a family physician in Lees Summit, Mo., who is an employee of Hospital Corporation of America.
In the early 1990s, Dr. Yasso and his two partners sold their practice because they were having trouble coping with new, more onerous workplace standards. Moreover, at that time Blue Cross and Blue Shield of Kansas City had been talking about creating its own closed-panel HMO. “Those of us in private practice would have been shut out of Blue Cross and Blue Shield, a huge part of the payer mix in the town we practiced in,” Dr. Yasso says.
Dr. Yasso and his colleagues ended up selling their practice to TriSource, a Kansas City, Mo.-based partnership involving Blue Cross and several hospitals. While being an employee provided some income security and relief, Dr. Yasso lamented the loss of autonomy. “When were were in negotiations to sell the practice, TriSource kept making the point that we would be kept whole and that nothing would change,” he says. “Those were wonderful statements but probably not extremely accurate.”
Nonetheless, Dr. Yasso has never returned to private practice, though he left TriSource after a few years to pursue a career in academia. The costs and challenges of being a small business owner are excessive, in his opinion.
“You have to make payroll on top of paying yourself a salary,” he says. “You have to pay utilities. You have to buy supplies. And if you don’t own your own building, you have to pay a lease.
“And your expenses are not fixed. They go up over time. If your reimbursements aren’t keeping pace with that, you’re going to lose money.”
For obstetrician and gynecologist Mark A. DeMasi, DO, medical liability insurance premiums exceeding $130,000 a year to do both obstetrics and gynecology drove him to close his Hammonton, N.J., practice. “The cost of malpractice insurance was so high, I literally ran out of money,” he says. “I loved being in private practice. I grew up in New Jersey and had practiced there for 15 years altogether. But I also have a set of twins who are in college.”
Dr. DeMasi could have joined a large obstetrics group to remain in the Philadelphia area but chose instead to move to rural New England in early 2010. Employed by Calais (Maine) Regional Hospital as the chief of obstetrics and gynecology, his medical liability premiums were just $6,000 during his first year in the position. Besides relishing the security of a steady paycheck, he likes being able to do both gynecological surgery and obstetrics, which probably would not have been the case had he joined a large specialty group.