Private Practice vs Big Healthcare: From Various Perspectives
ASHAAR BAKSHI – In healthcare, there are two main types of administrations: for-profit organizations and private practices. The most common of the two types are for-profit organizations like hospitals and clinics. When people think of healthcare, this is generally what comes to mind. In a hospital setting, most doctors operate under a fee-for-service (FFS) model, which means they perform services and are then compensated. This is done through a set yearly salary or set hourly rate. However recently, policymakers are shifting towards a value-based care approach, where doctors are paid based on patient health outcomes. The purpose of this is to focus on the quality of care that patients are receiving instead of the number of patients that are seen – essentially quality over quantity.
The second type of healthcare administration includes private practices, which is a healthcare business that is owned and operated by providers instead of a hospital or large entity. Private practices can be fully run by one physician or run by a group of physicians partnering together.
Benefits of Independent Practices
One of the main benefits from a patient perspective is that private practices allow physicians to spend more time with each patient. Private practice patient care is generally scheduled through appointments and not walk-ins, unlike some hospitals. Therefore, physicians don’t have a waiting room full of patients and can dedicate more time towards each patient. From a physician’s standpoint, they have more freedom, such as the ability to work within all types of health systems, the ability to offer a variety of treatment options and the ability to refer patients to any other specialist provider. Physicians also have the potential to make more profit and work their own hours – essentially they are their own boss. They are not restricted to a yearly salary and can divide their payout however they like.
Downsides of Independent Practices
From a patient’s perspective, the main drawback of private practices is their narrow insurance acceptance. Many private practices may not accept certain insurances or Medicaid, which can lead to issues of pricing or accessibility. From a physician’s perspective, there could be many administrative drawbacks.
- Stability: When working in a hospital, physicians have a guaranteed income and job stability. A private practice is essentially a small business, so there is no guarantee of success or income. Especially when starting up, it can be difficult to attract new patients and maintain a stable income.
- Time and work-life balance: In addition to clinical hours, physicians have to spend time running the actual business and dealing with administrative challenges. Especially when first starting out, running a private practice can take up a lot of time and be stressful. This can impact work-life balance and lead to burnout.
- Cash flow: Balancing profit can be extremely difficult with all of the expenses and overhead costs. Aside from the normal business expenses, machinery/equipment is very costly. Ex: 1 X-ray machine for an orthodontist can cost anywhere from $30,000-50,000. Various insurance has to also be purchased, including malpractice insurance, which can get expensive. According to The Intake, “Medicine in Connecticut realized average annual [malpractice] premiums of $34,700 in 2017, according to the AMA.” Other overhead costs include: rent for the office space, utilities, staff salaries, renters/healthcare insurance, medical supplies, office supplies, practice management software, and administrative costs. These add up very quickly and can be a large barrier to making positive profits.
- Staffing: Hiring the right people and avoiding shortages is essential for a successful practice. Because private practices generally don’t have many employees, it is crucial that each employee is hardworking and can be held accountable. Additionally, ensuring employees are qualified and keeping retention can be challenges.
The choice between private practices and large scale healthcare ultimately depends on individual priorities and circumstances. Large scale healthcare offers job stability, guaranteed income, and ability to focus on the clinical aspect of medicine, but it can be restrictive and sacrifice patient care for profits. On the other hand, private practice allows for physicians to make their own schedule and there is no cap on profits, despite the administrative challenges it comes with.
Copy Editor – Shriya Garg
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