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Do You Know if Your Physician is “Owned” or on Their Own?

Do You Know if Your Physician is “Owned” or on Their Own?

January 4, 2015

Medical Providers

The healthcare industry, often out of touch with the actual healthcare market, is making a push for the phrase “medical provider” to encompass all medical personnel able to treat patients-the problem with the use of medical provider is that it’s known throughout the medical community but not to the community at large. Patients were (and in some cases still are) confused by the phrase medical provider. It will take time and education to transition patients and consumers used to using the terms doctor, surgeon, nurse, nurse practitioner, physician’s assistant to all of a sudden just accept the universal term of medical provider. The lack of transparency and confusion around the phrase medical provider is moving in the opposite direction of what’s best for patients and consumers who want to educate themselves regarding healthcare and in part is why I’m not in favor of lumping all in one phrase of medical provider.  This is just one small example of the healthcare industry not knowing their “customers” or patients in the healthcare market.

Patients and consumers have the right to know with full transparency specifically who they’re going to see during their office visit.  If it’s routine or follow-up an ancillary provider (nurse practitioner, physician’s assistant, etc.) are in most cases acceptable but should always be disclosed to a patient at the time the appointment is made.

Health Insurance

If a patient is experiencing a problem outside of something routine or common issues (ex: unexplained lump), making an appointment with the most educated medical professional is well within a patient’s rights.  One thing I’ve often incorrectly heard patients say was, “If I’m paying to see a doctor I’m going to see a doctor.”   Insurance is billed by two specific codes: provider (rate changes depending upon who actually saw the patient) and procedure code (is the same rate regardless of who sees the patient).

So, if a patient saw a nurse practitioner the patient’s insurance wouldn’t be billed at the physician’s office visit rate (ex: $250) it would be billed at the nurse practitioner’s rate (ex. $150) and the procedure code (testing done at the time of the visit ex. throat culture $75 billed the same regardless of which provider sees the patient).


An easy way to think of it-like going to a movie: the first charge gets a patient in the door (cost of admission) and the second charge is what helps determine what’s wrong with the patient (once you’re in the theater everyone watches the same movie). Both charges are going to be billed regardless but it’s up to the patient to decide if they want to save money by seeing an ancillary provider based on their symptoms or problems.

To clarify this point further it’s also important for patients and consumers understand that physicians today fall into two groups: private practice or hospital /practice owned physicians; and, this information could potentially help you make better healthcare decisions for you or your family.

Since the economy declined and insurance companies are making less favorable payouts that’s created one big change for the healthcare industry and it’s that physicians have three options: retire (sell their practice), become a hospital owned employee (collect a salary-no over overhead), or insulate their practice and grow in order to remain in business.

Physicians Private Practice vs. Hospital Owned

Medical practice expenditures are the most overlooked component to physicians first starting out and not understood from the patient or consumer level.  A private medical practice has day to day running expenses, rent of office space (lights, air conditioning, heating), negotiating insurance and vendor contracts as well as employee salaries and benefits must be covered by what the entire practice can financially generate.  It’s why we’ll see less single practice physicians and more private practice partnerships to help in ownership and defraying the huge overhead it takes to run a successful practice.

Private Practice

These huge expenditures are why so many physicians are opting to just practice medicine and becoming salaried hospital owned employees (and not practice medicine while also running a business) . The hospital absorbs the cost of staffing and paying for the physician’s office.  Hospital owned physicians see roughly the same number of patients a day and as a result much better work life balance. An example: a hospital owned surgeon can schedule only two surgeries (opposed to four when in private practice) a day in order to leave the hospital at a relatively normal time and make the same salary (ex: $300,000) regardless of how many procedures are done or how many patients they see in a day.


Hospital executives I’d spoken to over the last few years were alarmed at how drastically surgery across all specialties (a money maker for the hospital) had decreased when their physicians transitioned from private practice to hospital owned. For example surgeons operating at the hospital when in private practice may have done 100 of a particular procedure annually but when they became hospital owned salaried employees that same procedure was done only 25 times in one year.

So before anyone judges think about your own job and if someone came in offered you your current salary (minus $1,000)-took away the worst part of your job and no one cared when or what you completed how motivated would you be overwork yourself for the same pay?

Physicians are working less than they used to—evidence shows that as compensation declines, the motivation to work harder declines too.  KevinMD

I carefully explained to a group of hospital executives preplexed by their huge profit loss that the hospital took physician’s power to make business decisions away (one of the hospital goals to control spending), took incentive away by providing salary only, and along with that went employee accountability. This is no way a negative indictment to hospital owned physicians; and, is more of statement that hospital executives in place to run a business (and yes medicine is a business) weren’t equipped to anticipate, recognize or develop tools to prevent huge profit loss during the transitioning of private practice physicians to hospital owned physicians.

Physicians Private Practice vs. Hospital Owned Physican Procedure Example

There are pros and cons to both scenarios for the physicians and for the patients. Private practice physicians should not be viewed as greedy any more than hospital owned physicians viewed as lazy. It’s simply understanding the differences and making choices that are best based off those facts.  For instance, if it’s important to you  that a sinus surgeon perform  X number of procedures annually this information may help you determine which direction to go when selecting a surgeon.  Again, any information is good information it’s what we choose do with it that counts.





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