Practice Structure

Now that you have some idea of whether you prefer private practice in a small or large group, academics, or employment, you can start narrowing your choices based on the structure of the practices available. Picking the right environment for you will be the most IMPORTANT factor in becoming a SUCCESSFUL doctor. The most common practice structures summarized in Table 1 are the following:

• Solo Practice: Solo practice was the most common practice in 1990, accounting for 68 percent of all radiation oncology physicians at that time. Today, less than half of that number remain in solo practice. The structure of a sole proprietorship is appealing, with the physician having complete autonomy and independence and with immediate rewards tied directly to your own productivity. However, the major disadvantages include financial risks in startup, the capital required, and the need to develop a patient base.

• Small Group Practice: The major advantage of a small group practice is that there is shared financial risk among your group while still having significant input into governance. The major disadvantages are less independence than solo practice and more financial risk than with a large group.

• Large Group Practice: The financial risk with a large group is the least with shared overhead. In addition, there is more potential for synergies in referrals. There also can be significant cost savings due to economies of scale with the overhead. The major downside is the dilu- tion of the physician’s input into governance.

• Employment: You can choose to be employed by hospitals, affiliated health care organizations, large multi-specialty groups, the military, or physician management companies to name a few. Since you are salaried, you are guaranteed a paycheck and usually relieved from any administrative duties. Your salary and future are tied to the success of the organization.

• Academics: This is generally an employment model but with significant differences. A combination of teaching, research, and patient care is integral to most appointments. The availability of tenure, the probability of obtaining it, and research grant opportunities are all important elements. Many institutions have created “clinical” tracks, which are often glorified private practice positions with limited remuneration and lack of tenure opportunities.

After choosing the type of practice, other important factors— such as location, salary, cost of living, hospital system in area, and availability of technology with state-of-the-art care—will come into play.

TABLE 2—Advantages and Disadvantages of Practice Types

**Adapted from AMA’s Starting a Medical Practice

Types of Legal Entities

Although there are five major types of practices to choose from, each one may have a different or the same legal structure. Most physicians form or join a corporation due to the advantages of such entities. They are summarized in Table 3.

• Sole Proprietorship: This is equivalent to solo practice, and the structure is simple to start with a single owner without tax complications; however, the physician is per- sonally responsible for all liabilities of the practice. For that reason, even most solo physicians incorporate.

• Partnership (group practice): A legal partnership is composed of two or more individuals with equal rights among the partners. There is shared decision-making, shared risk, and equal benefits. Partnerships terminate with the death or departure of a partner, so succession planning is important. All partners share in the liability. A new structure, the limited liability partnership (LLP), is available in some states, and this entity helps limit each partner’s liability.

• Corporations: Most physicians either form a corporation or are employed by one. Corporations in general limit liability and allow for continuation of the practice even if a member dies or leaves the practice. The costs of forming and maintaining a company are usually far outweighed by the benefits. Single physicians can be incorporated in most states under a professional corporation or association (PC or PA). The most common types of corporations are:
  • “C” Corp: This is the most common form of a large corporation with many members. Its ad- advantages include limiting personal liability to the assets of the corporation, and it also has tax advantages for the deductibility of benefits paid by the corporation. Profits can be taxed twice if not distributed to the shareholders.
  • “S” Corp: This is the most common corporation for physicians. There is a limitation of thirty-five shareholders, with one class of stock, and it re-quires operating on a calendar year rather than a fiscal year. The major advantage is that income is considered “pass-through” and not doubly taxed.
  • Limited Liability Corporation: An LLC allows the benefits of a partnership as well as the protection of a corporation. While still limiting liability and offering the same tax benefits in- including pass-through income, shareholders are owners of the LLC. Transfer of membership is not allowed without the consent of the majority.

TABLE 3—Legal Structures

Factors Influencing Your Decision

As noted above, other factors will be important to consider after you choose the type of practice you wish to join. Location, salary, cost of living, a hospital system in the area, and availability of technology with state-of-the-art care will all need to be carefully considered.

• Location: As the saying goes, “Location, location, location.” This is the motto of every good realtor and applies equally to all of us. A great practice in a locale where you do not fit in socially is a recipe for disaster. However, do not narrow your search first on geography alone unless you are absolutely sure you do not want to live somewhere. Make sure to research the demographics of a loca- tion’s population, cost of living, availability of housing, and educational system.

• Salary and Cost of Living: The starting salary is often the most important consideration of most applicants. One needs to evaluate the ENTIRE compensation package, however, including benefits such as a pension plan, to make a rational decision. The regional cost of living also needs to be considered. A $200,000 annual salary in New York City yields much less buying power than the same salary in Syracuse, NY. More importantly, you need to consider the long-term prospects for employment, promotion, and potential for partnership or tenure. Long-term prospects should overshadow short-term salary compensation. As a rule of thumb, the first-year.

salary is INVERSELY proportional to the long-term prospects for compensation. Employers inflate first-year salaries either because they have trouble recruiting candidates or are “churning” candidates without any intention of retaining them on a long-term basis. Always ask for names of candidates who left and the reasons why (and be sure to CALL and talk to them to confirm their reasons). It is just as important to speak to candidates who left the practice as it is to speak to ones who are still there. The average physician salary as reported by Money magazine was $247,500. Salary surveys for various specialists are published annually in Medical Economics.

• Hospital System and State-of-Art Care: As the premise of the book states, the goal of every physician is to deliver the best care. You can’t even dream of being a GREAT doctor if you do not have good facilities and health care around you. Be sure to visit the hospitals you will be working with or near (even if you do not work in hospitals), and make sure they have competent specialists and the latest technology available—cardiac services, oncology, neurosurgery, pathology, and radiology with advanced CT, MRI, PET facilities, to name a few. If you are in a bad neighborhood for medical care, you will be painted with the same brush.

Conclusion

When deciding about your future, the three Ps are the most important factors:

The right PRACTICE, the right PLACE, and the right PRICE. All three factors have to be balanced in order to make the most important decision in determining whether you will be a GOOD doctor or a GREAT one.

TABLE 4: PRACTICE CHECKLIST