Alexandra Kharazi, MD, a California-based cardiothoracic surgeon, previously worked as an employed physician and is now in private practice. Though she appreciates that there are some trade-offs to working with her small group of three surgeons, Kharazi has no qualms about her choice.

“For me, it’s an issue of autonomy,” she said. “While I have to work a lot of hours, I don’t have to adhere to a strict schedule. I also don’t have to follow specific policies and rules.”

In contrast, Cassandra Boduch, MD, an employed psychiatrist with PsychPlus in Houston, Texas, is very satisfied with working as an employee. “I looked into private practice, but no one really prepares you for the complications that come with it,” she said. “There’s a lot more that goes into it than people realize.”

By hanging up her own shingle, Kharazi may be living a rapidly shrinking dream. According to the American Medical Association (AMA), between 2012 and 2022, the share of physicians working in private practice fell from 60% to 47%. The share of physicians working in hospitals as direct employees or contractors increased from about 6% to about 10% during the same time period.

Many factors contribute to these shifting trends, a major factor being economic stress stemming from payment cuts in Medicare. Add in rising practice costs and administrative burdens, and more doctors than ever are seeking employment, according to the AMA.

Though the traditional dream of owning your own practice may be slipping away, are employed physicians less happy than are their self-employed peers? By many measures, the answer is no.

In Medscape’s Employed Physicians Report 2023, doctors weighed in on the pros and cons of their jobs.

When asked what they like most about their jobs, employed physician respondents reported “not having to run a business” as their number-one benefit, followed closely by a stable income. The fact that employers pay for malpractice insurance ranked third, followed by work-life balance.

“We get no business classes in medical school or residency,” said one employed physician. “Having a good salary feels good,” said another. Yet another respondent chimed in: “Running a practice as a small business has become undoable over the past 10 to 12 years.”

And 50% of employed physicians said that they were “very satisfied/satisfied” with their degree of autonomy.

Still, employed physicians also had plenty to say about the downsides of their jobs.

Many pointed to “feeling like a cog in the machine,” and one doctor pointed to the hassle of dealing with bureaucracy. Others complained about the fact that nonphysicians ran the business and lacked an understanding of what physicians really need from their jobs. When asked whether administrative rules made sense, 63% of physician respondents said that yes, the rules make sense for the business; but, only 52% said that the rules make sense for the doctors themselves.

Other complaints included the requirement to reach high productivity targets and too low an income potential. In the 9 years since Medscape’s 2104 Employed Physicians Report, the share of employed doctors paid on a straight salary has declined from 46% to 31%. Those compensated on a base salary plus productivity targets and other performance metrics rose from 13% in 2014 to 32% now.

“Many doctors go into private practice because of the freedom it brings and the potential financial incentives,” added Boduch. “I know that many doctors have a dream of working for themselves, and in many cases, that works out great for them.”

Boduch noted that in her job as chief medical officer at PsychPlus, she still has flexibility plus the perks of working with a bigger practice. In this scenario, Boduch said, the company can negotiate with insurance companies, allowing her the financial rewards of private practice.

What’s Right for You?

“I think it might be somewhat generational,” said Cody Futch, senior recruiting executive at AMN Healthcare. “It used to be that fewer hospitals offered employment, so private practice was the way to go. Now, there are fewer privates because hospitals and corporations are buying them up.”

This reality has potentially shaped the way younger generations approach their workplace. Also, Gen Z tends to have less intention to stay with a current employer for the long-term than did their parents. “Older physicians were trained to expect they’d run their own business and build it over the years,” said Futch. “The younger generations look at it as a job, something they may want to switch in a few years. It’s a combination of candidates wanting more options, and also the fact that there are more options to be employed.”

Along those lines, younger generations in general tend to place work-life balance as a higher priority than do older generations, and employed physicians place this equation high on the list as well. In the Employed Physicians Report 2023, 54% said that they are satisfied or better with their work-life balance, up from 51% in the 2022 report.

With that in mind, Kharazi noted that flexibility is one of the chief reasons why she likes private practice. “If my kid has an event I want to attend, I don’t have to adhere to a strict schedule,” she said.

Satisfaction as an employee vs employed doctor sometimes changes based on the type of medicine you practice too. With specialties that tend to be primarily outpatient, such as dermatology and allergy, private practice may be the best option regardless. “Hospitals don’t seek out those specialists as much and the specialists can operate successfully without a hospital,” said Futch.

Hospitals try to incentivize doctors with perks like hefty sign-on bonuses, student loan forgiveness, plenty of vacation time, and more. They also put money into marketing their doctors, a time-consuming and expensive aspect that is tough to shoulder in private practice, especially in the early years. Futch adds that many doctors view employment as a more stable option. “As the government changes reimbursement policies, the income from private practice fluctuates,” he said. “So many doctors worry that if they buy into a private practice, it is a risky endeavor.”

Hospitals aren’t always a sure bet in that regard, either: They go through tough financial times, lay off staff, or make salary cuts. Historically, however, employment tends to be the safer route, which can make it an attractive option.

Ultimately, the pros and cons of each scenario are just are individual. It’s up to physicians to do their own math and balance sheet before making a decision.

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