I’ve posted twice now on the topic of the business of private practice medicine. Once about how being a solo practitioner is not a good business and a second post about the group practice model of medicine. There are other models and this time I will address the corporate partnership model of physician practice. This is a model used widely by physicians in Emergency Medicine and Anaesthesia as well as Radiology. In this model, the founding physician or group of physicians run their practice like a corporation and hire young physicians as employees.
This is a desirable model of business because the revenue per employee exceeds the cost of the employee. Thus the group can add more physicians as long as they have the work for these employees. In essence, the founding partners are more like “rainmakers” that must win business for the group. This type of practice is much like a law firm where associates and junior partners must climb the ladder for several years before becoming partner or manager.
One reason why this is possible in the fields of anaesthesia, emergency medicine, and radiology is that these physicians only provide care to patients under a contract basis. Additionally, these physicians contract with other physicians or hospitals. Essentially, the doctors in these fields of medicine work on other doctors’ patients or on patients that belong to the hospital.
For example, an anaesthesiologist typically does not have a medical practice where he sees patients. His specialty is to provide anaesthesia for surgeons who do surgery. Thus in order for him to get cases to do anaesthesia he must be invited by a surgeon or be hired by the hospital or surgery center to do anaesthesia. Thus he can sign a contract for his firm of anaesthesiologists to do anaesthesia for any of those entities.
Similarly, a hospital Emergency Department can either hire ED physicians separately or may go ahead and contract with a group of Emergency Department physicians to provide care for the ED for a certain number of hours or a certain number of patients. In this manner the firm of ED physicians may hire young ED docs to work.
As you can see, the contract side of medicine is a good business to be in and is more of a corporate model of physician practice. What is different about this type of medical practice is that the founding partners actually practice little medicine because they are busy winning contracts or are busy running the firm. They make a lot more money but they typically end up being the “business partner” in the firm.