Published 9/1/2013
Melbourne D. Boynton, MD; David L. Cannon, MD; Charles A. Goldfarb, MD

Making the Decision to Become Employed

Get help from the AAOS Practice Management Committee

Melbourne D. Boynton, MD; David L. Cannon, MD; and Charles A. Goldfarb, MD

Based on data from the AAOS member census, from 2010 to 2012, about 400 orthopaedic surgeons in the United States moved from a private practice to an employed practice model. For some orthopaedic surgeons the transition was easy; others struggled with the loss of autonomy.

During the Practice Management Symposium for Practicing Orthopaedic Surgeons, held during the 2013 AAOS Annual Meeting, Ian J. Alexander, MD, and Louis F. McIntyre, MD, discussed the pros and cons of making the transition to employed surgeon. Both had made the shift, but Dr. McIntyre later moved back into private practice.

“One of the key benefits of a private practice is that, as an orthopaedic surgeon, I maintain complete control of operational decisions, revenue, and patient care,” he said.

For Dr. Alexander, on the other hand, having the hospital make many operational decisions was a benefit. “I don’t have to worry about billing, reimbursements, and uninsured patient issues; the hospital handles them,” he said.

What’s right for you?
Making the decision to become an employed physician is not easy. Nor is it the only option, although the alternatives may be overlooked. For example, an alternative for an orthopaedic surgeon in solo practice who is considering an employed model might be joining a group to maintain a measure of control over his or her destiny. A group practice might look into a service-line management approach with the local hospital, which would enable it to maintain its independence while reducing risk.

Any change in practice comes with risk. Safeguarding against risk requires answers to many different kinds of questions. Some physicians enter into arrangements without legal review of the agreement and think they have signed a long-term contract that guarantees employment for the remainder of their career. This is not always true.

For example, one surgeon sold his solo practice to the hospital under the terms of an initial 3-year agreement. For 2 years and 9 months, the surgeon believed that the relationship was meeting everyone’s expectations. Then, 90 days prior to the end of the agreement, the hospital administration informed the surgeon that the contract would not be renewed and that his practice would be limited to handling trauma call until his contract expired.

Not only that, but the hospital had already hired another orthopaedic surgeon as his replacement. This left the surgeon seeking another opportunity so that he could continue practicing.

Making smart choices
Decisions shape experiences. In their book Smart Choices: A Practical Guide to Making Better Decisions, authors John S. Hammond, Ralph L. Keeney, and Howard Raiffa describe the following eight critical elements of effective decision-making:

  • Work on the right decision problem.
  • Specify your objectives.
  • Create imaginative alternatives.
  • Understand the consequences.
  • Grapple with your tradeoffs.
  • Clarify your uncertainties.
  • Think hard about your risk tolerance.
  • Consider linked decisions.

In any scenario that creates a new relationship with a hospital, the orthopaedic surgeon needs to consider ‘what is best in the long term for me’ to avoid making the same mistakes others have made.

For these reasons, members of the AAOS Practice Management Committee have compiled a list of questions that orthopaedic surgeons should consider before completing an employment agreement with a local hospital. Included on the list are questions for the orthopaedic surgeon as well as questions the orthopaedic surgeon must ask others. Among the issues covered are the employment contract, reporting responsibilities, decision-making authority, and compensation calculations. (See “Sample Questions,” this page.)

These questions will benefit the orthopaedic surgeon who is considering an employed position by helping to frame the decision and permit consideration of many of the factors (including personal, business, and other) that will affect the ultimate outcome of this critical choice. In addition, the Committee’s “Practice Evaluation Inventory” is a free, downloadable form that takes one through the process of finding the best practice option based on individually ranked criteria.

Get the complete list of questions and download the “Practice Evaluation Inventory” from the AAOS online practice management center, www.aaos.org/pracman

Melbourne D. Boynton, MD; David L. Cannon, MD; and Charles A. Goldfarb, MD, are members of the AAOS Practice Management Committee.

Sample Questions

  1. Why do you want to sell your practice?
  2. What is the reputation of the hospital?
  3. How much experience/history does the hospital have with buying practices and employing physicians?
  4. What are the conditions for contract renewal?
  5. Under what circumstances can you or the hospital terminate the agreement or not renew the contract? How is the decision made and by whom?
  6. Who owns the electronic medical record data of the patients in your present practice if you leave employment or are terminated?
  7. When you are away from the office, would adequate quality coverage be provided?
  8. If pay is based partly on productivity, how is productivity measured?
  9. Are medical liability insurance premiums paid by the hospital/employer? (Tail coverage is normally the physician’s responsibility.)
  10. Would the employer pay dues to national, state, and county professional associations on your behalf?