Did you know that 46.7% of healthcare providers work in wholly-owned physician practices? Whereas, 31.3% of clinicians work in practices that are wholly or partially hospital-owned.
If you cannot decide whether to start a solo practice or join a group, this guide is for you.
We will present a detailed discussion on whether to choose group practice or private practice, including pros and cons, startup challenges, and key considerations. All this will help you get clarity and make an informed decision. So, continue reading!
Differences Between Private Practice & Group Practice
The table below offers an at-a-glance view of the key differences between group practice and solo practice:
| Group Practice | Private Practice | |
|---|---|---|
| Autonomy | Shared control, i.e., subject to board or partner approval. | Complete control over all clinical and business choices. |
| Financial Risk | Moderate to low because risk and overhead are shared. | High since only you are responsible for all overhead. |
| Income Potential | Structured, i.e., salary plus productivity bonuses. | Uncapped. That is, you keep all net profit. |
| Administrative Load | Light, since it is often handled by dedicated administrative teams. | Heavy because healthcare providers manage business operations. |
| Work-Life Balance | Favorable because of built-in shift and on-call coverage. | Challenging. Time off stops clinic revenue. |
Pros & Cons of Private Practice
This section covers the main advantages and disadvantages of having a solo practice:
Advantages of Private Practice
Some of the key advantages of running a solo practice instead of joining a group practice are as follows:
- You hold 100% decision-making power over every aspect of your practice. That is, you can select your preferred EHR/EMR software and decide which insurance carriers to join.
- Since you are the sole proprietor of the practice, there is no group owner or corporate entity to take a substantial cut from your per-patient encounter rate. As a result, you keep 100% of your net collections.
- You can decide your working hours, daily patient volumes, and vacation timelines.
- When running a solo practice, you have direct control over the brand identity. Simply put, you can decide on your personal clinical philosophy, office aesthetics, and patient care standards.
Disadvantages of Private Practice
The following are key disadvantages of having a solo practice instead of being part of a group practice:
- Running a practice on your own means you are a business owner first and a clinician second. This means you must personally manage vendors who handle credentialing, revenue cycle management (RCM), HIPAA compliance, and other key operations for your practice.
- Being a solo practitioner means you carry the complete financial liability. That is, if insurance reimbursement delays, patient volume drops, or you take a holiday, your incoming revenue stops entirely. However, your overhead obligations remain constant.
- Running a solo practice can become highly isolating. The reason? It lacks an immediate peer support structure and informal hallway consultations.
- You must invest significant time, effort, and capital into building relationships with local physicians, managing directories, and driving patient volume to your clinic.
Here’s a quick summary table for you:
| Pros of Solo Practice | Cons of Solo Practice |
|---|---|
| It offers full autonomy over clinical niche, software, and panel selection. | You manage all accounting, marketing, and compliance. |
| You receive maximum revenue. That is, you get 100% of net revenue. | No paid time off. That is, if patient volume drops, overhead remains. |
| Private practices offer complete control over the schedule with zero volume quotas. | Must build a local referral network from scratch. |
Pros & Cons of Group Practice
This section covers the main advantages and disadvantages of having a group practice rather than a private practice.
Advantages of Group Practice
Discussed below are the key advantages of running a group practice:
- From day one of the practice, you have established brand recognition, active marketing budgets, and steady referral streams from local physicians or insurance panels. This enables you to fill your caseload rapidly.
- The group handles the operational complexities of running the practice, from compliance to RCM. As a result, you can focus on clinical care rather than running a business.
- The best part? You are not personally responsible for bearing major expenses, such as office rent. Thus, startup risks become virtually non-existent, and overhead liabilities are distributed among shareholders.
- Additionally, the group offers immediate peer support, informal hallway consultations, and structured case reviews. This significantly lowers professional isolation.
- Besides, built-in cross-coverage means partners can cover your on-call duties or patient emergencies when you call in sick or take a vacation. As a result, your practice revenue stays stable.
Disadvantages of Group Practice
Some of the key disadvantages of having a group practice instead of a solo practice include:
- The practice owner or corporate entity takes a significant financial split, typically 40% to 50% of your total billing collections, since the group handles the administrative infrastructure and marketing.
- You must conform to the group’s established policies. These are not limited to operational hours and workplace culture. That is, you may have limited say over which EHR/EMR system to use, which insurance panels the practice should accept, or the specific types of clinical cases assigned to your schedule.
- Implementation of changes in a group practice is challenging because decisions are democratic or dictated by a board of directors.
Here’s a quick summary table for you:
| Pros of Group Practice | Cons of Group Practice |
|---|---|
| Steady, patient referral pipelines from day one. | The group takes a large cut, i.e., 40%-50%, to cover overhead. |
| Administrative tasks like billing and HR are handled for you. | Less control over schedules, panels, and software choices. |
| No direct personal liability for clinic overhead or rent. | Decision-making requires consensus or corporate approval. |
Challenges of Starting a Private vs. Group Practice
Now that you know the pros and cons of group practice and private practice, it is time to understand the key challenges of starting them:
Challenges of Starting a Private Practice
The following are the key challenges of starting a solo practice:
High Administrative Burnout
As a solo practitioner, your biggest challenge is time allocation. That is, you must act as a full-time clinician as well as a full-time chief operating officer.
Thus, you often juggle between bookkeeping, marketing, compliance documentation, and following up on denied claims or delayed payments. This leads to severe early-stage burnout.
Referral Network Building from Absolute Zero
Without an established brand, you start with an empty caseload. This means you must fund your own digital marketing, optimize local SEO, and network with local physicians or community organizations to secure your first wave of patients.
High Initial Capital Constraints
When you start your own practice, you must invest in the lease of your own office space, professional liability insurance, IT infrastructure, and EHR system. Besides, you must cover these expenses entirely out of your personal savings or a solo business loan since you cannot split upfront costs like in a group practice.
Severe Revenue Volatility
Note that during the first 3 to 6 months, your cash flow will be highly unpredictable while you wait to get credentialled with insurance carriers.
Challenges of Starting a Group Practice
The following are some of the key challenges that you may encounter while starting a group practice:
Massive Upfront Capital Requirement
Starting a group practice requires significant initial funding. But why? Because you need multiple treatment rooms, enterprise-grade software licenses that scale per user, and enough liquid capital to cover payroll for administrative staff and clinicians before insurance reimbursements start flowing in.
Complex Corporate Governance
When starting a group practice, you must navigate the intricate corporate healthcare laws. This includes defining equity splits, drafting partnership agreements, and structuring compliant compensation models.
That’s not all, you must also adhere to federal regulations, such as the Anti-Kickback Statute or Stark Law, if you share revenue.
Scaling of Credentialing & RCM
Keep in mind that management of the revenue cycle for a group is exponentially harder than for a private provider. Besides, you must handle group credentialing, i.e., link multiple physicians to your organization’s Type 2 NPI and Tax ID.
What’s more? You must also handle complex billing workflows to track which clinician rendered which service across varying payer contracts.
Key Considerations When Choosing Private vs. Group Practice
Are you in limbo and cannot decide whether to join a group practice or start your private practice? If yes, then simply evaluate each of the following options, and by the end, you will get your answer:
- Decide: (1) if you want a pre-built infrastructure where administrative tasks are handled for you, (2) if you prefer 100% control over your clinic’s niche, software, and schedule.
- Weigh: (1) whether you want to share financial liabilities with partners in exchange for a capped income, (2) prefer to keep 100% of your net revenue while absorbing all overhead risks.
- Evaluate: (1) if you want your working hours dedicated strictly to clinical patient care, (2) are you willing to spend significant weekly hours acting as an entrepreneur, handling billing, HR, and marketing.
- Consider: (1) whether you want your built-in cross-coverage for seamless vacations, (2) whether you have the tolerance for after-hours on-call duties.
With that said, if you were more inclined towards option 1 every time, you should join a group practice. Otherwise, start a solo practice.
Streamline Credentialing with MediBillMD
To summarize, group practice and private practice have their own benefits and disadvantages. Simply put, if you want complete control and want to make every decision, start your own practice. But remember, when you cannot see patients, your revenue stops altogether, even though the overhead remains.
Similarly, if you want to focus entirely on patient care and leverage a huge referral network, join a group practice. However, be ready to get a capped income and lose the autonomy.
Now, keeping that aside, whether you prefer joining a group practice or setting up a solo practice, one thing is certain: you need MediBillMD’s medical credentialing services to expand your patient base.
