5 disadvantages of being an employee

Recent trends in the practice of medicine have been shifting from a predominantly private practice model toward an employment model. Many factors are driving this. The popular emphasis on work-life balance has promoted the impression that it’s better as an employee, which is not necessarily true. Skyrocketing debt from training is making doctors reluctant to lay out money to buy into a practice. Healthcare reform has created uncertainty about how the industry will be affected, making a salaried position look more attractive.

I have practiced in both models, and experienced the good and the bad each has to offer. This is the final article of a four part series comparing the differences. Weigh the pros and cons of each before making your final decision.

Little control

The biggest downside is having almost no control over what happens in the practice. You don’t pick the office staff, the retirement plan, your hours, your vacation time, or anything else about the practice. You answer to an administrator. One hospital I know of hired a new doctor, and three months later still hadn’t put her name on the office door. Granted, it is a small item, but if that’s an example of where you stand in the priorities of the employer, you can be sure they will not be jumping in to help you when you need something important.

You will not be in control of picking your new partners. The employer will be deciding when it is time to bring on a new partner. If you are feeling overworked and ready to get another partner, it will happen only if your employer agrees. When it’s time to get a new partner, they will likely invite you to the interview and listen to your input, but they will pick the partner. If you are getting paid based on a production formula, when they bring on a new partner, it may cut into your production and drop your pay.

You will have much less to say about when you take time off and how much you can take. The employer wants you working; when you are on vacation, you are not making them any money. They might not allow you to take a three week vacation, or even a couple hours off to attend your child’s school performance.

Your retirement plan will be whatever they tell you it will be. Hopefully, they have a good one. It will likely have a maximum contribution that is lower than that of your colleagues in business for themselves. You will have less control as to how your money is invested as well.
Your employer will be deciding what equipment you use. You can make suggestions, but if you have a favorite tool you used in your training and they own a different one, you are unlikely to get them to fork out the money to buy the tool you want. They will tell you to use what they have.

Fewer tax advantages

As an employee, there are few tax deductions available for you. The tax laws are not written in favor of the employee, they are written in favor of the employer. On the same income, the business owner has more money to spend as less evaporated into taxes.

Less job security

Your employment is at their mercy. If they feel you aren’t doing what they want, you will be terminated. One physician I know had a complication which prompted a look into all his cases. When the examination was complete, there were more complications than desired. He was called into a meeting and fired. No warning. No chance to see the results. No chance for improvement. You work as long as they want you to work and no more. If it becomes unprofitable for them to own you, the relationship will end abruptly.

No equity

When you do leave, there is nothing to sell. You have equity in nothing. You don’t own a building, or the accounts receivable, or any equipment. If you were the physician in the last paragraph, you got your last paycheck and were gone. No residual income for retirement, beyond that saved in your retirement plan.

Production quotas

You may be required to meet a production quota. They hired you to make money for them and for no other reason. If you can’t keep up with expected production, you could be fired.

If you have read through all four articles in this series comparing employment with ownership you will appreciate that both groups can be happy with their choice. If you think about it ahead of time and weigh the pros and cons for your personality, I think you will be able to pick the model that best suits you and you will also be happy with your choice. Learn more in my book The Doctors Guide to Starting Your Practice Right.

Feel free to comment below if you feel I missed an important disadvantage and sign up to receive my blog at DrCorySFawcett.com so you won’t miss out on anything.

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4 thoughts on “5 disadvantages of being an employee”

  1. Kinda sad that this is the society we’ve adapted into. I get everyone needs money but others also have bills to pay, food to eat, things to do. It’s sad most employers only think for themselves when everyone is trying to play a part but employers also have needs of their own so to be fair, we really don’t understand each other

  2. Nice analysis. I strogly agree as I have practiced both. Good cooperative patrners in private practice is a must to enjoy your work and be more productive. Understanding boss in a must in partnership


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