Making the leap into independent practice is more high stakes than ever, as hospitals and health systems grow in size and influence and the cost of doing business narrows operating margins.
In 2024, 42.2% of physicians were working in private practice, a significant drop from 60.1% in 2012, according to the American Medical Association’s “Physician Practice Benchmark Report,” published May 29. Private practice now represents less than half of physicians in most medical specialties, with participation ranging from 30.7% in cardiology to 46.9% in radiology.
Conversely, the share of physicians working in hospital-owned practices rose to 34.5% in 2024, up from 23.4% in 2012.
Two physicians recently joined Becker’s to share their advice to those interested in starting their own independent practice.
Editor’s note: Responses have been lightly edited for clarity and length.
Question: What advice would you give someone about to start their own independent medical practice? What are common pitfalls to avoid?
Harry Haus, MD. Medical Director of Dr. Haus & Associates (Erie, Pa.): First, start preparing months ahead of your opening date. You must have a state license and a DEA license in place. Next make sure you have money to cover costs to open and costs the first month. You must buy malpractice insurance and you have two choices: claims made and occurrences. Next, find a location with low rent but make sure the lines in the building can support your computer and telehealth needs. You will pay the first month’s rent and a deposit. You must set up utilities like heat, electric phones and cable. Also set up a bank account with checks and set up to take credit card payments. You need computers with screens to do telemedicine visits and a HIPPA safe telemedicine company to work with. You must buy furniture and equipment. Sometimes you can get used furniture and equipment that looks new and this will save you a lot of money.
Check the local hospital, since many will not allow on staff if you are not their employee. Some will let you on staff but you can not admit your own patients since the hospitalist gets all admissions. This same thing can occur at some nursing homes. Check with all the major commercial health insurance companies and Medicare to make sure you are contacted with them. There are some insurance companies that will not pay for your prescriptions if you are not contracted with them. You will need paper scripts if the internet goes down and an EMR that allows you to send prescriptions. You also need EMR to store your medical records and progress notes. Office Ally is the least expensive.
Billing: You can hire a billing company or get a billing program. Most EMRs have a billing option you can buy. Also if you do billing, you will need a biller. Make sure that person also bills for copays and deductibles. Depending on when you bill and the insurance companies, it may take seven to 28 days to get paid. If it is longer than that something is wrong.
Consider advertising. Weekend and evening hours help build a practice. Offer services that get you paid today like driver exam, CDL exam, and school physical exams. Doing occupational medicine means there will be no copays and deductibles.
Teresa Tam, MD. Minimally Invasive Gynecological Surgeon and Owner of All for Women Healthcare (Chicago): Starting an independent practice in minimally invasive gynecologic surgery takes careful planning and realistic expectations. My biggest advice is to build strong hospital relationships early, obtain solid operating privileges and good rapport with operating room staff. And remember: efficiency in the OR leads to consistency, which leads to proficiency. This principle has guided my practice, and it’s something I’ve passed on to the residents I’ve trained.
The most common pitfalls? Underestimating startup costs and cash flow challenges. Insurance reimbursements take months, so you need adequate capital reserves. Don’t try to do everything yourself. Invest in good billing services and practice management software from the start instead of trying to save money with makeshift systems. As for marketing, I’ve found that good surgical outcomes are the best marketing tool. Satisfied patients become your strongest advocates and referral sources. That said, you still need to build relationships with primary care physicians and establish an online presence early on. Lastly, invest in an experienced administrative support who really understands surgical scheduling, insurance credentialing and prior authorizations.
