Self-employed physicians have the highest salaries, largest homes, and greatest wealth ― yet they feel the least fairly compensated, according to an analysis of data from over 17,000 physicians.
A new examination of survey responses from the Medscape Physician Compensation Report 2020, which included information about income, job satisfaction, and more, compared responses from self-employed physicians, independent contractors, and employed physicians.
We compared income and wealth, benefits, and job satisfaction. From the results of our questionnaire, self-employed physicians stand out among their peers across all categories: they enjoy greater income, wealth, and benefits and appear to be more satisfied by their choice of practice.
“The survey confirms that self-employed is the most satisfying, although the trend in healthcare is to take employed positions,” said Robert Scroggins, JD, CPA, certified healthcare business consultant with ScrogginsGreer, Cincinnati, Ohio. “Doctors who become employees primarily do that to escape the management responsibilities for the practice. It seems to be more a decision to get away from something than to go towards something.”
Self-employed physicians reported the largest salaries for 2019 (average, $360,752), followed by independent contractors ($336,005). Employees reported the lowest average salary ($297,332).
The largest percentage of self-employed physicians (46%) work in an office-based group practice, followed by those in office-based solo practices (30%). Almost two thirds (64%) of self-employed respondents are owners, and 37% are partners.
Self-employed physicians are more likely to be older than 45 years; 79% fall into that age bracket, compared to 57% of employees and 70% of independent contractors.
Self-employed physicians reported the highest levels of wealth among their peers. About 44% of self-employed respondents declared a net wealth of over $2 million, compared to 25% of employees. Only 6% of contractors and employed physicians reported a net wealth of over $5 million, compared to 13% of self-employed physicians.
Self-employed physicians also managed their personal expenses slightly differently. They were more likely to pool their income with their spouse in a common account used for bills and expenses, regardless of how much they each earned (63% of self-employed respondents compared to 58% of employees and 50% of independent contractors).
Perhaps unsurprisingly, self-employed physicians also reported having the largest homes, with an average square footage of 3629, compared to 3023 square feet for employees and 2984 square feet for independent contractors. Self-employed physicians’ mortgages (average, $240,389) were similar to those of employed physicians’ mortgages but were higher than those of independent contractors’ mortgages (average, $213,740).
Self-employed physicians were also most likely to highly appraise their own performance: half of all self-employed respondents felt “very satisfied” with their job performance, compared to 40% of employees and 44% of independent contractors.
When asked what they consider to be the most rewarding aspect of their job, self-employed physicians were more likely to choose gratitude and patient relationships than their peers (32% compared to 26% of employees and 19% of independent contractors).
Despite their higher net wealth and larger salaries, self-employed physicians were least likely to feel fairly compensated; 49% of self-employed physicians said they did not feel fairly compensated for their work, compared to 40% of employees and 40% of independent contractors.
“Self-employed physicians may be better compensated than others of the same specialty who are employees, so some of that may be perception,” said Scroggins. “Or they feel they should be compensated to a far greater degree than those who are employed.”
Self-employed physicians were also more likely to respond that they would choose the same practice setting again, though across all three categories, fewer than 50% of respondents would do so: 34% of self-employed physicians compared to 29% of employees and 28% of independent contractors.
About a third (32%) of employed physician respondents work in hospitals; 28% work in private practices.
Employed physicians were most likely to report a salary increase from 2018 to 2019: 74% compared to 45% of self-employed and 52% of independent contractors.
As for declines in income, self-employed physicians and independent contractors suffered a comparable loss, with 13% and 12% of them, respectively, reporting salary cuts greater than 10%. Decreases of up to 10% were felt mostly by the self-employed, with 17% experiencing such cuts, compared to 7% of employees and 10% of independent contractors.
In contrast, employees were the least likely of the three categories to have incurred large financial losses over the past year: 77% of employed respondents indicated that they had not experienced any significant financial losses in the past year, compared to 63% of self-employed physicians and 63% of independent contractors. They were also least likely to have made any investments at all over the past year — 21% of employees reported having made none at all in 2019, compared to 11% of self-employed physicians and 16% of independent contractors.
Just over half (52%) of all independent contractors who responded to our questionnaire work in hospitals; 15% work in group practices; 9% work in outpatient clinics; and just 2% work in solo practices.
Independent contractors were less likely than their peers to have received employment benefits such as health insurance, malpractice coverage, and paid time off. They were also less likely to be saving for retirement. Almost half (45%) of independent contractors said they received no employment benefits at all, compared to 20% of self-employed physicians and just 8% of employees.
What’s more, 27% of independent contractors do not currently put money into a 401(k) retirement account or tax-deferred college savings account on a regular basis, compared to 16% of self-employed physicians and 8% of employees. Similarly, they were less likely to put money into a taxable savings account (39% responded that they do not, compared to 32% of self-employed physicians and 27% of employees).
“Net worth and retirement funding findings do line up with what I’ve observed,” said Robert Scroggins. “Those who have independent practices as opposed to working for a hospital do tend to more heavily fund retirement plan accounts, which is typically the biggest driver of building net worth.”
Despite the lack of retirement planning, independent contractors were more likely than their peers to derive satisfaction from making money at a job they like (18% compared to 12% of employees and 11% of self-employed physicians). They’re also far more likely to be in emergency medicine (22% of independent contractors compared to 3% of self-employed and 5% of employees) or psychiatry (11% of independent contractors compared to 5% of self-employed and 6% of employees).
Among the three categories of physicians, independent contractors were least likely to say that they would choose the same practice setting again. Across all three categories, fewer than 50% of respondents would do so: 34% of self-employed physicians compared to 29% of employees and 28% of independent contractors.
Physicians who are considering leaving their own practice for a hospital setting should do so with caution and fully understand what they are getting into, says Scroggins. “If they’re just looking at compensation, they also should be looking very carefully at retirement plan benefits. If that’s their main method of saving and building net worth, then that’s a dramatic difference.”
And of course, there’s always the intangible value of feeling connected to a practice and its patients: “Physicians got into this line of work to treat patients and help people become healthier, and in hospitals they end up being more disconnected from their patients,” Scroggins said. “That’s a big factor as well.”
Editor’s Note: Only differences that are statistically significant at a 95% confidence level between categories of employment have been included. Of the 13893 responses included in this analysis, 3860 physicians identified as self-employed, 9262 as employees, and 772 as independent contractors.