Should I join a practice or start my own?

• Pros and cons of each business model
• Cost impact of each business model
• Other considerations:
  • Your lifestyle
  • Your specialty
  • Your financial situation
  • Urban vs. rural living

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If you’re a new physician drawn to the idea of starting your practice as part of a group, you’re not alone. Among primary care physicians, there were more group practices in Canada in 2019 than in 2015 (65% versus 60%)¹, reflecting a trend away from solo practices. Yet some physicians still crave the autonomy that private practice offers.

TIP: Learn the pros and cons of going solo or joining a practice first-hand during residency or by taking a locum job.

Primary practice site for primary care physicians in Canada¹

So, what’s the best choice? That depends on several things. Here’s a look at the pros and cons of each business model — and how your decision could affect your bottom line.

Going solo

The pros: The freedom to set your own schedule, dedicated staff and resources, and fewer distractions — solo practice can be appealing if you want to be your own boss. It’s also a learning experience, offering you a crash course in everything from marketing and human resources to facility management and contract negotiation.

And if you place a high value on patient relationships (often the most satisfying aspect of medical practice), a solo practice may be more rewarding because it allows you to customize the care you provide to your patients.

The cons: The number of physicians starting a private practice may be decreasing for a reason — it’s expensive, especially the start-up costs and ongoing overhead. And despite your years of physician training, it’s likely that nothing prepared you for what amounts to starting your own business.

In a solo venture, the entire burden of running a practice rests on you. You must not only deal with finding a physical location and hiring staff, but also worry about insurance, equipment, overhead and managing day-to-day operations.

Also, if you take time off in a solo practice, you’ll need to decide whether to close your practice temporarily or find a locum tenens.

The cost impact: As a solo physician, you’re responsible for covering costs, with no economies of scale to help spread the load. What do these costs include? They can be subdivided into three areas:

1. Operating expenses: These include the cost of office space, utilities, staff salaries, EMR fees and insurance.
2. Capital expenses: Upfront costs can include the purchase of office equipment, furniture and an EMR system. Later expenses could entail office renovations/leasehold improvements.
3. Professional expenses: These include medical association dues and Canadian Medical Protective Association (CMPA) membership2 . Note that these are individual expenses and cannot be shared in a group practice.

Joining a group

The pros: Most new family physicians choose to join an existing group practice (or start one with other professionals) to take advantage of shared overhead expenses. Other benefits can include a lower staff to physician ratio, shared fixed costs like the purchase of medical equipment, and better price negotiating power for purchasing supplies.

Whether you plan to create or join a group practice, consult your lawyer and accountant beforehand to ensure you are using the proper group structure to accomplish your goals. It’s important to draft a comprehensive contract that outlines responsibilities, expectations and benefits, and how expenses will be shared in the group practice setting. Working with a lawyer and an accountant to create a sound agreement could help you avoid potential problems and stress down the road.

The cons: A group practice can bring with it challenges like reduced autonomy, personality clashes or disagreements over capital expenditures.

The cost impact: If you choose to join a group practice, your start-up costs will be lower, but you’ll need to find common ground when it comes to a shared business approach. If you join an existing practice, you’ll enjoy minimal start-up costs and red tape, although those benefits come at the expense of complete independence. With more physicians and a larger patient base, group practices are also better able to manage financial risk.

Deciding which business model is right for you

Besides pondering the pros, cons and costs outlined above, answering these questions will also help you decide what type of practice will best fit you and your situation:

• Does my specialty lend itself to a particular practice style? Non-hospital-related specialties like family practice or pediatrics are better suited to a solo practice model.
• Do I want to live in an urban or a rural community? Less populated areas with growing families are often more supportive of a solo practice. More densely populated areas can be competitive and challenging for a solo practice start-up.
• What does my financial situation look like? Solo practices often face significant financial risk due to the cost of doing business. So, if you have a large student debt, the prospect of start-up costs and sole responsibility for ongoing overhead may be daunting.

Not sure what type of practice will best fit your goals? Residency is an excellent time to learn about your likes and dislikes, and the pros and cons of different business models. At this stage, you may get the chance to find out first-hand which arrangement would likely be the best fit. Another way to test the waters is to take on temporary work as a locum tenens.

Supporting you in the decision-making process

As you can see, different practice models offer both advantages and disadvantages. With a careful analysis of your long-term goals, and a detailed assessment of your financial situation with help from an MD Advisor*, you’ll be well prepared to make the career decision that best fits your needs.

* MD Advisor refers to an MD Management Limited Financial Consultant or Investment Advisor (in Quebec), or an MD Private Investment Counsel Portfolio Manager.

¹ Source: Canadian Institute for Health Information, How Canada Compares: Results From the Commonwealth Fund’s 2019 International Health Policy Survey of Primary Care Physicians (January 2020).

² Provincial/territorial governments reimburse part of the CMPA membership cost; amounts and eligibility criteria differ by jurisdiction.

The above information should not be construed as offering specific financial, investment, foreign or domestic taxation, legal, accounting or similar professional advice, nor is it intended to replace the advice of independent tax, accounting or legal professionals.