Get Started Here!

8 Reasons Employed Doctors Should Consider Employment Lite

Today’s post is a guest post from Dr. Tod Stilton, a family medicine doc who is going to share his interesting experience and recommendations regarding “employment lite” for doctors.

I really enjoyed this one and think you all will too!

Take it away Tod…

I am a physician with 30 years of experience and I love my life. In my opinion, I have the best job in the world. Yet our profession is under an unprecedented assault from the current medical-economic system.

It breaks my heart to know that 1 out of 2 of our tribe is currently burned out. This is especially concerning to me as my oldest son starts his residency this year. I would like to see him and his cohort avoid this tragic career space. 

A little over 10 years ago, I discovered the little known professional model called employment lite that rescued me from my downward spiral due to employment.

This discovery revitalized my career and allowed me to hold onto the many benefits of employment. Yet, it also emancipated me from from suffocating control of my employer. In addition to that, it allowed me to hold onto over $70,000 in retained income annually.  All of these same benefits are available to you as well.

Your small business superpowers

The path involves forming your professional corporation(PC) and then connecting it to what is called a professional services agreement. This opportunity is hidden to most employed doctors because they have mistakingly assumed that PC’s are only useful for private practice. It turns out that this is a myth that has been perpetuated by both doctors and employers alike.

To identify the origin of this myth, you must understand that doctors a generation ago fully embraced the fact that they were professionally endowed with small business superpowers.

They embraced and leveraged one of the most important earned benefits of their medical degree and professional license. They did this via the the formation of their own small business-PC. Thus their old model involved forming a private practice-PC that housed their professional services and small business affairs within a clinic owned by the PC. Back in the day, this was a smart move.

But now these traditional PC’s are disappearing from the landscape. This is due to large corporations erasing them as competition. Thus many doctors are wisely choosing to avoid this option.

Blue chip recruits

In fact most younger physicians are responding to these market forces by selling out their small business superpowers to large corporations who fully understand the economic potential of these superpowers.  

This has led employers to pursue physicians like blue chip athletes. According  to the 2021 Physician Recruiting Incentives report from Merritt Hawkins physicians are in such high demand by employers that 45% of new doctors received 100 or more job solicitations during their training. 66% of new doctors said they received 51 or more job solicitations.

This high demand from employers is why MH EVP Travis Singleton says,

“The days of new doctors hanging out a shingle in an independent solo practice are over, Most new doctors prefer to be employed rather than deal with the financial uncertainty and time demands of private practice.”

Benefits of employment

90% of you as younger physicians are choosing the simplicity of employment. 

(This includes me! – I Found My Perfect Physician Job in 6 Steps!) 

 In comparison to private practice, the benefits are many and include: 

  • Quick-start without taking on any additional financial risk 
  • Predictable paycheck at fair market value rates
  • Robust benefit package that saves you the time & effort of sourcing them yourself
  • Term limits in your contract that make it easier to change jobs. This is important since 50% of doctors leave their first job
  • Time away from work rather than using your non-clinical time to operate-manage your practice and its employees.
  • Great remedy for your business illiteracy 

Activating your small business superpowers

While I fully believe each of these points do make employment the primary job option for most of you, I do believe the system desperately needs a market correction that addresses the heart of the burnout issue for doctors.

It’s not about resiliency as much as it is about professional autonomy for employed doctors. The first step to regaining your autonomy is to activate your small business superpowers. Then you need to wisely use them for YOUR benefit.

Employment lite is one of the best ways for both employers and doctors to win in business relationship that supports a doctor’s well being.

In my experience, the formation of my own PC-employment lite agreement restored a significant amount of both my personal and professional autonomy. And all while maintaining my employment relationship with my hospital.

Employment Lite

I realize that this seems almost paradoxical that a core solution to physician burnout is form your own business while remaining employed at the same time. It turns out that employment lite truly is a myth buster.

Let me explain…

Employment lite is a progressive employment model that mirrors most of the components of traditional employment but without full integration. It is a better version of employment for the modern doctor because it uses your own PC in what is called a professional services agreement (PSA). Visually it looks like this: 

employment lite

Traditional employment is the fullest form of alignment among hospitals and physicians. However, employment lite still signifies a high level of physician-hospital alignment that falls just short of traditional employment.

It is formalized by a professional services agreement that is specific to this arrangement. In the end, your employer wants your professional services because that is how they make their money through you.

They monetize your professional services in 3 ways:

  • direct patient care,
  • downstream revenue, and
  • healthcare data (EHR).

But here is the critical point for you to understand

When you form your own PC, you can contract out those same professional services to your employer. But simultaneously you can hold onto your control over parsing out additional professional services to any other businesses (side jobs).

In other words, in a market where physician professional services are in such high demand, you make a huge mistake by contractually aligning yourself as an individual to just one employer. When you form a PC, you provide yourself the opportunity to develop multiple business relationships for your professional services. The diversity of income streams reduces your total dependence on one employer, and thus psychologically frees you from feeling trapped and controlled by a singular employer.

Under a PSA, a physician (or medical group) remain independent and this independence reinforces your professional autonomy.  The PSA structure allows for many of the same benefits and elements of employment, all while you remain an independent contractor rather than an employee.

Corporate citizenship and organizational governance can be built into the PSA such that you function in nearly the same manner as your fully employed peer. Organizational alignment remains strong for both traditional employees and those who chose employment lite. 

1099 rather than W-2

  Your fair market value compensation formula typically remains the same, but now you receive your earnings via 1099 income rather than W-2.  

What does change is that the employer is no longer responsible to manage benefits for you as your own PC now provides you with a more personalized tax advantaged benefit plan.  

The flow of cash and benefits into your home is vastly different between standard employment and employment lite as noted side by side comparison below. This change helped me retain nearly a million dollars in earned income over 10 years, and you could have similar results.

employment lite

Progressive organizations will often cover the management expenses for their physicians in this program through credible agencies like SimpliMD.  This is because this model saves employers money through a combination of reduced employment expenses, and savings related to physician retention.  

Employed physician expenses when compared to traditional employment can save employers $30-$50,000 per employed physician. Ultimately employment lite is a powerful recruitment and retention tool for employers due to the way it benefits both parties. 

The following is a summary of the benefits of employment lite for physicians:

Benefits of employment lite for doctors

  • Gain greater control of your life with enhanced professional autonomy that is associated with running your own professional corporation-small business 
  • Grow your household income without working harder, via retained earnings strategies that are unique to small businesses and increasingly limited as W-2 traditional employees.
  • Individualize your fringe benefit programs to those that benefit you most- including unrestricted international CME, private school reimbursement, and automobile leasing just to name a few.
  • Access substantially larger tax-advantaged retirement plans in comparison to traditional employment.
  • Lower your effective tax rate- I have been able to nearly half mine through this move.
  • No job change or moving is needed with this transition, so your family is not disrupted by this change
  • Seamless and invisible implementation within your existing employment structure in a manner that is not recognizable by your peers
  • Burnout risks are lower due to enhanced professional satisfaction 

Time for change

I like what business management guru Peter Drucker points out about the importance of mindset when it comes to change when he said:

 “If you want something new, you have to stop doing something old”

I believe most of you understand the need for something new when it comes to the high burnout rate within physician employment. Employment lite is the smart and progressive alternative for doctors to the old and broken traditional employment model. It’s just a matter of stopping the old and transitioning to the new, and the power to do this is in your hands.

Tod Stillson is a family physician and founder, SimpliMD. You can reach him at Dr. Incorporated. Follow his regular YouTube and podcast episodes and join his employed physician community on Facebook at The Employed Physician’s World

What do you think? Does employment lite sound like a good option for doctors to you? What is your current practice model? What would you change? Let us know in the comments below!

Learn more about my flagship course!

Love the blog? We have a bunch of ways for you to customize how you follow us!

Join the Prudent Plastic Surgeon Network

And accelerate your path to financial freedom with my free FIRE calculator!

    We won't send you spam. Unsubscribe at any time.

    Join The Prudent Plastic Surgeon Facebook group to interact with like-minded professional seeking financial well-being


    The Prudent Plastic Surgeon

    Jordan Frey MD, a plastic surgeon in Buffalo, NY, is one of the fastest-growing physician finance bloggers in the world. See how he went from financially clueless to increasing his net worth by $1M in 1 year and how you can do the same! Feel free to send Jordan a message at [email protected]

    8 thoughts on “8 Reasons Employed Doctors Should Consider Employment Lite”

    1. What does employment law say about about a doctor or PA/NP working as a 1099 contractor if they are working only for your practice and full time? We asked our practice attorney about this option and they said that situation needs to be W-2 based.

      Reply
    2. I think your overlooking the big issue of providing your own malpractice insurance and the associated personal liability you have in a judgement as a 1099 rather than W2 where the employer is responsible.

      Reply
      • I think the malpractice issue is a fair consideration. Although not all employers will offer adequate malpractice requiring W2 employees to get it or at least tail coverage upon exit. This is something that needs to be weighed in each individual case.

        Regarding liability, if you have a case brought against you, it is against you – regardless of employment structure. And as a 1099 contractor, you still 100% need as asset protection structure to create a separate corporate identify and protect personal assets. To me this is less of an issue.

        Reply

    Leave a Comment