Like most healthcare providers right now, many hospitals and systems are financially stressed. Drivers behind this include staffing and supply costs, declining reimbursements from payers, and the post-pandemic expiration of federal financial support. They are designing new operating models, revising budgets and trimming the workforce. And physician compensation is being affected.

If you are an employed physician with a healthcare system you may have considered joining or forming an independent practice. Many who leave do so to join another group, or leave with others to form their own. Deciding to no longer be an employed physician comes with the allure of potential for higher income, greater independence, and the ability to cast a vote or make decisions about business and operational matters. It also comes with greater risk and less security.

Take a look at the items below. They provide a starting point for you as you begin to think about the options that are best for you to attain your career objectives.

Employment Contract. Your contract with the hospital sets out key terms of your employment. The agreement may contain restrictive covenants. These provisions may limit the markets that you can practice in after you leave and the time period for the limitation. They may also include prohibitions against soliciting any hospital staff to work with you in your new venture. You should also thoroughly understand the structure and payment of compensation and production bonuses and details about the retirement plan and pension eligibility. There may also be a minimum notice period for resignation. Understand all of these terms and factor them into the timing of your departure.

Patient Notification. Your ability to notify patients could also be included in your employment agreement, and in any case should be governed by applicable law. Find out what the practice has been in the past when physicians have left. Your employer may seek to actively assure patients of continuity of care through other providers within the system. Be sure that you understand how the notification will work and how the patient election to follow you will be administered.

Tail Coverage. There will be a sizable price tag for tail malpractice insurance. Investigate pricing options for this coverage. It will be necessary in order to obtain a new policy with your new practice. If you join a mid-size or large independent group, prior acts coverage may be available to you.

Referral Sources. One of the advantages of working on staff at a hospital is the integrated referral network. Prepare for how you will ensure continued referrals. You could retain referrals from the hospital, although the incentives to referring physicians may not exist any longer. You may join a group which by itself will be the primary referral source. You could get on the hospital call schedule. Another option may be to participate in an ACO or enter into value based care contracts with payers to care for their member population.

Credentialing and Privileging. You will retain your NPI and DEA license, but they will need to be registered with your new group. This should be an easy process. However, if you start a new practice, it will have to be credentialed with Medicare and private payers. This will take time and be more complicated. If you have multiple places of service in addition to your clinic, such as ASCs and dialysis units, and if you plan to admit to the hospital or be on call rotation, you will need to obtain privileges at those facilities. Anticipate that this will all take at least 90 – 120 days.