Employed Physician vs Private Practice: Financial and Career Comparison 2026
The majority of U.S. physicians are now employed by health systems (74% as of 2024, up from 38% in 2012). Yet physician-owned practices still outperform employed positions financially over a 10-year horizon in most specialties. Here's what the data actually shows.
Compensation: Employed vs Private
Employed physician (health system): MGMA median compensation 2025 — Primary care: $280,000. Internal medicine: $310,000. OB/GYN: $390,000. Orthopedic surgery: $680,000. Compensation is typically base + wRVU bonus above threshold. Productivity incentives cap out at 75th percentile for most employed contracts. Private practice owner: collections exceed MGMA employed medians by 20–40% at 5+ years. Primary care private practice: $320,000–$450,000. Orthopedic surgery group: $800,000–$1,400,000/partner at established groups.
Non-Compete & Restrictive Covenants
Health system employment contracts typically include 2-year, 15–25 mile non-compete clauses. FTC proposed rule to ban non-competes was vacated in federal court (2024) — state law governs. States banning physician non-competes: California, North Dakota, Oklahoma, Minnesota. States with limited enforceability: Massachusetts, Illinois, Colorado. If you're in a state where non-competes are enforceable, leaving hospital employment means geographic restriction. Private practice owner: you own the non-compete advantage — patients follow the doctor, not the brand.
Control Over Practice
Employed: EHR mandated by system (typically Epic or Cerner). Productivity quotas (often 4,000–5,500 wRVUs/year). Referral restrictions (must refer within network). Administrative decisions made by hospital management. Private practice: EHR of your choice. Your patient panel, your schedule. Ancillary revenue: laboratory, imaging, physical therapy — captured by practice, not system. Downside: administrative burden falls on you.
Benefits & Liability
Employed: malpractice covered by system. Health/dental/vision benefits included. 401(k) with matching (typically 3–6%). CME budget: $3,000–$5,000/yr. No business equity. Private practice: malpractice is your expense ($3,500–$50,000/yr depending on specialty). SEP-IRA allows $66,000/yr contributions (2025), vs $23,000 limit for employed physicians. Business equity: exit value of established private practice (2.5–4x EBITDA for primary care).
Which Path Is Right in 2026
Choose employed if: you value income certainty, are early career, are in a high-liability specialty, or are in a state with enforced non-competes. Choose private practice if: you have 3–7 years experience with an established patient panel, are in a specialty with ancillary revenue potential, or value autonomy over schedule and referrals. Financial crossover point: most specialties show private practice financially superior at year 5–7 due to equity buildup and higher collections. Sources: MGMA 2025 Physician Compensation Report, AMA Physician Practice Benchmark Survey 2024.
Explore the Network