Employment

Physician Employment, the Pareto Principle, and the 99%

January 15, 2014

I’ve been thinking today about Pareto-type distribution, you know the “80/20 rule,” and physician employment.

By physician employment, I’m addressing that situation in which there is no opportunity for meaningful ownership by the affected physician. So, for example, becoming an employee in a physician owned group in which there is a track to equal ownership would not fall within the definition of employment for purposes of this post. However, being an employee of a group controlled by a publicly traded company would. Unless, of course, you are one of the control persons who receives a significant stock option. You get the idea.

Certainly, these days, some medical groups can be sold for real value, although I find that the true percentage of groups that have sold/can be sold is a small subset of the total number. Many simply aren’t candidates for any meaningful purchase. Or, sorry to say, for any purchase at all.

So, it’s not as if those groups in which physicians can become true owners offer the likely prospect of some significant payday upon a sale. There are, of course, exceptions – significant size groups that are actually run as true businesses can sell for amounts that return significant capital gains to their owners.

But for those who are owners of groups which do not offer a realistic prospect of sale at a significant price, what value is there in ownership? The answer lies in the value of control and in the value of the notion that there is still the opportunity for an unlimited upside: For compensation that is more, rather than less. For control that is local, not distant. For compensation that is not reduced to feed the bureaucratic machine and outside investors.

For those who view opportunity in healthcare as a fixed-sized pie in which there are only so many slices of a certain size, employment is a meaningful option. Those individuals are, in essence, not simply the 80% in the popular Pareto-type distribution but perhaps the 99% of the Occupy Wall Street crowd. They will play an increasingly important role in healthcare as the shakeout between worker bees and entrepreneurial thinkers accelerates.

Comment or contact me if you’d like to discuss this post.

Mark F. Weiss

www.weisspc.com

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