Practice Economics

More Hospitalists Opt for Part-Time Work Schedules


An increasing number of hospitalists are pursuing part-time schedules to cater to lifestyle demands and personal desires. According to a 2010 survey conducted by the American Medical Group Management Association and Cejka Search, 21% of physicians in the U.S. are working part time, compared with only 13% in 2005.

Among those part-time physicians, the fastest-growing segments are men approaching retirement and women in the early to middle stages of their careers. Senior physicians who are tired of the commitment that comes with full-time employment increasingly are opting for part-time employment as a transition into retirement. Physicians with young children are seeking part-time employment to be more active in child-rearing.

The medical community generally has welcomed the opportunity to incorporate part-time physicians into hospital settings as a way to maintain female physicians, senior physicians, and physicians in specialties experiencing shortages. Physicians who are retained on a part-time basis should be cognizant of the following areas of the physician’s employment or independent contractor agreement:

  • Independent contractor or employee status;
  • Compensation;
  • Benefits;
  • Professional liability (malpractice) insurance; and
  • Restrictive covenants.

Independent Contractor vs. Employee

Oftentimes, physicians assume that just because he or she is working part time, he or she is an independent contractor. That is an inaccurate assumption. The amount of time a physician works is not the determining factor as to whether someone is an employee or an independent contractor of the practice or hospital. Whether a physician is an employee or an independent contractor is a distinction with real consequences for tax purposes and protections under federal and state labor and employment laws.

Generally, labor and employment laws provide protections for employees, but these protections do not extend to independent contractors. With regard to taxes, if a hospitalist is an employee, the employer is required to withhold income, Social Security, and Medicare taxes, and pay unemployment tax on wages paid to the hospitalist. Conversely, if a hospitalist is an independent contractor, the practice or hospital will not withhold or pay taxes on payments to the hospitalist; rather, the individual hospitalist will be responsible for making those payments to the IRS and state tax authorities. It is imperative that the contract clearly indicates whether the hospitalist is an employee or an independent contractor, as well as the corresponding responsibilities of the parties.

Compensation and Benefits

Partial compensation for part-time work is logical, but determining a fair and competitive compensation package is not always as straightforward when it comes to part-timers. There are two general models that practices and hospitals use to determine compensation for hospitalists working part time. First, the physician may be paid a percentage of a full-time physician’s salary, based on the number of hours worked. Second, the physician may receive a per diem rate or an hourly rate. As with full-time physicians, there are various ways to formulate a part-time physician’s compensation, and the method used should be explicitly outlined in the physician’s employment or independent contractor agreement.

Retaining part-time hospitalists is an increasingly attractive option for physician practices and hospitals, and part-time work is an increasingly attractive option for physicians.

Benefit plans and arrangements (such as health, dental, vision, retirement plan, pension plan, disability coverage, life insurance, etc.) frequently are provided to employees and infrequently provided to independent contractors. Whether a physician who is working part time will receive benefits will vary from employer to employer. A threshold issue, however, is whether a part-time worker is even eligible to receive certain benefits. Many health, dental, and vision plans require employees to work a minimum of 30 hours a week on a regular basis, thus excluding part-time employees who work fewer hours. For retirement and pension plans, employees typically must work a minimum of 1,000 hours per year to be eligible to participate. Even if a hospitalist’s employment agreement provides that the hospitalist may receive benefits from the employer, the agreement may also provide that such a provision is subject to the terms and conditions of the particular benefit plans or arrangements.

Professional Liability (Malpractice) Insurance

While some practices or hospitals pay for a part-time physician’s malpractice insurance premiums, many shift some or all of these costs to the physician. Many insurance providers offer malpractice plans for physicians practicing part time, with reduced premiums and reduced coverage.

When negotiating a compensation package, payment for malpractice insurance should be considered. A physician also must be aware of what is excluded from coverage. For example, if a physician works part time with Hospital A and part time with Hospital B, and Hospital A provides malpractice coverage for the physician, it cannot be assumed that such coverage will cover the physician’s work with Hospital B. In this case, the physician may need a separate policy for work performed through Hospital B.

Restrictive Covenants

Although a physician might only be employed on a part-time basis, the employer might nevertheless want to protect itself by including restrictive covenants (i.e. noncompetition and nonsolicitation clauses) in the physician’s employment agreement. A part-time physician must be careful that the restrictive covenants do not jeopardize their other career objectives. For example, in the example described above with the physician working part time for both Hospital A and Hospital B, a noncompetition clause in the physician’s employment agreement with Hospital A could prohibit the physician from working at another hospital, including Hospital B.

Retaining part-time hospitalists is an increasingly attractive option for physician practices and hospitals, and part-time work is an increasingly attractive option for physicians. The items described above are just a few of the provisions that are unique to the part-time physician relationship that should be reflected in the physician’s employment or independent contractor agreement.

Steven M. Harris, Esq., is a nationally recognized healthcare attorney and a member of the law firm McDonald Hopkins LLC in Chicago. Write to him at [email protected].

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