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Systemic collusion: How big business and government herd physicians into traditional employment

Tod Stillson, MD
Physician
September 15, 2024
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As a physician, I spent years training to care for patients, only to realize by the time I completed my education that I wasn’t truly in control of my career. Like so many of us, I had been funneled into a rigid system that pushes physicians toward employment with large health care systems rather than allowing for independent practice or entrepreneurial ventures. It felt like I had been herded—herded by the very institutions that trained me, by the corporations that employed me, by a government that prefers high-income earners like us to be taxed as W-2 employees, and by the lack of business education that left me ill-prepared to explore other options.

This isn’t an accident. It’s systemic. The forces that shape our careers aren’t just coincidental; they are designed to maintain a status quo that profits from keeping physicians tied to traditional employment. Let’s take a closer look at the four major forces that have influenced me—and so many others: the big business of medical education and health care, government policies that push physicians into W-2 jobs, the tax system that favors traditional employment, and the lack of business education that makes us fear stepping into self-employment.

Force 1: the big business of medical education

I still remember the moment I realized just how much debt I was accumulating during medical school. It weighed on me every step of the way. The cost of medical education has soared in recent decades, leaving many of us with staggering student loans by the time we graduate. When I finished, I carried a substantial debt, and I wasn’t alone. That kind of financial burden exerts enormous pressure, influencing career choices in subtle yet powerful ways.

The debt load made me, like many of my peers, think about prioritizing higher-paying specialties over pursuing the fields I truly loved. It wasn’t just about following my passion for family medicine—it was about survival. The thought of repaying my loans became a constant presence in my decision-making. We’re told early on that financial security comes from stable, high-paying jobs in large health care systems, and it’s easy to believe that when you’re staring at a mountain of debt.

The influence of prestige also played a role. In medical school, I frequently heard the sentiment that “I was too smart to be a family doctor,” as if my desire to practice rural family medicine was somehow beneath me. There’s an implicit hierarchy in medicine, and it’s reinforced by the competitive nature of medical education. The emphasis on certain specialties—those perceived as more prestigious or lucrative—shaped my perceptions of success, and it’s shaped yours, too. We’ve been conditioned to equate our worth with the specialty we choose and the paycheck we earn, which leads many of us directly into the arms of large health care systems that offer the security of a steady paycheck and benefits.

Force 2: the government’s push for W-2 employment

Another force at play that I didn’t fully grasp until later in my career was the government’s interest in keeping physicians employed as W-2 earners. There’s a reason for this: it’s about maximizing tax revenue. High-income earners like us are much easier to tax when we’re employed by someone else. As W-2 employees, we have little say in how our taxes are managed. Our income is subject to automatic withholding, and we don’t have access to the same tax optimization strategies available to independent contractors or self-employed physicians.

When I started learning about the difference between W-2 and 1099 employment, it was eye-opening. As a 1099 independent contractor, there are numerous deductions and strategies that allow you to keep more of your income. You can write off business expenses, optimize retirement contributions, and use other legal strategies to reduce your tax burden—options that are much more limited when you’re a W-2 employee.

But the system is designed to push us into those W-2 jobs. It’s more convenient for the government because it ensures a steady stream of tax revenue. Physicians who venture into self-employment or independent practice often have to navigate a complex web of tax laws and business structures to truly benefit from these strategies, and without business education, most of us never even realize that option exists.

Force 3: the lack of business education

And that leads to the third, and perhaps most insidious, force: the lack of business education in medical training. Throughout medical school and residency, we are trained to diagnose and treat patients, but no one ever teaches us how to run a business. It wasn’t until I was well into my career that I realized how ill-equipped I was to even consider starting my own micro-corporation based on my professional services. And I know many of you feel the same.

The absence of business education creates a mindset that starting a practice or becoming self-employed is too risky, too complicated, and not worth the effort. I used to think that. It seemed much safer to take a job with a large health care system, where I didn’t have to worry about overhead, billing, or managing staff. But that safety came at a cost: my autonomy.

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Looking back, I now see that the lack of business literacy among physicians is not just a personal barrier, but a systemic one. We’re not taught how to navigate the business side of medicine because the system benefits from our ignorance. Large health care corporations rely on us to remain employees, and without the knowledge or confidence to step out on our own, we’re more likely to stay in their ranks.

Force 4: corporate consolidation in health care

Once I finished residency, I was confronted with the fourth force: the corporate consolidation of health care. The health care system, increasingly dominated by large hospital systems, insurance companies, and managed care organizations, has made it nearly impossible for physicians to practice independently. The narrative is that if we want to practice medicine, we need to do it within the framework of these large institutions. I had seen it happen to colleagues who tried to start their own practices only to be swallowed by the administrative burdens, regulatory requirements, and reimbursement challenges.

These corporations prioritize profit, and in doing so, they often compromise our ability to provide patient-centered care. Administrative tasks, productivity metrics, and insurance reimbursement models dictate how we practice, and more often than not, we find ourselves constrained by forces outside our control.

After years of training in such environments, I, like many others, was herded into traditional employment. The idea of venturing into the marketplace as a self-employed physician seemed too risky. It was a narrative I had internalized after nearly a decade of medical training, reinforced by the very system that benefits from my labor.

Taking back control

It took me years to realize that there was another path—one where I could regain control of my career, my income, and my life. But it required unlearning the conditioning I had received throughout my medical education and embracing the reality that the forces that had shaped my career choices didn’t have to continue dictating them.

We are not powerless. By educating ourselves about business, understanding how to leverage the tax system, and recognizing the corporate and governmental forces at play, we can break free from the herd. The marketplace is vast, and there are opportunities for physicians to thrive as self-employed practitioners. Yes, it requires effort, learning, and a willingness to take risks, but the rewards—both financially and personally—are worth it.

It’s time we stop allowing these external forces to dictate our professional lives. By reclaiming our autonomy, we can create careers that are not only financially sustainable but also fulfilling in ways that traditional employment can never offer.

Tod Stillson is a family physician, entrepreneur, and Amazon best-selling author of Doctor Incorporated: Stop the Insanity of Traditional Employment and Preserve Your Professional Autonomy. He can be reached at SimpliMD.  Follow him on Facebook, Instagram, and X @DrInc9, or join his Facebook community for doctors, Every Doctor Is A Business.

Dr. Stillson is the founder of SimpliMD, an exclusive physician community that supports doctors on their journey to micro-business competency through community, courses, content, coaching, and consultation. At SimpliMD, he inspires and informs doctors about the benefits of micro-incorporation through his content and regular blog posts titled The Truth.

Schedule a business consultation meeting with Dr. Stillson to discuss how micro-incorporation can help you.

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Systemic collusion: How big business and government herd physicians into traditional employment
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