Types of Medical Practices

Physicians have a number of options when choosing the type of medical practice in which they wish to participate. Choices include sole proprietorships, partnerships, and corporations. All types of medical practices are likely to employ medical assistants.

Sole Proprietorship

Historically, physicians worked as sole proprietors within their own offices. They were in charge of their practices and could operate them as they wished. Being self-employed, they enjoyed a certain level of independence and flexibility. Patients liked knowing that they could count on seeing their own doctors and appreciated the personal nature of health care. As sole proprietors, physicians were the owners of their practices and could employ whomever they wished, even other physicians. However, sole proprietorships are becoming less common as physicians these days are more aware of the disadvantages in this type of arrangement. Such disadvantages include potential liability for acts of all employees, long work hours, and being on call virtually 24 hours per day, 7 days per week.
Furthermore, physicians must bear all financial responsibility of the practice and, unless they sell them to someone else, their practices end when they retire or die. In recent years, many physicians began joining together to form associate practices. This arrangement allows them to enjoy the benefits of a sole proprietorship while sharing resources, such as office space, equipment, and employees. While associate practices help alleviate the burden of a sole proprietorship somewhat, physicians still must deal with issues of liability, long hours, and continuous on-call time.


Because sole proprietorships and associate practices require such a substantial commitment, many physicians are finding partnerships to be more attractive. A medical partnership is created when two or more physicians create a legal agreement that specifies the rights, obligations, and responsibilities of each.There are many advantages of a partnership, including an increased potential profit because physicians share expenses and pool such resources as office space, equipment, employees, and insurance. They can also enjoy more freedom because they alternate taking calls for all patients in the practice. The main disadvantage of a partnership is the potential liability for a partner’s debts. A partnership with three or more licensed, full-time physicians is known as a group practice.


A corporation is an artificially created body with legal and business status that is regulated by the state. The corporation exists independently of shareholders or employees and has a continuous life that does not end or change with a change in the shareholders or employees. Physicians in the corporation are usually shareholders as well as employees of the corporation. This status provides them with significant income and tax advantages, along with attractive benefit packages. Furthermore, as professional employees of the corporation, they are not liable for the acts or debts of other employees of the corporation. Therefore, their personal assets are not in jeopardy if others are involved in litigation. A health maintenance organization (HMO) is one type of a corporation in which physicians commonly practice.