Whether you're a resident weighing job offers, a physician considering a career change, or an administrator building an operational model, understanding these structures matters. This article breaks down the five main types of medical practices, how they differ, and how to pick the right one.
TL;DR
- Five practice types: private/solo, group, hospital-based/employed, HMO, and locum tenens
- Tradeoffs center on autonomy, income structure, work-life balance, and administrative load
- Billing ownership differs: solo/group practices carry full RCM load; employed and HMO roles shift much of it to the organization
- Match the model to your risk tolerance, income needs, and lifestyle—not just the highest headline pay
What Are Medical Practices?
A medical practice is an organized setting where licensed providers deliver patient care under a specific ownership or employment structure. Practices vary by size, specialty focus, and how administrative work gets handled. Choosing a practice type is a clinical, business, and employment decision at once. Practice sizes typically fall into four categories:
- Solo: 1 provider
- Small: 2–5 providers
- Mid-size: 6–15 providers
- Large: 15+ providers The category you choose determines who owns the business, who bears the financial risk, and who handles the paperwork when a claim gets denied.
Why Does Practice Type Matter?
Your practice type directly shapes your autonomy, income potential, and daily workflow. It also determines how much administrative burden lands on your desk.
According to the American Medical Association, private practice ownership has declined 18 percentage points since 2012, with payment pressures, resource costs, and regulatory requirements cited as key drivers. That decline reflects a hard reality: running an independent practice carries real administrative weight.
Billing complexity varies dramatically by structure. A solo psychiatrist juggling billing alongside patient care is a different situation than a hospital-employed physician backed by a dedicated billing department.
Consider this real-world example: a solo psychiatry practice owner was spending 15+ hours per week on billing tasks instead of seeing patients. After outsourcing that work, collections rose 28% and those hours returned to patient care.
Specialized billing partners like Persistex support solo and group practices that lack in-house teams to manage denied claims and slow reimbursements.
The 5 Types of Medical Practices
No single practice type suits every physician. Each balances autonomy, income stability, and administrative demands differently, and these differences directly affect how billing and coding get handled internally or outsourced.
Private (Solo) Practice
A physician owns and operates the practice independently, with minimal staff and full control over clinical and business decisions.
How it differs: Full ownership and control, versus shared decision-making in group models. AMA data shows only 11.9% of physicians were in solo practice in 2024, down from 18.4% in 2012.
Best suited for: Physicians who want maximum independence and closer patient relationships.
- Strengths: Full autonomy, flexible scheduling, direct patient relationships
- Limitations: Longer hours, full financial risk, heavier billing burden without dedicated staff
Group Practice
Two or more physicians share a facility, staff, and revenue under agreed terms. Groups can be single-specialty or multispecialty.
How it differs: Shared resources and decision-making replace solo ownership. AMA reports 37.2% of physicians work in single-specialty groups and 27.8% in multispecialty groups as of 2024.
Best suited for: Physicians wanting reduced hours and built-in coverage while keeping some independence.
- Strengths: Shared on-call duties, greater working capital, less individual financial risk
- Limitations: Less individual freedom, group consensus needed on billing and business decisions
Hospital-Based/Employed Practice
Physicians are employed by a hospital system, working in hospital-owned clinics or departments.
How it differs: A salaried employment structure replaces ownership-based models entirely. This category has grown fast: 34.5% of physicians worked in hospital-owned practices in 2024 (up from 23.4% in 2012), and 47.0% were either hospital-owned or directly hospital-employed.
Best suited for: Physicians who prioritize income stability and minimal business risk.
- Strengths: Predictable salary, steady referral network, low legal/business risk
- Limitations: Reduced autonomy, employer-driven policies, mandatory committee participation
HMO-Based Practice
Physicians work within a health maintenance organization structure focused on managed, cost-controlled care. An HMO is primarily a health-plan and network arrangement, not strictly an ownership category, per HealthCare.gov's plan-type definitions. A physician can be employed by or contracted with an HMO.
How it differs: Care follows organizational guidelines rather than fully independent clinical judgment.
Best suited for: Physicians who prefer stable hours and salary with less business responsibility.
- Strengths: Regular schedule, reduced paperwork, salary plus productivity or satisfaction bonuses
- Limitations: Limited clinical autonomy, required adherence to organizational care guidelines
Locum Tenens Practice
Physicians take temporary assignments, filling staffing gaps at various locations rather than settling into one permanent role. Assignments typically run from a few days to six months or longer.
How it differs: Work is temporary and assignment-based instead of a permanent role. According to CHG's 2025 State of Locum Tenens Report, 8% of physicians (roughly 57,000) were working locum tenens as of May 2024, with another 27% having done so previously.
Best suited for: Physicians seeking variety, flexible schedules, and exposure to different practice settings.
- Strengths: Higher pay potential, flexibility, exposure to different regions and specialties
- Limitations: Inconsistent work, lack of standard benefits, frequent relocation
How to Choose the Right Type of Medical Practice
The right choice depends on your personal priorities, not what's trending among your peers. Weigh these factors carefully:
- Autonomy vs. stability — Do you want to make every decision yourself, or would you rather trade some control for a predictable paycheck?
- Income structure and risk tolerance — Ownership models carry more financial upside and downside. Employment models smooth out the variance.
- Administrative and billing workload — Are you willing to manage claims, denials, and coding yourself, or would you rather hand that off entirely?
- Long-term career goals and lifestyle needs — A physician planning a family may prioritize different things than one early in a locum-focused career.
Regardless of which type you choose, billing doesn't manage itself. Solo and group practices often see in-house billing eat into clinical hours and leave revenue uncollected. A specialized partner like Persistex can cut that administrative load and improve collections—with no long-term contract required.
One multi-provider behavioral health clinic that partnered with Persistex cut denial rates from a 35% baseline, added $85,000 in monthly revenue, and dropped average A/R to 22 days.
Conclusion
Medical practices come in five distinct models, each offering a different trade-off between autonomy, income, and administrative demands. Solo practice gives you control but adds risk. Hospital employment gives you stability but limits independence. HMOs, group practices, and locum tenens each land somewhere along that spectrum.
Understanding these differences helps physicians and administrators choose the structure that matches their goals for control, income, and workload. Whichever model you choose, strong revenue cycle management keeps cash flow predictable and the practice sustainable—whether you handle billing in-house or partner with a specialized RCM team.
Frequently Asked Questions
What are medical practices?
Medical practices are organized care settings where licensed providers deliver patient care under a specific ownership or employment structure. They vary by size, specialty, and how administrative work is handled.
What are the five types of medical practice?
The five types are private (solo), group, hospital-based/employed, HMO, and locum tenens. Each differs in autonomy, income structure, and administrative burden.
What does type of practice mean?
It refers to the ownership, employment, and operational structure under which a physician practices. That can mean solo ownership, shared group ownership, hospital employment, or a managed-care arrangement.
What are the different types of doctors?
That question usually refers to medical specialties, like cardiology or pediatrics, which is different from practice type. This article focuses on the business and employment structure under which any specialty can operate.
What is a doctor's group called?
It's called a "group practice," where two or more physicians share facilities, staff, and revenue. Group practices can be single-specialty or multispecialty.
What are best practices in healthcare?
"Best practices" refers to standardized, evidence-based approaches to clinical care and operations. This is a separate concept from practice "type," which describes ownership and employment structure.
