disability insurance for doctors

The physician-owned practice is alive and well. Despite the recent growth of larger medical practices, many doctors still work in small practices that they own by themselves or with physician partners. These doctors are also business owners, so they have additional insurance needs. When looking at disability insurance for doctors, don’t forget about the need for business overhead expense insurance.

Shifts in Medical Practices

The American Medical Association (AMA) says that there has been a shift away from physician-owned practices and toward larger medical practices in recent years, and the data supports this conclusion. In fact, the 2020 AMA survey showed that the percentage of doctors working in physician-owned practices dropped below 50% for the first time since AMA started collecting this data in 2012.

This may seem alarming to anyone selling insurance to physician-owned practices, but you can relax. Physician-owned practices are still extremely common; they’re just slightly less common than they used to be. AMA says 49.1% of patient care physicians worked in physician-owned practices in 2020. That is less than half, but only by a hair. Furthermore, AMA says that 53.7% of physicians – more than half – still work in small practices with 10 or fewer physicians.

It’s impossible to predict with certainty what the future will hold. It’s possible that this trend will continue, and the number of physician-owned practices will slowly shrink. It’s also possible that the trend will reverse. Regardless, there are plenty of physician-owned practices now, and if they have any hope of sticking around, they need insurance coverage.

Help Protect Physician-Owned Practices

Imagine there’s a small physician-owned practice, owned by a single doctor. The doctor experiences a heart attack and needs to take time off work to focus on recovery. Patient appointments have to be canceled, and the practice is not bringing in any revenue. At the same time, the operating costs don’t stop. The doctor still owes the monthly rent, as well as costs related to the expensive medical equipment at the practice.

Even worse, the doctor has several employees, and he doesn’t know how he’s going to cover their benefits and salaries. Physician-owned practices typically employ other workers who help keep the place operational. According to the 2021 Staff Salary Survey from Physicians Practice, 61% of practices employ at least one nurse, 88% of practices employ at least one medical assistant, 97% of practices employ at least one front-desk worker and 85% of practices employ at least one biller or coder. Each of these workers is depending on a regular paycheck, and the doctor is also responsible for payroll taxes and employee benefits.

If the doctor can’t keep up with these costs, the practice may need to close. All of the workers will have to look for new jobs, and there will be one fewer physician-owned practice in the country.

Business overhead expense insurance can help prevent this outcome.

How BOE Insurance Helps Physician-Owned Practices

Business overhead expense (BOE) insurance provides critical coverage for small business owners, including physicians who own their own practice.

If the business owner experiences a disability, the BOE policy can cover eligible operating expenses, including employee salaries, payroll taxes, insurance premiums for employee benefits, rent, utilities, property taxes, office equipment expenses, accounting fees and more.

The benefit period usually lasts for up to 12 to 24 months. This gives the business owner a year or two to either recover and return to work or figure out another plan for business.

The Social Security Administration says that around one in four of today’s 20-year-olds will experience a disability before turning 67. For small physician-owned practices, a disability can prove disastrous. BOE coverage can help keep these practices from having to close due to disability.

Coverage Needs Are Increasing

Running a physician-owned practice isn’t getting any cheaper. High inflation means that everything has become more expensive, from rent to equipment.

Amid staffing shortages, employers are also having to pay higher salaries and provide more benefits to attract talented workers. According to the 2021 Staff Salary Survey, 44% of practices expect their staffing level to increase, but 53% say that finding qualified staff is the biggest staffing challenge. Many practices are planning to give raises, including 50% of practices that say they’re planning to give cost-of-living raises, and 55% that say they’re giving performance or merit raises. Among the practices that are not planning to give raises, 37% cite uncertainty about the economy as the reason.

As costs increase, small practices are feeling the financial pressure. These practices may have exhausted any reserve funds they had during the COVID-19 pandemic. If a disability were to strike now, it could be ruinous – unless business overhead expense insurance is in place.

Help Doctors Protect Themselves and Their Practices

Doctors are considered a prime market for individual disability insurance, and for good reason. Individual disability insurance for doctors provides the paycheck protection that doctors need. However, individual disability insurance doesn’t help the practice itself. When securing disability insurance, doctors who own their own practice should also consider their business overhead expense needs. Learn more about disability insurance for business owners.


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