Transitioning From Employed Physician to Owner in the Same Community

The hospital is not your friend when you decide to leave. Especially not if you’re opening your own practice two miles down the road.

If you’re an employed physician who wants to become an owner in the same community, you’re stepping into one of the trickiest career transitions in medicine. Not because you cannot do it. Because there are a dozen ways to blow it: legally, financially, politically, reputationally.

I’m going to walk you through what actually matters if you’re in this specific situation: currently employed, planning (or strongly considering) opening your own shop in the same geographic area.

Forget vague “follow your passion” fluff. This is about contracts, referrals, timing, and surviving the political blowback.

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Step 1: Pull Your Contract and Look for the Landmines

Before you talk to anyone, before you look at space, before you call a lawyer: read your employment contract. Then read it again.

There are four clauses that control how ugly or smooth this transition will be:

1. Non-compete (restrictive covenant)
2. Non-solicitation (patients, staff, referral sources)
3. Notice and termination rules
4. “Moonlighting” or outside practice clauses

You’re looking for specific, concrete details, not general vibes.

Clause Type	What to Find Exactly
Non-compete	Radius (miles) and duration
Non-solicitation	Patients, staff, referral scope
Notice Period	Days required and how to give it
Tail Coverage	Who pays, when, and for what

If your contract has a non-compete:
– What’s the radius? 5 miles? 15? “Within the health system’s service area” (this one is dirty and vague; discuss with a lawyer).
– How long? 6 months is one thing. 2 years is another.
– What’s the trigger? Does it apply if they terminate you without cause, or only if you leave?

If there’s a non-solicitation clause:
– Does it say you can’t “directly or indirectly solicit” patients? That phrase will matter when you’re tempted to email half your panel when you leave.
– Does it include staff? That affects whether you can recruit your favorite MA or office manager.
– Does it mention “referral sources”? That can complicate your relationships with community docs.

Tail coverage:
– Is malpractice “claims-made” with required tail after you leave?
– Who pays for tail if you resign? Often it’s you. I’ve seen people write $60–$120k checks because they didn’t think about this early enough.

You are not looking for “is this fair?” You’re looking for: “What’s the actual battlefield I’m standing on?”

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Step 2: Get a Healthcare Attorney Before You Open Your Mouth

You’re not calling your cousin the divorce lawyer. You need someone who lives in medical employment and practice law, in your state.

What you want from that attorney:

1. A real read on how enforceable your non-compete is in your jurisdiction. Not theory—local reality. Some states basically do not enforce physician non-competes, others absolutely do.
2. A strategy, not just a warning. “You’re probably fine if you set up 6.5 miles away and avoid direct patient solicitation for 12 months” is useful. “This is risky, good luck” is not.
3. Help planning the sequence: when to resign, when to file your LLC/PC, how to avoid accusations of disloyal competition.

Do not cheap out here. That $1–2k paid now may save you months of lost income or a full-blown lawsuit later.

And yes, you can absolutely send them your contract before you’ve 100% decided to leave. That’s part of deciding.

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Step 3: Decide Your Exit Timeline Like It’s a Procedure

You’re effectively performing a high-risk clinical procedure on your own career. It needs a plan.

There are three overlapping timelines:

1. Legal/contractual – notice period, non-compete timing, tail coverage
2. Operational – build-out, credentialing, hiring, equipment
3. Financial – cash reserves, loans, when revenue will realistically start

You want them aligned so you are not sitting at home for 6 months, burning savings, because you resigned too early and your build-out is delayed.

Typical Private Practice Launch Timeline (Months Relative to Last Day Employed)

Category	Legal/Planning	Build/Operations	Revenue
-9	1	0	0
-6	2	1	0
-3	3	2	1
0	4	3	2
+3	4	4	3
+6	4	4	4

As a rough, realistic pattern (for outpatient specialties):

– 9–12 months before leaving: start talking to a lawyer, run numbers, quietly explore space.
– 6–9 months before: form the legal entity, apply for tax IDs, start payer credentialing.
– 3–6 months before: sign a lease, start build-out or fit-out, order equipment.
– 60–90 days before: give notice if required. This depends heavily on how vindictive your employer is likely to be.

People get burned by assuming they can be “up and seeing patients” in 60 days. You won’t. Credentialing alone can eat 90–180 days.

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Step 4: Pick a Business Model That Actually Works in Your Market

You’re already in the community. That’s a massive advantage if you use it intelligently instead of just doing a worse version of the hospital’s clinic.

Ask yourself plainly: what problem are you solving that your current employer is not?

Examples that often work:

– Primary care: shorter visits, better access, same-week appointments, continuity with you instead of random APCs. Possibly direct primary care (DPC) if your market has the right demographics.
– Ortho/ENT/derm: faster scheduling, procedures that are cheaper than hospital-based, cash bundles for certain services.
– Psych: access, of course, but also telehealth, evening hours, better follow-up.

The point: you don’t leave to recreate the same bureaucracy in smaller square footage.

Talk to:

– Your current patients (informally, in general terms, before you announce anything): what frustrates them about the current system?
– Referring physicians in the community: what do they wish existed? Faster consults? Easier to reach you directly?

This is where your current job gives you real intel. Use it.

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Step 5: Plan Your Transition Without Violating Your Contract

You’re walking a tightrope here. You’re allowed to plan your future. You’re not allowed to actively compete with your employer while you’re being paid by them.

Lines you cannot cross (in most contracts and jurisdictions):

– Using the hospital’s patient list to market your future practice.
– Printing labels of your panel to mail announcements later.
– Asking staff, while on the hospital clock, to join your new practice.
– Taking templates, forms, protocols, or proprietary materials that belong to the hospital.

What you can usually do:

– Do your planning at home, on your own time, with your own devices.
– Form a legal entity, get a tax ID, sign leases.
– Quietly meet with banks, contractors, consultants.
– Build a generic professional website and online presence (without “I’m opening 2 miles from St. Mary’s on June 1” while still employed, if you want to avoid drama).

There’s also the human side: word will leak. A vendor you met will mention something to a hospital administrator. A colleague will “confide” your plans to leadership. Assume everyone will eventually know—so don’t lie in ways that blow up later.

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Step 6: Control the Exit Conversation With Your Employer

How you resign sets the tone for everything that follows: references, non-compete enforcement, how your departure is messaged to patients.

You want to go in with:

– A simple, practiced script
– Clear knowledge of your contract terms
– Zero emotional venting

Something like:

“I’ve decided to pursue an independent practice opportunity in the area. My last day will be [date] per the notice requirement in my contract. I’m committed to a smooth transition for patients and colleagues.”

You don’t need to explain your business plan. You don’t need to detail your grievances with administration. That stuff feels satisfying in the moment and costs you leverage.

Expect:

– They may walk you out the same day and pay out your notice, especially if they see you as a competitive threat.
– They may restrict your schedule or block access to some systems.
– They may start actively recruiting your replacement within days.

Plan for the worst case: that your clinical income could stop the day you give notice, even if technically there’s a 90-day period.

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Step 7: Move Your Panel Without “Stealing” Patients

This is the tightrope everyone worries about.

Reality check: patients are not property. They can follow you wherever they want. What you’re avoiding is soliciting them in a way that violates your contract.

You need three layers here:

1. Legal reality (what the contract and state law say)
2. Employer policy (what they’ll claim they can enforce)
3. Practical behavior (what you actually do and document)

Common, relatively safe patterns I’ve seen:

– When patients ask you directly in the months before you leave: “Are you staying here?” you can usually say, “I’ll be practicing in the community. If you contact the office after [date], they can share updated contact information for me or help with transfer.” (Run exact wording by your lawyer.)
– Once you’re gone, many employers will, under pressure from patients, give out your new practice info when requested. They don’t have to enthusiastically promote you, but they also don’t want angry patients.
– You set up a website and Google Business Profile that’s easy to find if someone searches your name and city.

What you avoid:

– Mail-merge letters to your entire panel, using hospital data, saying “Come with me to my new practice.”
– Front-desk scripts at your new place that say, “We’re calling all Dr. X’s old patients to invite them over” if that relies on unauthorized lists.

Have your attorney approve any written communication you send broadly, like a “practice announcement” letter.

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Step 8: Build Your Referral and Reputation Strategy in the Same Town

You’re not moving states. You’re operating in the same pond. That’s both a blessing and a nightmare.

The blessing: people already know your clinical work. Some will be thrilled you’re independent.
The nightmare: hospital leadership may quietly smear you as “left because they didn’t play well with others” or “had performance issues.”

Your job: own your story before others do.

With referring docs (PCPs, specialists, etc.):

– Once you’ve resigned and it’s public, schedule short visits or calls:
“I’m opening a small independent practice so I can spend more time with each patient and offer faster access. I’d be grateful for your support and any feedback on what would be most helpful for you and your patients.”
– Bring something concrete: cell number for clinical questions, a one-page referral sheet, typical wait time for consults.

With patients (once you’re legally clear):

– Patient-facing website explaining your philosophy and what’s different from Big System.
– Clear self-pay pricing (especially for procedures) if you can undercut hospital facility fees.
– Online scheduling if feasible. People love not having to call a call center.

With the community:

– Local talks (library, senior centers, employer wellness events).
– A small but consistent online presence: a monthly article or video answering common questions in your field.

Do not disappear for six months and then wonder why your panel didn’t magically reappear.

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Step 9: Financial Reality: Cash, Not Optimism, Pays Bills

You’re going to hear a lot of fantasy numbers from other physicians:

“I was full in 3 months.”
“I replaced my salary in 6.”

Sometimes true. Often, revisionist memory.

A more grounded starting point:

– Aim to have 6–12 months of personal living expenses saved or otherwise covered.
– Expect 3–6 months of reduced or zero income after leaving until things ramp.
– Budget for: build-out or build-in, rent, staff wages, EMR, malpractice, lawyer, accountant, equipment, supplies, marketing.

Sample First-Year Private Practice Budget Categories

Category	Value
Staff	30
Rent/Utilities	20
Malpractice/Insurance	10
EMR/Billing	10
Equipment/Supplies	20
Marketing/Legal/Other	10

Run worst-case numbers:

– What if revenue is 50% of your projections for the first 6–9 months?
– Can you still keep the doors open and not lose your house?

Banks will often lend to physicians fairly easily, especially with a decent prior income, but debt doesn’t fix a broken business model. Run numbers like a grown-up.

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Step 10: Staff – Who You Take, Who You Don’t

You’re going to be tempted to bring your favorite MA, nurse, or front-desk person with you. Sometimes that’s smart. Sometimes it triggers a nuclear response from your employer.

Check:

– Does your contract include a staff non-solicitation clause? Many do: you cannot “directly or indirectly induce” employees to leave the employer for a set period.
– State law: some states are more hostile to these clauses, but do not assume.

Typical safer pattern:

– You do not, while employed, say: “I’m leaving. Come with me.”
– After you’ve left and word is public, you post or share openings for your new practice on neutral platforms (job boards, LinkedIn, etc.).
– If people independently apply, you discuss with your attorney whether hiring them is likely to trigger a fight.

From a practical standpoint, at least one experienced front-desk/office manager who knows the local payer and referral landscape is gold. But not if their presence guarantees legal drama.

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Step 11: Protect Your Sanity and Your Clinical Standards

You’re not leaving just to torture yourself with spreadsheets. But you are signing up for 12–24 months of being uncomfortable and stretched.

Two ways physicians blow this transition:

1. They try to stay emotionally attached to the hospital system’s approval, constantly worried about “what will they think?” They’ll think you’re a threat. Accept it.
2. They let the business stress pull them into cutting clinical corners or overbooking to survive.

You need:

– A clear line you don’t cross clinically: visit lengths, documentation, when you say no to unsafe volume.
– A small support network of people who actually get it: another independent doc, maybe a mentor who’s done this.

And you remind yourself: the whole point of this exercise is autonomy and better care. If you recreate the same misery you left, just with your name on the lease, what was the point?

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Practical Example: How This Looks in Real Life

Let me give you a composited scenario that’s very close to what I’ve seen multiple times.

You’re a 3-year employed internist at a large health system in a mid-sized city. Panel is full, you’re booked 3–4 months out, 15-minute slots, constant RVU pressure. You decide you’re done.

Month -12: You pull your contract, highlight the non-compete (10 miles, 1 year), non-solicit (patients + staff, 1 year), and see that you owe tail if you resign. You call a healthcare attorney. They tell you: non-compete is enforceable but courts usually like concrete geography. You could safely set up 11–12 miles away, still technically “in the community” but not in the same neighborhood. Tail is $45k based on your malpractice carrier.

Month -10: You and your spouse look at the map. That 11-mile ring still includes a fast-growing suburb that has terrible access to primary care. You start running numbers on a DPC model vs. insurance-based. You talk to 2 other independent docs in town.

Month -8: You form an LLC, get an EIN, open a business bank account. You talk to banks about a line of credit. You start payer applications, knowing they’ll drag.

Month -6: You sign a lease in that suburb, with 6 months free rent during build-out. You select an EMR, get malpractice quotes, talk to a contractor about a minimal build: 3 exam rooms, 1 office, 1 small lab area.

Month -4: You tell your attorney you’re ready. You plan to give 60 days’ notice (your contract requirement), but mentally you’re ready to be walked out immediately.

Month -2: You meet with your medical director and HR: “I’ve decided to pursue an independent practice opportunity in the area. My last day will be [date] per my contract.” They’re not thrilled. They do not walk you out, but they start cutting new patient slots.

Month 0: Your last day. Hospital sends a bland letter to your panel: “Dr. X is no longer with [System]. For continuity, please schedule with…” Patients start googling you. Your clean new website and Google Business Profile show up.

Month +1: Your space is ready, basic furnishings in, staff of 2: front desk and MA. You’ve kept your expenses lean. A trickle of former patients finds you. Referring docs who liked you start sending more.

Month +6: You’re not at your old income yet, but you’re covering expenses and your schedule is filling. The commute is longer. The control over your day is night and day. Even with the debt and risk, you’re not going back.

That’s how this actually looks when it goes reasonably well.

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Stress and Autonomy Across the Transition

Category	Value
Year -1 (Employed)	40
Exit Year	80
Year +1	60
Year +3	30

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FAQ

1. Should I tell my patients directly that I’m opening a new practice?

You have to tread carefully. Direct broad outreach using employer resources (like mailing your whole panel using hospital data) can violate non-solicitation and trigger legal trouble. What’s usually safer: answer individual questions honestly when they ask, have a clear professional web presence, and let patients find you. Any mass communication (letters, email lists, social media blasts) should be drafted or at least cleared by your attorney based on your contract and state law.

2. Is it worth trying to negotiate my non-compete before I leave?

Sometimes. If your employer really wants to avoid a messy departure or you’re going to an underserved part of town, they may agree to reduce radius or duration, especially if you give a longer notice or help recruit your replacement. But do not expect miracles. Negotiation works best if you start early and your attorney frames it as a win-win: smoother transition, less disruption for patients, you not opening right next door.

3. Can I start my new practice part-time while still employed?

Often no, at least not in the same geographic area. Most contracts forbid outside clinical work without written approval, especially if it’s competitive. Could you do a tiny telehealth side practice in a totally different state or market? Sometimes. But starting a local brick-and-mortar “on the side” while employed is asking for immediate conflict and probably a fast termination. This is exactly the kind of thing you run by your lawyer before you test the waters.

4. How do I know if my market can support another independent practice?

You’re already sitting on the data: wait times in your system, how many patients you can’t fit in, how often you’re told “we have no appointments for 3 months.” On top of that, look at: number of competitors in a 10–15 mile radius, demographic trends (population growth, employers moving in), insurance mix (is there enough commercial to sustain your model, or do you need lean operations for a Medicaid-heavy panel?). Talk to local independent docs and even honest referring physicians. If everyone is booked out and complaining about access, there’s probably room for you—if you run it smartly.

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The jump from employed to owner in the same community is risky, but not reckless if you do it right.

Three core things to keep front and center: know your contract and get real legal advice, plan your exit and launch timelines like a serious project, and own your story with patients and colleagues before the hospital writes it for you.