Author: SmartMoneyMD

How to save money while living in New York City

Posted on by SmartMoneyMD

Most of my readers do not live in high cost of living (HCOL) cities. The financially savvy crowd typically has already done their homework and know all about geographical arbitrage. A doctor in the Bay Area might not even be able to swing a two-bedroom apartment for less than $3000 a month (more like $4500). Guess where all of your salary is going towards if you life there? For $3000 a month, you can get a McMansion in Indianapolis, with a one-acre lot to boot.

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Unfortunately, not all of us have that much freedom. Many doctors are going to be “stuck” living in a HCOL city due to family ties, specialization, or hubris. Hey, Northern California is nice.  You won’t find strawberries better anywhere else in the world.  Who cares if there are droughts, mudslides, and earthquakes? ?

Likewise, there are many doctors in the New York area.  This place is crazy expensive.  I remember hearing some statistic that almost a quarter of all doctors in the United States have journeyed through New York City or are living in one of the boroughs. I suppose that it is a reasonable number due to the dense population and high number of hospitals in the region. For this reason, many of you readers might end up living in the NYC area at some point during your career. Here are some tips to keep more of your paycheck in your bank account while living in the Big Apple:

Rent  

By far, the biggest expense for most people in NYC is the cost of rent or owning. There is almost no real way to cut costs since the real estate market is insane. If you choose to live in the city, getting a roommate may be the most economical choice. You can probably save about 30% on rent with splitting a two-bedroom unit instead of living in a studio or one-bedroom apartment. The cost of rent correlates with vicinity to subway lines and neighborhoods. You have to weigh in safety to cost, as there is obviously crime in the city. One consideration is to live near a college campus where you might be able to get a cheaper rent targeted for students. Rent stabilized units are also an option, although many of these may be in less desirable neighborhoods.  Get on your hospital bulletin boards to look for roommate options and rental opportunities. Sometimes there are professionals who own their apartments but wish to rent them out while they are living in another city training or on a sabbatical.

I assume that most of my readers aren’t in the market to purchase a house/condo/co-op in New York City. If you are flush with money, go on ahead and buy. ? Expect to pay premium HOAs for doormen and building amenities.

Food

There is no Aldi grocery store in NYC, but there are plenty of ethnic neighborhoods with more budgetary grocery items. I wouldn’t necessarily consider these ethnic markets to have a healthier selection of food, but vegetables, fruits, and meats tend to be cheaper in Hispanic markets and markets in Chinatown. The grungier the neighborhood, the cheaper the products.  There are Chinatowns in Manhattan, Flushing, and Brooklyn. Take your pick.  Budgetary Indian groceries can be had in Jackson Heights in Queens.

This Cara Cara orange at $2.99/lb better taste awesome!

If street markets or ethnic groceries aren’t your type, you can still find some deals at expensive grocery stores like Fairway and Whole Foods.  These are the markets where you pay $12 for a dragonfruit, or $24.99/lb for salmon that you can get free from rivers in Alaska (Looking at you, LiveFreeMD!).  Produce at these groceries establishes aren’t allowed to have blemishes. And unfortunately when fruits are stacked together in piles, some of them will be bruised. Every day Fairway will have blemished fruit prepackaged in clear bags for about $1.50 or $2 apiece. Sure, you might only get two apples, a pear, and two oranges, but this haul would have otherwise cost $10!

Restaurants are a dime a dozen in the Big Apple. If you live there, you will find your favorite cheap eats.  Ask Yelp, or your friend who has written thousands of Yelp reviews. We live in a foodie world.  The only tip that I have that I rarely see mentioned is dim sum. Yep. Dim sum is tapas in Chinese form. It is typically eaten as a brunch. Each dish is typically >$4 a piece. If you have dim sum with friends, you will likely rack up a hefty bill. If you are in the market for decent dim sum at the minimal price in NYC, go to Ken’s Asian Taste.  Go there, and report back here on your findings.  You will not be disappointed.

Furniture and consumables

For furniture, Craigslist is your friend. It is not easy moving stuff onto or off of Manhattan island.  New York is also a city with many transient residents.  Use that to your advantage. You can even hire movers on Craigslist.

You might also like: How much of your lifestyle contains used items?

If used items aren’t your cup of tea, then you can seek your wares elsewhere.  There is an IKEA in Brooklyn, and one in New Jersey.  That’s right, right across the river is more normal civilization.  You can find Targets, Walmarts, and grocery stores with normal prices.   Even if you rent a car for the day (or Zipcar/Uber), you can save quite a bit if you are buying bulk.

Hospital

No matter how much you hate going to the hospital for work, it can be your friend.  Take advantage of your hospital perks, like discounted or free meals.  Procell batteries (first person to comment on this, wins a prize!), alcohol swabs, and the break room are your friends.  Use that hospital gym membership, cellphone discounts, and price breaks that your labor affords.

New Yorkers, what other money saving suggestions do you have?

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How much of your lifestyle contains used items?

Posted on by SmartMoneyMD

We all know that we can save a bit of money by buying used items. The prospects of preowned material wealth is good for the environment and is good for your wallet. However, it’s not for everyone. Up until I finished college, I wasn’t truly aware that you could actually buy anything used other than informally through your friends. Call me a lucky kid, but my parents never bought me anything used. Then again, America is the land of incredible wealth and cheap items. A new top at Walmart, whether you believe in foreign labor, was less than $10. Why would anyone ever spring for second-hand clothing for $5 if you could have a new one for marginally more?

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As I’ve gotten more savvy with money, it’s slowly dawned on me that second-hand doesn’t necessarily connote being “cheap”. Buying used is actually cool.

Used car = financially smart.

Aside from your home, the vehicle we drive is considered a big ticket item. Sure, if you’re like Mr. Money Mustache and bike everywhere for transportation, you might not ever need a car. But a car is pretty much necessary for most people who commute to work.

Cars can be expensive. The sticker price of a 2017 AMG SL63 (Surgeon Moe’s weekend car), is close to $150,000! However, a four-year old 2013 AMG SL63 can be had for about $65,000!

 

You might also like: How to burn through a $1 million salary

 

That’s right. After 4 years, this monstrosity is worth less than half its original value! Most cars lose significant value after 4 years regardless of mileage and wear. You can save quite a bit of money by buying a used car, even if you buy a certified preowned vehicle from the dealer.

Conversely if you sell your new car after 4 years, you will have lost quite a bit of money.

Used furniture, can it be a good idea? 

I first purchased used furniture when I was a medical student. Most of it was second hand IKEA furniture. Some of it was actually stylish. Boy, was that furniture cheap. I remember buying a desk for $20 that would have retailed for $150. Were there mites and bedbugs? Not that I could recall. After I graduated, I sold that desk for $20 (I probably could have sold it for more, but you gotta pass along the good karma).

I have since moved on from second-hand furniture, but have wondered whether it is a venue that I should reconsider in the form of estate sales. I once had a coworker who stated that she bought a $10,000 dining set for “only” $1000. Sounds like she got a great deal, if the dining set is worth that much to her. I haven’t actually seen her dining table, but I sometimes wonder if one would derive as much happiness in buying a “new” dining table at a furniture store for $1000. Who knows.

Miscellaneous items in the used market

There are various items that I’ve seen in the used markets that are simply expensive when purchased new. Sporting equipment like golf clubs, hockey gear, ski gear, and scuba gear are some of the items that come to mind. These are items that I actually don’t feel cheap by buying used. Scuba gear is EXPENSIVE. Most of the time this gear is hardly used. More importantly, you might not use it frequently either. I have a coworker who owns her own snowboard, but only hits the slopes once or twice a year. Someone eventually buying her snowboarding gear would get a great deal on equipment that is rarely used.

Who wants to buy a used watch pitcher? J/k, but not really…

Used clothing = bad idea? 

This is a topic that I have mixed feelings about. Justin at Rootofgood purchases used clothing for the family, which is a practical idea for kids who will outgrow their clothing within a few years anyway. Our markets are filled with used clothing. The last time I made a Goodwill drop-off, I was shocked to see department store-sized aisles of used clothing for sale. Some of the used clothing was practically free (<$2), which some of it was overpriced ($19.99 for a Banana Republic top).

I’d imagine that you can get huge savings on used clothing, but is it worth your time to sift through the mix to find something that suits you while saving a few dollars? Would you ever buy used shoes? What about socks? What should one’s threshold even be?

Should an early retiree doctor with $5 million in the bank buy a used shirt for $5 or just spring $15 for a new one?

What is your threshold for buying used items?

The only strategy you’ll need to save money when you’re too busy to price shop

Posted on by SmartMoneyMD

There was recently a poll on Whitecoatinvestor’s forum on number of hours that we work, and I was embarrassed to see that I was actually on the upper end of the spectrum. I will make it a goal in 2017 to figure out a way to cut back hours, although it might also come with a pay cut.

That being said, my limited hours of free time certainly are reflected in my shopping patterns. I’ve got better things to do than to drive around finding the cheapest prices on items and foods that I need. Price shopping also takes mental power and an affinity to knowing what the going prices for items are. Some people have that knack. Some people don’t. Those who are intense price shoppers are the ones that pester their doctors to find the cheapest pharmacy for them as well. I could be one of those people, but I really don’t have the energy at the end of the week.

 

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What do I do? I just shop at Costco and Sam’s Club. That’s right. Wholesale clubs. Some people hate them. The bulk. The crowds. I hate them too, but the stuff is [relatively] cheap with a slight premium twist.

You don’t want to get in the way of these guys wanting to get into the store!

The cost of wholesale clubs.

Membership isn’t free. Many people may not necessarily recuperate the cost of membership either. I’ve seen debates on the validity of purported cost savings at Costco and Sam’s Club.  You buy two pounds of lettuce but a pound and a half rots.  You don’t need 25 lbs of flour but you buy it because it’s “cheap”.  However, if you spend a decent amount on bulk items, you could come out ahead and get a higher quality of product.

A standard membership at Costco is $55 a year. An executive membership is $110 a year, and you get a 2% rebate on all of your purchases. In order to make up the difference between the two tiers, you’d have to spend an extra $2,750 a year at Costco. That is not a small number. However, you also receive a second membership card. This allows other family member to use the same membership. I have an executive membership, and I share my card with a relative who doesn’t live nearby. I doubt that Costco actually cares, since it gives them another means to capture another customer. If you are in the market for a mortgage, you’ll come out ahead from getting better rates over the life of the loan.

The perks of wholesale club membership. 

You don’t necessarily have to buy a ton of stuff to benefit from a wholesale club—you just have to have a general idea how much things cost in general to maximize your savings. For instance, Walmart/Target typically has a 2-pack of Colgate Total (8oz) toothpaste for $5. Costco had a 5-pack for $5! You’re not always going to save this big all of the time, but these little savings add up. Moreover, toothpaste is relatively shelf stable so you won’t have to worry about waste (you have to fill up you McMansion anyway!).

Gas. I violate one of the principle tenets of saving money: living close to your workplace. It just isn’t going to happen for me until I move somewhere else or hang up my hat completely.  I spend a lot on gas. My strategy is simply to save some money when I fill up. Fortunately Costco has great savings at the pump. In general, prices are at least 10c/gal cheaper than anywhere else in my vicinity, so I save approximately $1.40 (oooh, big money) simply by filling up at Costco. With the Costco credit card, you automatically get another 4% back at the pump. If you have the Chase Freedom card, you can save 5% on gas purchases this quarter. I probably fill up once a week, so with the Chase Freedom card at Costco I “save” a little less than $3 on gas when I fill up 14 gallons at $2/gal. Will I get rich on this? No way. But it’s the best that I can do if I have to drive.

Penny pinchers beware.

If you are a price Nazi or a coupon clipper, membership clubs aren’t going to be for you. If you’ve had the luxury to shop midday and midweek, you can find really great deals on food items. I once found a 12oz bag of Gevalia coffee for $1.50 at a local (expensive) grocery store! If you are fortunate enough to have access to an Aldi grocery store (I do not), you can save quite a bit on groceries. That being said, most produce items at wholesale clubs aren’t going to be great deals, although the quality might be higher.

 

You might also like: Stealth wealth revisited: this applies to doctors too!

 

Most busy people are going to consolidate their shopping trips. This might mean going to a wholesale club that’s 20 miles away every three weeks and stocking up on bulk items.  You might even overpay (or pay a competitive price) on some items, but it can save you multiple trips elsewhere. In fact, the more items that your household needs in general the more you will likely benefit from joining a wholesale club.

How much of your monthly budget do you spend at wholesale clubs?

How to burn through a $1 million salary

Posted on by SmartMoneyMD

There is something about tragedies and victories that we all love to witness. The guy who was blessed with the silver spoon but squanders his way into poverty.  Or the waitress who finds her way to become a real estate mogul. Today we’re going to look into the financials of Joe, a surgeon I know who has experienced both the financial successes of being a high-earner and the dangers that come with a huge bankroll. While I don’t have exact numbers in this scenario, the overarching principles still apply.

Ahem. To keep Joe’s anonymity, let’s call him…Moe.

Moe, a vascular surgeon, had a relatively lengthy training path. He wanted to enter academics, and had matched at one of those 7-year general surgery residencies. Afterward, he spent an extra two years in fellowship before striking out in the real world. That’s already a crazy long time to train. Fortunately he saw the light and did not take an academic job.  I recall that his first job was with a hospital that lowballed his worth with a salary around $275,000 a year. That’s pretty insulting for a job that expects you to work a minimum of 70 hours a week and answer the phone during ungodly hours. Vascular surgeons fix dissecting aortic aneurysms, clean out carotids, and place dialysis shunts. These are serious plumbing jobs.

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Gals (or guys) who work serious jobs need to have a nice place to live. So Moe bought a $750,000 home. He also leased two nice cars, and the wife and kids also had nice clothes. Thus far, an estimate of his big ticket recurring expenses included:

Fine details left out, but you get the point.

Moe had a monthly take-home salary of around $13,000. After the expenses above, he had roughly $3,500 left for everything else including gas, clothing, discretionary spendings…etc. Overall, not a bad salary, but he make quick work of his hard-earned cash. There was not much left over for savings.

After two years of indentured servitude at the hospital, Moe found a private practice job across the country and relocated his family there. Here’s an outside snapshot of some of his big-ticket expenses after 4 years when he made partnership.

This is how to kick your expenses into overdrive!

This is but a crude estimate of how one can blow through a huge bankroll. Note that there was no account for vehicle upkeep, clothing, routine home maintenance (lawn), malpractice, disability, and life insurances, or personal goods and toys for the kids. Given that the kids were in school, babysitting expenses are relatively modest, and mostly for evening hours.  Moe, by virtue of living in a very high cost of living area, is expected to have a take-home income of about $550,000 on a $1 million salary.

How sustainable are $400,000+ expenditures?

In this scenario, I’d expect Moe to still have about $100,000 of disposable income annually. It’s not horrible for most families, but it looks bad with a $1 million pretax income to start with. He is basically spending 80% of his post-tax income. Despite having a millionaire salary, Moe isn’t much of a millionaire with these expenditures. Interestingly, if he is able to maintain his line of work throughout a standard 30-year career, he’ll still make do.

The problem is that life happens. What if he can no longer work those 70+ hours a week? It may not necessarily be disability that prevents him from working.

Epilogue

Last I checked in with Moe, he did curb some of his lavish lifestyle habits. Gone were the ultra-elaborate vacations (replaced with still-luxurious vacations). He actually purchased a Honda Accord for his daily commutes to cut down on maintenance costs and gas for the AMG.  He was still paying off his first house, which is still on the rental market. The kids had even more (read: expensive) activities like tennis, baseball, and hockey.

Moe’s medical practice has been doing even better than before.  He still works about 70 hours a week, but he is now average about $3 million of pretax earnings a year! Talk about hard work and a bit of luck!

The moral of the story? Not everyone will be as fortunate and diligent as Moe. Don’t hedge your life savings on a strong offense. And by the way, some people do get lucky.

Are doctors outside of the United States able to retire early?

Posted on by SmartMoneyMD

The more I travel and see the world, the more I realize that we are incredibly fortunate to live in the United States. Clean water, bountiful produce, cheap land, and awesome plumbing are just some of the perks that we benefit from in this part of the world.

Imagine paying $2 apiece for these guys in Japan! Sweetness not guaranteed!

Most professionals in America have a pretty good life too. Sure, our vacation time pales in comparison to the French, but our earning potential is not bad.  As our online financial community has shown, you can really build up a nice chunk of change relatively quickly in life if you play your cards right.  Even doctors, who spend at least a decade of our lives training, can build up a nice retirement fund and enjoy the option of retiring “early” (looking at you, PoF and WCI!).

However, the common bond between all of these achievements is that essentially all of our online financial blog gurus have worked in the United States (except for Millennial Revolution). Is America that great? Is it possible for doctors elsewhere to replicate this financial wizardry?

 

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Could a doctor in Sweden, enjoy 50+ weeks of maternity leave, work for a decade, and still build up adequate savings to meet the 4% rule to enjoy a comparable lifestyle as a U.S. doctor? Or does “socialist” medicine condemn doctors to a life of mediocre earnings and retirement under a governmental pension system?

Let’s walk through the considerations of this thought experiment:

Incubation time to become a real doctor.

If the goal is to earn and save as much as you can, you’d want to spend your time making money. Unfortunately, the 6-figure income that comes from being a doctor has to be bought with time. While some people try to shave off a few years of training through accelerated BA/MD programs, most doctors I know are at least 30 years old before starting their first real jobs. Some of us who took on medicine as a second career are even older when we finish.

In France, whose medical training is considered to be one of the most rigorous in Europe, doctors train for nine to twelve years. Starting at year 7, doctors start getting a stipend, sort of how residency works in the U.S. The difference is that this training starts right after high school.  This means that doctors in France can be fully trained by age 26 for a generalist position! They can actually start generating an income by age 23!

From talking to my international colleagues, it takes about the same amount of time to become a doctor no matter what country you train in. However, most countries start medical training right after high school. This means that you can start earning and saving at a younger age, perhaps by four years. At $100,000 a year, you could have made an extra $400,000 by skipping “college” through training in another country.

Medical education isn’t free in America either. Most doctors in the U.S. finish up with at least $200,000 in loans. Most medical training programs elsewhere, are much cheaper. Medical school in France is essentially free (thanks to a 45% tax rate for high income earners).

All in, doctors in the U.S. could be at a $600,000 disadvantage compared to doctors elsewhere by the time they finish training. You could buy a nice Lamborghini for that price. ?

Earning potential of doctors.

We have a general idea of how much U.S. doctors earn. Our work isn’t easy, but you can earn pretty good money. I work about 55 hours a week and am pretty exhausted after every day. I’d say that the 55 hours I put in is as tiring as 120 hours of writing software!  I’ve gotten the impression that many doctors in Europe might not work as many hours as those in the U.S., and doctors in Asia put in insane hours.  How do physician salaries in other countries compare?

Doctors in which of these countries have to deal with stupid insurance companies?

We have to realize that statistics are only numbers. The reported specialist salary of $230,000 for the U.S. looks more in line with university and academic positions.  One of my friends from Holland moved to the U.S. explicitly for career opportunities and higher wages.   One of my acquaintances from Australia also told me one of the orthopedic surgeons in his medical plaza makes $1,000,000 a year.

If any of the data is to be trusted, I would still conclude that doctor salaries in the U.S. should be among the highest in the world, but any of the countries we’ve listed on the chart should also be conducive to high incomes for doctors.

How do the financials look being a doctor in the Netherlands?

Suppose that you are Dutch and wanted to become an emergency medicine doctor. Let’s look through the education/career process:

Education/Training

You finish high school at age 16, and enter your medical training. This consists of 6 years of medical school (3 years undergrad and 3 years Msc). I’d estimate that the cost of education would be relatively low for the first three years (perhaps 2 000 euros a year), and then ballooning up to 20 000 euros for the last three years.

At age 24, you enter internship and EM residency (totaling 4 years), and finish at age 28. During residency, you earn approximately 40 000 euros as a stipend. Afterward, you get a great job and earn 150,000 euros annually as an attending.

This doesn’t look too much different than being an emergency room physician in the U.S., only that ER physicians might have the opportunity to earn much more in the U.S. long term.

Would I rather be a doctor in the United States?

 Let’s face it, Americans still have it good despite having to go to college before becoming a doctor. Sure, I’m biased, but America is cheap. Cheap housing. Cheap food. Cheap cost of living. Big homes. Big cars. I haven’t seen the cost of gas go over $3 a gallon in Minneapolis for years, but the average gas price in Amsterdam is around $6.50/gallon! I doubt that you’d find $0.99 Aldi strawberries in Nijmegen either. I’m sure that toilet paper is more expensive anywhere in Europe and the toilets don’t work as well either.

I might be missing something as an uncultured American. However, with such great savings opportunities, couldn’t I just travel elsewhere to enjoy the cultures that I’m missing out on?

Would you consider working your entire medical career outside of the United States?

Welcome Physician on Fire readers!

Posted on by SmartMoneyMD
PoF probably doesn’t use this stuff for anesthesia.

I wanted to thank my current readers and welcome newcomers to the Smart Money MD website from Physician on Fire! We’ve got a great mix of content for physicians and those who want to be more financially-inclined. If you haven’t signed up for our mailing list, please do so on the sidebar. You’ll get a FREE pocket-sized PDF financial handout like those your gunning classmates made in medical school!

Just to give the new readers an overview, I am a practicing eye surgeon who was not always financially conscientious.  I understood the basics of frugality, but I figured that most physicians had enough financial offense to withstand any sort of high spend rate. Not true, but we do fortunately have enough earning power to live very comfortably without having to sacrifice our lifestyles. This is where Smart Money MD comes in. Concise information from my mistakes so you don’t have to make them.

We try to keep the content coming at the usual schedules for dialysis patients (Yes, readers will have to deal with the bad puns). This means either Monday, Wednesday, and Friday posts, or Tuesday, Thursday, Sunday series for the non-medical folks. ?

Here are a couple of must-reads to get you guys started:

Are you turning away millions of dollars as an academic physician?

Stealth Wealth Revisited – This applies to doctors too!

Is a degree from a prestigious medical school advantageous for doctors?

You don’t have to be a doctor to be rich.

How Mustachian can a doctor be?

And here are a few non-medically related but financially frugal articles on DIY work to boot:

The Ultimate Buyer’s Guide to Consumer Car Batteries

How to fund a backdoor Roth IRA

The Basics of Home Mortgage and how not to get scammed.

That’s it for now! Comment in the posts, and interact with your fellow financially-interested peers!

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(Photo courtesy of Flickr)

Are you turning away millions of dollars as an academic doctor?

Posted on by SmartMoneyMD

After doctors finish their medical training, there is a spectrum of career options that range from full-time clinical medicine (which most people choose) to full-time academic medicine to full-time researcher. Whichever path one takes will surely benefit society, but can have a major impact in compensation. Over the course of one’s career, there is unfortunately a huge discrepancy in earnings.

Think millions of dollars.

Or for you gamblers, it’s like getting to the final table (guaranteed $1 million earnings) of the World Series of Poker every few years, but donating your earnings back to your hospital administrators. These administrators then make you work harder for less pay.

Sounds fair, right?

Let’s take a look, step-by-step, at how there can be such a discrepancy in earnings despite being the same type of doctor.

 

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How doctors generate revenue in private practice.

As a doctor involved in direct patient care, you generate revenue directly from your services. The more services you provide, the greater revenue you bring into your practice (or your employer). For many doctors who participate in insurance plans, this is measured in revenue value units (RVUs) or something similar—anesthesiologist work is measured in ASAs, which are calculated on the difficulty of a type of surgery and modified by the duration of a surgery.

 

You might also like: How do doctors make money?

 

Even doctors who don’t participate in direct patient care—that means you, pathologists and radiologists—have productivity that can be quantified.  Additionally, there may be other factors in physician productivity that aren’t directly quantifiable, such as the number of consults that are generated and procedures that other specialists perform on patients that you cared for who otherwise wouldn’t have received treatment. If you look into capitated care models, managed care models, and closed-system models, the revenue streams becomes even more obfuscated.

 

No matter how confusing this may seem, medicine in a private practice model is still service-driven. The more you work, the more money you bring into your practice or your employer. Hopefully this work translates into a higher income for us all.

 

How doctors generate revenue in academic medicine.

If you are a physician in an academic center or university setting, the revenue generating component is more opaque. I look at it like a black box:

No one knows what happens inside the black box, not even the administrators!

The service portion of being a doctor in academic medicine is diluted into many different roles. Some of these roles aren’t directly related to patient care, so any revenue that is generated doesn’t go through the typical insurance panels.

Take, for instance, research. This is a very valuable component to the healthcare industry, but there is no visible compensation in research unless there is a breakthrough discovery. Research funding in the U.S. comes mostly from the National Institutes of Health (NIH). Most researchers have to apply for funding through an arduous process every few years!  The funding that one receives through a research grant is unlikely to even cover your salary!

Teaching medicine is another example where the income stream is not clear cut. Insurance companies pay you for taking care of their insured clientele, not for educating future doctors.  It doesn’t matter if you’re taking full liability for a full inpatient service, presenting grand rounds, or writing a case report.

Let’s compare a specialist working in academic medicine with one in private practice.

Suppose that you are a vascular surgeon who decides to work at a teaching hospital. You have a faculty appointment at the medical school but you are primarily a clinician working 85 hours a week. The call schedule is only once every five weeks, but you get called in every time you are on call (hey, ruptured aneurysms wait for no one!). You also spend time teaching medical students, residents, fellows, and prepare grand rounds cases. Your hospital pays you about $500,000 a year, but your salary is essentially capped. That means that you’ll likely be earning the same take after five to ten years on staff. You’re making big money, but you’re also spending a lot of time at the hospital.

If you decided to leave the university setting, there are a number of options that could materialize. You could join a hospital group, get paid a much lower starting salary than what the university might actually offer you, but build up to that $500,000 a year. You’d still be working those 80 hours a week. The difference is that by not being involved with teaching or research, you might actually free up a few extra hours a week. No bad, eh?

 

You might also like: Is a degree from a prestigious medical school advantageous for doctors?

You might also like: How much do doctors make?

 

A third option might be to join an office-based vascular surgery group. You might be brought on board with a salary lower than what you might get at the university, but there is room for growth. After several years of servitude, you purchase into the group and build equity in the equipment. There is an angio-suite that you own along with the practice. You are still working those 80 hours a week (yeah, what a brutal subspecialty), but you bring in a cool $1.5 million each year.

Think about it. A vascular surgeon can have a $1 million income difference depending on where she decides to work. I’ve actually seen situations where the income differences are even greater. Now we’re talking serious money.

What’s the moral of this story? Vascular surgeons have tough jobs!

 

It’s not about the money! 

Look, life isn’t all about the money. Some of us don’t enjoy yachting on the weekends or having caviar every night.  Some of us who do may even be fortunate enough to have alternative sources of income.  Our happiness levels start to plateau after a certain amount of income and net worth. I like to think of it like this:

Your happiness actually increases if your income potential is hopeless, but happiness will also plateau with increasing income.

For some doctors, academic medicine is a means to pay the bills AND be happy. What is not to like about conducting research that could potentially revolutionize healthcare or simply educating future generations of physicians?  Some of us actually enjoy writing and editing scientific manuscripts.  Academic institutions are structured to allow doctors to do just that.  These roles may not necessarily maximize a doctor’s income potential, but they contribute to society and personal satisfaction. If you would like to put a price on that, state your argument in the comments section below. 😉

 

What should I do if I’m undecided?

There’s not going to be a magic ball that tells you what to do. I know plenty of doctors who left academic medicine after several years when they needed a change. I also know several doctors who decided to enter academia after many years of pure clinical practice. The doors remain open no matter what decision you make early in your career.

Remember why you entered medicine; I hope that it was to care for patients. At the end of the day, you still need to be happy. However, it doesn’t hurt to consider the financial implications of your decisions.

How did you decide between academic and purely clinical medicine?