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Negotiating Pitfalls for the young doctor

Posted on January 14, 2019January 30, 2021 by SmartMoneyMD

In an ideal world, we should all be compensated fairly for our services and skills. The reality, as we all experience, is an amalgam of mistakes and victories. One hopes that with time our skills will translate to a greater number of victories. Most greenhorns entering the workforce are unfortunately poorly equipped to assess their worth. I certainly was.

Greenhorn doctors stand to lose a financial lot from mistakes simply because doctors tend to experience a significant jump in income after they finish their formal training. Seemingly inconsequential mistakes can end up costing us a lot of green and sleep over time.

The significant jump in salary signals a well-deserved reward at the end of the rainbow, but what doctors frequently fail to recognize is how big or small that pot of gold ought to be. In some ways it is difficult to believe that relatively intelligent, hard-working people who become doctors can have so little clue about our worth. When I was in my training, business sense certainly wasn’t in the medical school or residency curriculum. I doubt that much has changed over time either.

The last time I interviewed a high school student from New Jersey for college, I asked her if she knew how to pump gas. The response was an overwhelmed deer in the headlights look. (New Jersey law still doesn’t permit people to pump their own gas) It really isn’t that difficult to find voids in one’s fund of knowledge, no matter how intelligent anyone is.

When I was a fledging greenhorn coming out of my training, I made plenty of mistakes in looking for a job. Some of factors I overlooked were so egregious that I probably deserved to fumble. Live and learn, as they say. January and February are the typical months of year that graduating trainees start looking for jobs. This is also the time I start getting questions about job hunting.

I figured it was time to distill some of my impressions about rookie mistakes into a post.

Underestimating your worth

Medical trainees provide way too many services pro bono. In my training, I moved gurneys, waited for up to an hour over the phone for health insurance companies, cleaned up excrement, and performed many duties that didn’t require busting my ass. When trainees enter the workforce, life suddenly becomes easier in most respects.

What do you say when you’re offered this to take call on Christmas eve?

Sometimes if life becomes easier no matter how you spin it, we may be more willing to take anything we are given. Maybe your potential employer intends to give you a signing bonus of $5,000. Great! Would you think any differently if they gave your coworker an $8,000 signing bonus instead? That’s where doing your research will pay off. Most medical graduates do a good job in their sleuthing skills, because that’s what medicine is all about.
The key is actually going to the right sources. Your friends who are several years into practice can give you pointers. But relying solely on their experience can only give you a certain picture into the situation. Your friends might share similar views that you do, or even think like you do. They are likely to provide the information that you want to hear, but there is also a possibility that their mindset leads them to overlook certain aspects of the job world that you’d miss too.

Pro tip: Ask doctors who may be in a different generation as well as other maybe even in another specialty about their wisdom. Get the advice of others who have worked for the employer that you’re considering, or those who have paved a career similar to what you envision your career to be.

Overestimating your worth

Not understanding your skill level can lead doctors to ask for too much as well. There are statistics out there that include median starting salaries along with median mid-career salaries of all the specialties. The problem is that these are median numbers, and you have to be able to extrapolate the statistics.

For instance, if you plan to join a bustling medical practice that is drowning with patients you will be busy very quickly. However, most new doctors fail to recognize that they still need time to ramp up their practice patterns. Just because the retiring doctor who touch-typed was seeing 100 patients a day doesn’t mean that you could see 120. In fact, as someone learning the ropes you might only be capable of doing a fraction of the work and maybe even at a fraction of the quality! There may be reasons why the employer would consider starting you at a much lower salary as someone else with a decade of practice under their belts.

Pro tip: Go into your negotiations with the facts, and make your potential employer give you good reasons why they think that you’re worth what they’re offering you. If you can prove them wrong, you can command a better arrangement. Just be aware of your own limitations too. Gray hair does come with some benefits.

Overestimating what the employer can afford

This is a touchy subject. Financially and business savvy new doctors can make very informed decisions about their qualifications and practice goals to potential employers. The problem arises when everything is a great fit except that the potential employer isn’t actually able to financially afford what you’re asking. Sometimes this happens.

Pro tip: You cannot earn more than your boss. If you do, then they are in either a horribly desperate situation to bring you on board or a situation to make you work like a dog. Neither situation is sustainable long-term.

You have to set realistic expectations in any situation. I have known plenty of doctors who calculate how much they should be earning based on professional charges, negotiate based on expected overheads, and anger many potential employers. The reason? Many of these doctors don’t realize that there is give or take. They may have underestimated the costs of running a business.

Pro Tip 2: Do your homework. Go into your negotiations with reasoning. But don’t forget that you could be wrong too.

What other tips do you have for new doctors?

Tax filing for greenhorn doctors

Posted on January 1, 2019January 30, 2021 by SmartMoneyMD

I no longer am surprised at the creativity of my peers in the medical community, whether one of them finishes an Ironman competition (common) or runs an army of fast food restaurants in addition to curing cancer (not common). In medical school, I recall having classmates who wrote complete review manuals to help us ace each of our in-service exams. This produced unintended consequences of raising the bar and convincing the course directors to conceive even more devious ways to grade their students. Ultimately, it allowed all of us to become more competent doctors.

Likewise, the collective brainpower of the Internet has allowed us to broaden our fund of knowledge. Want to learn how to write an app? No problem! Want to hire someone to write an app? That can be done too. As a doctor, one of the most financially useful skill that I’ve developed was learning the basics of filing my own taxes. I remember that the first year that I filed taxes as an intern, I paid my parent’s accountant to complete my tax return. He gave me a discount, since he already had our business. I don’t recall exactly how much he fees were, but I assumed that I paid at least $100…maybe more.

Six months after filing taxes, I received a dreaded letter from the IRS stating that I forgot to include a special state filing form and incurred a penalty of a few hundred dollars. Ouch.

Those of you financial whizzes who have gone through the medical training are probably tasting bile in your throat at this point. Medical interns who have no other significant source of income have only worked for half the year–this roughly translates to $25,000 of pretax income, depending on which century you underwent medical training. ?

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Collect the paperwork

You will need to keep copies of all of the forms that you use to to file your taxes. Make sure that you keep copies of your tax returns as well–there is some variability with how long you should keep your paperwork for, but seven years seems to be a plausible duration. With the number of medical journals and textbooks that we tend to keep in the garage for decades, holding onto something as important as your tax returns for a few years should be reasonable!
Most medical residents will start receiving electronic or paper forms after January of the following year (i.e. you will receive paperwork for your 2018 taxes after January of 2019, and hopefully before April 2019). Common paperwork will include:

W2 form – This is a summary of your earnings broken down distributed by your employer. The numbers in each of the blanks will eventually make sense as some of the numbers will reflect your 401k contributes or HSA deferrals.
1099-INT – These forms are distributed by your financial institutions to reflect any interest income that you may have accumulated throughout the year. This can come from interest-bearing savings accounts or certificates of deposits (CD’s) that you might have purchased. Yes, you have to pay taxes on these earnings, and you pay them at the marginal tax rates.
1099-DIV – These forms will come from your brokerage firms if you have stocks that have distributed dividends. For instance, your Microsoft stock will distribute you quarterly dividends. You have to pay taxes on these earnings too, although at qualified rates most of the time.

Frankly, that’s all of the paperwork that I accumulated as an intern. I did not own any property, had no other income, and did not have any itemized deductions.

Use tax filing software

The easiest way out is to use a tax filing software. Years ago, the only option was TurboTax, but the market is now saturated with competitors. You can even find free software for the simple tax situations like the one above. Even with more complicated tax situations, I am still able to file using the software. These services also offer electronic filing for both federal and state forms. Nothing has to go in the mail, and you can fill out your data over several weeks as you obtain more forms.

File your taxes manually

The traditional way to file your taxes is to go to your local library to pick up tax forms, an instruction manual, and comb through the tax rules. You can still do that now, and it’s actually never been easier to manually file. It’s actually conceivable to file your taxes this way even through moderately challenging income scenarios, but it is quite daunting to start in this manner unless you have the most rudimentary tax situations.

Conclusion

Filing your taxes as a resident really isn’t that challenging, and it is worthwhile to go through the motions at least once in your working career. You actually can get a better idea of what each of your financial forms is useful for—if you end up using an accountant later in your career you will at least know what paperwork she will need in order to complete your tax return.
Happy New Year!

The daily life of a pediatrician

Posted on December 30, 2018February 2, 2021 by SmartMoneyMD

Most doctors well into their tenure of medical already have a general idea about how other specialists spend their days (except for radiation oncologists, where NO ONE else knows what they do). However, as a medical student I had incredibly limited insight on the variety of means to practice medicine. Even as an attending physician, I am still discovering how creative some medical specialties allow one to be. For instance, how many of you guys knew that you could be a cash-only neuromuscular neurologist?

Fortunately all medical school rotations will include some exposure to pediatrics, but this doesn’t mean that one or two months of rotation is actually adequate to inform students on the merits of pediatrics. This article will serve as an overview for those students considering a career in medicine or those medical students who are in their MS3 rotations considering what specialty to choose.

The medical aspects of pediatrics

Pediatricians take care of children, who are not small adults! This ranges from well visits to intensive care hospitalizations. One can also opt to take of children as sub specialists who train in a separate fellowship, like pediatric cardiology. There are too many pathways to take care of kids than I can keep track of. A rough diagram can be summed up as such:

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Pediatrics residency spans three years, with some programs adding a year of research if you choose. Fellowships can also span anywhere from one year to as long as one desires, although at some point you have to realize that the only way to truly master your profession is to get out and practice medicine. After training, there are a few common venues to practice pediatrics.

You might also like: Choosing how to practice medicine 101 for new doctors

The daily grind

Outpatient pediatric medicine is the more common approach to practice, and it is exactly what you think it is. Patients are scheduled perhaps every twenty minutes throughout the day, along with space for add-on emergencies. Some are well visits. Others are sick visits. Kids also get sick during winter months, so pediatricians are typically busier during those months. A pediatrician’s clinic schedule may range from twenty to thirty patients a day. It’s also common for most doctors to spend at least an hour after clinic tidying up notes or calling patients/parents about lab or test results. With the mandate of electronic health systems, we can all expect to spend some time after clinic to finish charting.

Years ago, most outpatient doctors also took care of their own patients while hospitalized. It’s more common that there are some pediatricians who work strictly on the inpatient services to take care of hospitalized kids. What that means is that you could become a pediatrics hospitalist. All newborns need to have a physicians in order to be discharged from the hospital.

Income

Unfortunately as important as our next generation is, society has decided to reimburse “pediatrics” anything at only insulting to mediocre levels. We all have to realize that none of us should ever consider going into medicine for the sake of money, but many medical students that have rotated with me have boldly commented on physician salaries. The bottom line is that you’re not going to starve if you become a doctor who takes care of kids. Don’t expect to own any McMansions.

Special venues

There are also options to go against the grain. Concierge medicine is becoming more popular in affluent areas, where the patients pay a certain retainer to obtain better “access” to the doctor. It is more common for internists to become a concierge practice, although the same can theoretically be done in pediatrics.

Other possibilities simply include working outside of clinical practice: consulting, health insurance reviewer, or even medical officer within a corporate health system. The sky is the limit.

What other aspects of pediatrics should medical students understand before choosing to enter the field?

Gratitude, stock market gains, and GOMERs

Posted on December 25, 2018January 30, 2021 by SmartMoneyMD

It’s that time of year again. Holiday gatherings, work parties, and thankfulness fills up the calendar. This also means that it’s time to reflect on the year’s accomplishments and failures. Perhaps we can learn from our mistakes and strive to be a better form of ourselves the following year.
It’s time to run through the three G’s, Finance-Edition:

Gratitude

We are lucky to have great hospital support staff, an electronic health record that only crashes intermittently, and a nice parking spot at the office. This time of year also translates to gifting. For the finance-minded folks, here is a list of reminders to keep track:

Gift tax – Suppose that you’ve hit the jackpot with your medical practice and are sitting on a cool $20 million in your estate. Maybe you decided to forego that living trust option and just want to spend down your stash. The annual gift exclusion amount for 2018 is $15,000 per person. You and your husband can each gift $15,000 per person without getting hit with a gift tax. This means that you can gift out quite a few $15,000 increments without having to pay a gift tax. Get your checkbook ready, or mail them online checks if you’re computer savvy.

Gifts to employees — There are certain rules to how you can rewards your employees. Be sure to reference the IRS’s de minimis guidelines to make sure what you do falls under the rules. In general, throwing an occasional holiday party to your staff will be perfectly fine. Giving them cash equivalent gifts will not.

Gatherings — It’s not uncommon for doctors to throw holiday gatherings for their staff in their homes. That’s very nice, but make sure you have an adequate amount of umbrella insurance. You’ll never know when someone has a little too much to drink and ends up hurting himself in your swimming pool or trampoline. Be sure to consider buying a rider for libel or slander as well, if that applies to you.

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Stock Market Gains

My last weekly e-mail from Personal Capital appeared like this:

Across the board, the stock market has performed poorly in 2018. The gains from 2017 have quickly vanished, and these are times that I feel fortunate that I have a stable income to fall back upon. Do I wish that I had alternative income stream from real estate or side gig? Sure. But it still isn’t necessary. The beauty of being a highly-compensated professional allows you to have more options to control your lifestyle, expenses, and ultimately, your net worth. Set your savings rate on autopilot, and make it a goal never to lower your savings rate unless some catastrophic life events occur.

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Bear market? Healthcare is here to stay, whether or not we like the direction of it. Some calculations project a physician shortage of up to 100,000 doctors by 2030! Even including doctors who trained outside of the U.S., it is inconceivable that we’d be able to sustain the physician shortage dilemma. We’ve seen automation, physician extenders, flowchart medicine, and all of the strategies to find ways to care for illness with minimal direct physician input. What this means for you, the doctor, is that you have job security. Use that to your advantage. Work hard and keep up with the bear market. You don’t have to do any more to win the game.

GOMERs

Anyone who has read Samuel Shem’s The House of God will understand the reference. We all have GOMERs in our medical practice, whether we work in inpatient or in ambulatory medicine. That one patient who we can never discharge because some snafu prevents us from doing so. Or the patient who keeps coming back unhappy about the seventh cosmetic surgery revision he’s had, and wants another one.

For free.

On a Saturday afternoon.

GOMERs are the one constant in the medical field that sometimes puts me at the edge of dislike for my profession. But whenever this irritating experiences occurs, I remind myself that we are still lucky to be in a well-paying profession that allows us significant freedom to heal. No matter how negative our workplace can be or how annoying certain hospital regulations are, don’t forget that we are still healers. We have a skill that allows us to provide services that even to this day I am still amazed that we are able to bring people back from the dead.

Happy Holidays!

Implications of job hopping for doctors

Posted on December 23, 2018January 30, 2021 by SmartMoneyMD

A large percentage of doctors end up switching jobs within the first five years of practice. This really isn’t surprising given that the medical training experience doesn’t necessarily correlate with the medical practice experience. Many doctors work hard throughout their entire training only to realize that their expectations do not necessarily align with reality. Is it our fault that we don’t really know what we got ourselves into?

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Perhaps taking q3 call as a resident didn’t seem too tough in your late twenties, but getting brutalized every third night in your thirties and forties starts getting really old. Maybe your kids’ private school tuition is really digging into your academic salary, and your escape plan might entail joining your medical school roommate whose surgical center pays out dividends the size of your salary.

Do you call it quits and seek greener pastures? Or do you grit your teeth and adjust up your savings rate to weather the storm? Before you decide to jump ship, you have to make sure that you are really coming out ahead. I’ve seen plenty of doctors job change every few years, some even more frequent than that. I cringe at the number of 401k accounts that these doctors actually have opened with all of these job changes. What about the bank accounts that they’ve opened and closed in every city that they’ve moved to? Every time you start afresh, you end up picking up extra baggage that you have to decide whether to purge with each move.
If you feel like you are working in living hell at your job, here are some considerations to make before deciding to jump ship:

Financial strain

Life alone can be expensive. Bills, lifestyle creep, and unexpected repairs add up over time. Any sort of disruption in your routine will have the potential to incur costs. One way to analyze financially whether a move would be worthwhile to make a move is to place a hard number on the increased costs during a job change process:

You’re potentially looking at a five to six figure cost when you change jobs.

In this scenario, you might be looking an all-in expense of roughly $60,000 if you make a move. Chances are that there will be additional costs with licensing, credentialing, and immeasurable costs. Is that worth the change of scenery? Only you can decide.

Social Disruption

Moving elsewhere means that you will have to re-establish your social circles. Your children will end up separating ways from their friends and school. If they are in high school, then their chances of entering college might be affected by a move. You might have to find a new church group. Depending on how much you value your social environment, there can a significant opportunity cost if you end up relocating. Ultimately, you have to decide which factors are more important to you and your family long term. Money? Friends? Sanity at work?

Learning curve at work

No matter how seasoned you are in your profession, change comes at a cost. New hospital environments mean that you will need to learn a new electronic health record, repeat the oft-hated online HIPAA training modules, and become acclimated to the new work environment. You will have new coworkers, new culture, and new regulations. Depending on what you are escaping from your original job, a new environment might be refreshing.

Family disruption

If you are the sole breadwinner in your household, you will have the additional stress that your family’s well-being is dependent upon your income. For any of you who are in this situation, you realize that if you make the wrong decision they will also have to ensure the stress. Are the gains worth it?

Play the long ball

Your career plans should aim to win the war. Take into account the financial, social, and mental challenges that come with any switch and make a decision. Life is short; you have to remind yourself to take charge of your own life and take calculated chances. If a career move will end up costing you $100,000 for the first year but allows you to enjoy a fruitful thirty year career, it might be worthwhile.

What risks have you taken to improve your career?

How to wind down your medical practice

Posted on December 15, 2018January 30, 2021 by SmartMoneyMD

A retirement plan isn’t usually a top priority for fresh doctors looking for their first jobs, whether that final date is in five years or thirty. Perhaps knowing when to hang up your hat is immaterial so early in your career since most doctors will end up leaving their first job within the first five years anyway. However I do wish that I had some inkling about the career paths at some point as during my medical school rotations. Knowing how medicine is really practiced and how practice patterns affect retirement would have probably influenced my career choices.
Interestingly, the specialty that you choose determines the means that you can even wind down. This is because different specialties lend themselves to different work situations.

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If you are a thoracic surgeon, you could work for yourself and contract with a local hospital. If the hospital decides to employ its own thoracic surgeons, you might have no choice but to join the party or pack for the hills. No matter how you intend to practice medicine, it is worthwhile to have some inkling how to wind down your job.
You might decide to hang up your hat completely and leave the medical world completely. Or you might want gradually wind down your hours. Here is the list of options to wind down your practice:

Cut down your hours
If you are a shift worker, then you have it made. Many hospitalists, nocturnists, and emergency room physicians have the ability to ramp down their schedules by taking fewer shifts. If you belong to a large medical group, it actually isn’t that difficult finding someone who will be willing to take extra shifts for the money. Pare down your shifts, and you can downshift your clinical practice as you wind down.
One of the emergency room doctors I know who is slowly transitioning to administration fills in roughly four shifts a month. I suspect that this number will eventually become zero as he renews his board certification through a non-clinical tract.

Sell your shares
Many partner physicians working in a large group can opt to sell their shares back to the company or to a junior associate ready to become a partner. Depending on the practice, the physician can then continue working on a part-time basis as an employee as a means to transition the patients over to junior physicians.
Sell your practice
If you are the sole owner of your medical practice, you have several options to transition into retirement:

Sell to another fellow physician — Be awarded by allowing the tradition of medicine to continue. You put in the hard work over the decades to build up a viable brand. Allow it to continue in the hands of another fellow doctor.
Sell to a medical investment/management group — Perhaps you will receive a healthy buy-out. Two million? Five million? Ironically, these groups may have very deep pockets so you may get more for your practice. Who knows what the long-term viability of this type of model will last, but it’s not like you’re going to care. That’s right, you’re going to be sipping a pina colada somewhere in the South Pacific.
Sell your equipment, end your lease, and pack up – This might be one easy solution—just quit. Liquidate your equipment and office goods, fire your office staff, and call it a day. The one downside of closing up is that you need to find a successor to continue care for your long-term patients.

Retire from your existing job and sign up for locum tenens work

If you end up selling your practice, you’ve basically closed the door on returning to work. Fortunately there are plenty of part-time opportunities floating around in the world. New Zealand? Sure! There are plenty of hospital systems or groups that need temporary coverage—that’s where you come in. You might be able to see a new part of the country as well. The downside is that if you intend to get rich from temporary work, you might be out of luck. Some temporary jobs aren’t really going to be wildly lucrative unless the hiring practice is going to be incredibly desperate with deep pockets. You have realize what you’re getting out of working part-time and what the hiring practice intends to get out of it.
Your retirement may be decades away, but it’s worthwhile to at least have a few thoughts on how your medical practice might look like at the end of the rainbow.

Choosing how to practice medicine 101 for new doctors

Posted on December 12, 2018January 30, 2021 by SmartMoneyMD

When I finished my training, I wish that I had known all of the options I could practice medicine. Most of us categorized our options as either “academic” practice or “private practice”, but in reality these two options only cover the tip of iceberg. Was my limited understanding a shortcoming of my medical training? Perhaps. I doubt that many medical schools back then actually had seminars on practicing medicine. Since nearly all of my attendings belonged on faculty or clinical faculty, it would have been nearly impossible for them to round up a bevy of doctors from all walks of the medical scene.

The following is a compilation of some of the more common ways that doctors can practice medicine. There are nuances in every category of medical practice that one would only truly understand after practicing in that venue, but here is a good introduction (along with my personal opinions):

Solo Practice
Solo practice medicine is unfortunately not as popular for a number of reasons, but it is still a viable form of medical practice. Generally speaking, one could either purchase a practice from a retiring physician or start from scratch. That means buying your own building or finding a lease, signing up for insurance plans, and going at it. There is always a learning curve to starting your own practice straight out of residency, but it could be done. Obviously some specialties in medicine may be more conducive to solo practice than others.

Pros:

You can call your own shots. That means taking all of the vacation you want. Or you can work 365 days a year if you’d like.

Cons:

Likely to require more involvement into the practice, including the business aspects of medicine.
May require many years of long hours before business will flourish.
Insurance company in certain markets may not allow individual doctors to enroll onto their plans if there are larger medical practices that are willing to take care of more medicine for less reimbursement.

Some work situations are more conducive to cross-country trips in the winter!

Group Private Practice
Most of my classmates who decided to go into the private sector ended up joining a medical group. These medical groups may be small, several-doctor organizations, or multi specialty behemoths. One of the perceived advantages of joining a large group is that they may better systems in place for benefits and that the patient volumes are more mature. Having multiple coworkers also means that you will have more opportunities to collaborate and dissent. Group practices may be able to allow doctors to achieve higher than average salaries for their field, given that there is likely some capitalistic motivation among the group’s members.

Academic Practice
Academic medicine is synonymous with working for a university with teaching or research opportunities. This may be the most “conservative” approach to many doctors’ first jobs since most of us trained at academic institutions (there are some training programs that are spin-offs of private practices). Many of my classmates simply opted to remain on faculty at the institutions that they trained at after finishing fellowship. There is familiarity with remaining at the institution that you spent the previous few years at.

Pros:

Familiarity with an institution that you’re already working at.
Good intellectual support system.
Likely cutting edge medicine.
Research support if you opt to conduct clinical/laboratory research.

Cons:

Excessive familiarity with the institution that you’re already working at.
Possibly poorly organized clinical support staff.
Likely cap on earning potential.

Managed Care Practice
In recent years, there has been an uprising of managed care organizations, or those that have certain arrangements with health insurance to provide care. Some healthcare systems like Kaiser Permanente have an insurance wing and a physician wing that work to cut costs and optimize care.
Pros:

Optimized healthcare system. Robust benefits program.
Stable and likely job security.

Cons:

Physicians may be subjected to assembly line care.
May have high volume of patients
May have restrictions on how you can practice medicine.
Not necessarily conducive to elective procedures.

Governmental / VA
In some ways, working at a VA is sort of like working at a managed care organization except that the VA may even be more slow to adjust to anything. Many of us who have worked in VA systems may have felt that the clinics and operating theaters functioned incredibly inefficiently. That being said, to each his own. Working for the government does have its perks in set working hours and mostly easy pace of life, plus the fact that you are taking care of our country’s veterans.
What comments do you have for each of the models of practicing medicine?