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Living in Rural America Can Make You Richer

Posted on July 22, 2015 by SmartMoneyMD

I’ve gone from living in a town with a population smaller than that of most major medical centers to living to the most populous city in the United States. I can see the appeal of both. The small towns offer an intimate connection with the community. You have the typical hangouts, stores, and venues that everyone visits, and it is seldom that I’d go somewhere in town and not run into someone I know. It seems as if everyone is your neighbor. The problem is, however, that everyone does seem to be your neighbor. There is no place to hide. As far as intellectual and cultural opportunities, there is no comparison with the large cities. If you enjoy having a breadth of cultural and intellectual diversity, living in a small town is torture.

From strictly a financial position, your occupation will likely determine the more financially advantageous location. Someone in the tech sector, investment banking, or finance will fare better in San Francisco or New York. Doctors, however, will likely do better in a rural area or small city.

Larger Cities Have More Doctors.

More doctors may mean more competition. Unless your insurance company belongs to an HMO, you have the option to see any doctor who accepts your insurance. Yes, there are also patients for doctors to recruit, but competition is fierce. In general, the more established doctors tend to see the bulk of the desired patient population (read: good private insurance or cash pay). Medicine is a service industry. We acquire new patients from word of mouth. The doctors with the best results, biggest billboards, and happiest patients get the bulk of the patients. In larger cities, private doctors will have difficulty building a practice due to the dynamics. It can be done, but it will take longer. In the process, you may end up earning less.

The Cost of Living Is Higher In Large Cities

Most essentials like housing, food, utilities, and transportation will cost more in large cities. Most of the time, this increased cost of living is not reflected in reimbursement adjustments. For instance, according to PayScale.com, an income of $200,000 in South Bend, IN will need to increase to $480,088 in New York City in order to maintain the same standard of living! I can’t think of any medical specialty where income more than doubles with regionality. Clearly, income has to be sacrificed in order to live in a metropolitan area.

Some Rural Areas Compensate Doctors More

When I was first looking for jobs in Los Angeles, San Francisco, and New York City, many practices lowball their new hires with insultingly low salaries. Some places guaranteed only 6 months of income, whereas 12-24 months was the norm in the rest of the country. Hospitals offered salaried positions (for Hospitalists and ER docs) that were often consistent with most starting salaries but had limited growth potential. Reimbursement schedules in a state like California are horrendous as well, which makes it difficult establish a stable practice. You pay a price for good weather!

In contrast, job postings from “less desirable” areas like North Dakota, rural Iowa, and the rural Midwest often advertise incredible income potential. I inquired to some of these positions, and they offer up to 80% higher guaranteed salaries for an internist position. For more specialized fields like vascular surgery, the compensation packages are up to 150% higher! It pays to be rural!

New Doctors In Significant Debt Should Consider Working Outside of Metropolitan Areas

Working outside of the major metropolitan cities is a financial no-brainer for doctors looking to eliminate debt. You will command a competitive income while saving on cost of living. The savings can be put towards debt repayment and retirement investing. Sure, you may not get the culture and accessibility of a metropolitan area, but you can always vacation in the larger cities while you are still repaying debt and move to your desired region after you’re debt free.

Do you agree on this philosopy? Is it worth it to strengthen your financial health for a few years before moving to your desired part of the country?

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Doctors Are Still In Financial Despair

Posted on July 20, 2015 by SmartMoneyMD

I recently came across a post on Sermo written by a family medicine doctor who claims to earn slightly more than a manager at Starbucks and is over half a million dollars in debt (not including the house mortgage and car payments). His wife apparently is going back to school and incurring additional debt. The rest of his post essentially consisted of contemplating what options he has to get out of his predicament.

Ho-Lee-Sheeeeet!

Is this guy for real? Last I checked, I don’t believe a store manager at Starbucks earns more than $75k a year. A family medicine doctor should earn at least a six figure salary, which is still a pittance for the level of education needed and debt incurred. Many physician’s assistants command salaries similar to that of some family medicine physicians. Unfortunately, this type of story is common on Sermo, which seems to have become an online venue for doctors to vent. While it’s not possible to verify the validity of his situation, it still does confirm my suspicion that physician debt is alive and well. I truly feel sorry for the guy and hope that he figures how to bail himself out.

He clearly has a spending problem.

Mr. Money Mustache calls it a “hair on fire” situation. Even if his family’s spending habits aren’t horrible, he still needs to cut out any lavish spending habits. If the car payments are going toward new cars, he’d better not be driving a Mexican-made German luxury vehicle that gets 15mpg! I see many doctors actually lease cars, stating that they deserve something new every few years. That’s one of the fastest ways to get yourself in financial trouble. His house should not be a McMansion, and he could even consider renting if his work environment is unstable.

Salmon at $28.99/lb at Whole Foods is definitely out of the question. As are Louboutins for the wife, $400 Burton ski jackets for his kids, or a monthly membership to the local car wash.

The spending problem started with educational debt.

While it’s not difficult to dig yourself into serious debt from medical school, it does take some effort to dig yourself half a million dollars in the hole during medical school. You simply combine a non-miserly lifestyle with a non-working spouse and kids. If you’re going to do that, then you need to have a strategy to get yourself out of debt and avoid financial ruin before you even start your career. I was able to pay off almost $150,000 in debt by the end of my first year of practice earning a low six-figure salary. That was without sketchy arbitrage business with loan disbursements either.

If this family medicine doctor were earning $150,000 a year, I’d expect him to take home at least $100,000 after taxes. I would expect him to dedicate at least half of that amount towards his debt for at least a few years until his income situation improves. His kids should not expect an inordinate amount of financial assistance for college either. The wife should consider helping the family diversify their income streams as well when she is able to. This is unfortunately their situation, but there is still hope.

Don’t panic and formulate a plan.

Doctors need to take some of their own medicine. I often have patients who are a nervous wreck for no reason, and fail to listen or take initiative in controlling their diseases. The “more” proactive ones ask for a magic pill to cure everything while others simply don’t attempt to do anything. Likewise, a debt problem isn’t the worse thing in the world. As long as you have income potential, you can still take control of it. Just formulate a plan, stick with it, and adjust as needed. Rinse and repeat.

What strategies have you implemented to get out of debt or avoid getting into debt?

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A Female Doctor’s Guide To A Raise

Posted on July 18, 2015 by SmartMoneyMD

As doctors, we deserve to be compensated for our hard work. We dedicate at least a decade of our lives to acquire the privilege to care for people and the rest of our careers doing so. Unfortunately many of us get taken advantage of despite putting in the hard work. Prior to taking our jobs, we try to educate ourselves by consulting with our predecessors, going to seminars, and having lawyers review our contracts. That is still no substitute to experience in the workforce, so most of us still make our career decisions based on limited (and sometimes inaccurate) information.

Female doctors have to work even harder, as medicine is still predominantly a male dominated profession. You have to work harder to get what you deserve, but it can be done. Fortunately the rules for getting compensated fairly as a doctor are similar to that of most other corporate jobs. The following is a step-by-step list to get that raise you deserve.

Know How Much You Are Worth

Your value to the practice or company is determined by what you can offer. As a doctor, that means that you must know the value of your medical knowledge to your boss. Are you the only person in the state who can deal with certain medical conditions? Are there a hundred more of you in the same city? Are you expendable? How much revenue ARE you bringing into the practice, and how much CAN you bring to the practice?

Before you begin your negotiations, you need data. You need to know approximately how much revenue each one of your consultations, procedures, or surgeries bring into the practice. You need to know the spread of insurance payors of your patients, and ideally the range of reimbursements you receive per carrier. You need to know what your collections rate for billed charges are. You need to know your practice expenses too (if they open the books to you). This includes all operational expenses of the department, like employee salaries, benefits, fixed costs…etc.

If you are employed by the hospital, you will obviously not know its operational expenses. Focus on what you bring to the table. That is your bargaining chip.

Obviously the tips above are contingent upon your effort in the practice as well. If you truly are not seeing many patients and bringing in money to the bosses, then your bargaining power diminishes substantially. However if you are actually very busy but stuck with non-revenue patients, then you still have negotiating power.

Know How Much Others Are Making

Salary negotiation is also dependent on the income of your peers both in your group and in the local vicinity. How many male and female doctors in your profession are there in town? You must have a baseline to start with. If your current salary is significantly lower than others within your group, you should have better negotiating power (if your boss wishes to treat you fairly).

Formulate Your Strategy And Be Assertive

This is most critical for female doctors. Women are traditionally more timid in male-dominated professions, and are expected to acquiesce. This stereotype and tradition transgresses through the entire workplace. When a male doctor asserts himself to the mid-levels, he is accepted to be in charge and headstrong. When a female doctor does the same, she is seen as a b*tch. The same requests by different genders are unfortunately interpreted differently.

You must be firm when you make your requests, and be logical as well. Administrators love data even if the decision to raise your salary is subjective. A sample argument that you can work from is as follows:

In the past year, I have seen a growth in patient visits of 25%. This has translated to 500 patient visits to date and 8000 rvu’s generated. My professional fees total $1.1 million, and I have also brought in $2 million in technical charges to the practice. To date, my total revenue and patient visits exceed that of all the senior partners in the group. I feel that I have built up the practice significantly, and have a steady referral stream from Dr. Outside, who previously was not referring to our practice. I believe that a $100k bonus for my effort for the past year is very reasonable. I hope to continue growing the practice in the future.

Reassess On A Regular Basis

If you don’t get exactly what you deserve, keep trying. You will never get more if you never ask. It doesn’t hurt to ask as long as you remain professional and provide evidence of your work. This applies not only to salary, but also with logistics of practicing medicine like call schedules and fair division of patient care.

It continues onward into partnership as well. When you start looking into practice real estate, buy-ins, and stock, you want to ask questions to make sure you are as informed as possible and you are getting what you want and deserve.

Conclusion

Obviously it takes effort to do all that I have mentioned, but nowhere as difficult as the path to become a doctor. You simply have to stay organized, state your case, and keep trying.

What strategies have you implemented to obtain a raise? Let us know below!

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How To Identify Physician Burnout — And How To Prevent It

Posted on July 10, 2015 by SmartMoneyMD

Physician burnout is becoming increasingly common, especially for new physicians. The combination of changing healthcare environment and debt burden has made medical practice less desirable to practice medicine. If you want to find whining doctors, go no further than Sermo. You will find plenty of disgruntled doctors.

How Does Physician Burnout Occur?

Burnout typically stems from an undesirable work environment. This might mean taking excessive call compared to the senior partners, getting dumped with non-revenue patients, handling scutwork, taking more hospital calls, or not getting compensated for your effort and time. For outpatient specialties, I’ve seen junior employees getting dumped with uninsured patients or taking care of non-revenue postoperative patients. This means that you end up being busy without being credited with revenue. Some practices do not openly disclose their books to their employees and hit them with overhead charges that should not be allocated to the junior doctor. For inpatient doctors, burnout can come from dealing with sick patients, demanding families, and high stress levels. Moreover, many inpatient doctors work for hospitals or larger groups that certainly can control the amount of revenue that is distributed to the doctor.

The practice of medicine is both a healthcare service AND a business. The Hippocratic oath doesn’t say anything about running a business, but it does us no good to care of patients if we can’t keep a roof over our head while doing so. Purists are going to scoff at this mentality, but this the cold, hard truth. Likewise, if you were to argue the financial ramifications of a cosyntropin stim test in your medical school endocrinology class, you’d be viewed as a heretic.

However, once you are out of the protected training environment, you end up dealing with the reality of a medical practice. Even in protected HMO practices like Kaiser Permanente, you still deal with cost containment, busy clinics, and budget cuts.

Take that work stress back home, and you’ve got a recipe for burnout. At home, you are too exhausted to deal with household chores and family. Fights will bound to arise. You not only have an unhappy doctor, but also an unhappy family.

How To Prevent Burnout

There is hope to escape and avoid burnout. The key is to identify what the offending routines that make your job intolerable and get rid of them. Is it the incompetent front desk that your practice has sustained for the past decade? Find a way to replace them. Are your senior partners giving you all of the holiday call? Justify to them that in order for you to be a productive doctor, these responsibilities need to be divided equally. Are you being charged overhead for a surgical center that you have no hope of owning? Make an argument with your employers that whatever policy that is imposed on you is not commensurate for long-term success for the practice. This is obviously a dicey topic since many of the senior doctors in your practice may have gone through the same process that you are going through (except that income was likely better for them). If they are truly committed to your success, they should be amenable to some change.

Do you keep getting overnight shifts at your hospital? Do they only pay you an extra $4/hr for taking those shifts? Find out what the problem is. Are there other doctors in your group who are willing to take the graveyard shift? If so, negotiate an arrangement with them. If not, then your administrators need to pay you more for working undesirable hours. If you know exactly how much revenue or charges that you bring in per shift, then you have negotiating power. Remember, administrators need facts. They aren’t going to pay you more simply because you are saving lives and deserve it. You bust your ass in the office to earn $200,000, and they bust their asses going to meetings the entire day for their $240,000. To the objective business mind, the two jobs are identical.

Do you simply hate going to work? Perhaps condensing your hours to four days a week can help reduce the stress by simply reducing the amount of time you spend at work. If you can accomplish five days of work in four days, by all means go for it. If you are fortunate enough to have a working spouse and have finances amenable to a part-time job, go for it. This is why alternative income streams are so important. You need that f-you money.

If all else fails, you need to find a new job. Most doctors cringe at the thought of picking up their families and moving, but sometimes that is all you can do. Remember, if you are stuck in an unfavorable financial and emotional job, you have to live with it daily. Most doctors change employers and jobs at least once during the first five years of their careers. This is more reason why you should not be buying a McMansion right out of residency.

Remember, there is hope. Thousands of doctors have been in your shoes and have survived. Some have struggled through burnout, but remember that you don’t have to in order to be a successful doctor.

What strategies have you applied to avoid burnout? What has work, and what hasn’t?

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What is Motif Investing and Does it Belong in My Portfolio?

Posted on July 5, 2015June 22, 2018 by SmartMoneyMD

Note: I do NOT receive any commissions from writing this review, although I wish I did. All opinions expressed in this article are not influenced by any third parties. Any information should not be construed as investment advice either.

Update: Motif reached out to me, and mentioned that they do have a dividend auto-reinvesting program. This program is different from a traditional DRIP in that it allows you to reinvest dividends in any other Motif fund. The article has been updated to reflect this change.

I recently came across Motif Investing, a startup that focuses on an alternative way of investing. The company was co-founded in 2010 by Hardeep Walia and Tariq Hilaly. They are both smart guys with business degrees from Wharton and HBS, respectively. Hardeep was an executive at Microsoft while Tariq belonged to Alliance Bernstein, a large hedge fund. This means serious experience with money.

What is Motif Investing?

I would consider Motif Investing a hybrid between individual stock picking and indexing. The premise is that in a “motif”, you have up to 30 stocks or exchange traded funds (ETFs). Each stock in the motif shares a common outlook, and one of the presumed advantages is that you can own a set of stocks that provide an appropriate amount of exposure to the market.

There are at least 150 predefined Motifs to choose from. When you first sign up with them, you can complete a survey to analyze your “Investment DNA”. Some Motifs include Horizon Models, “Biotech Breakthroughs”, “Housing Recovery”, and “Eating Out”. Obviously each motif has a catchy title to represent your investment sentiment. The “Eating Out” Motif holds stocks in fast food chains, casual dining chains, cafes, and fine dining establishments.

How Much Does Motif Investing Cost?

One of the advantages of Motif Investments is that the purchase of each Motif is CHEAP. You are charged $9.99 for a purchase that contains up to 30 stocks or ETFs. This means that each stock trade is only $0.33! I don’t have the details on how Motif is able to accomplish this but I’d imagine part of this comes from have a set volume of trades and some relatively deep pockets in their funding. I don’t know if the trade costs are part of the burn rate of the company.

If anyone from Motif wants to enlighten me, please contact me through the website!

All of the Horizon Motifs incur no transaction costs as well. For instance, if you purchase the Horizon 1-Year Aggressive Motif, you will get a mix of VTI, BNDX, BND, VXUS, IVR, and GSG at no trading costs! Great deal, if you ask me.

If you decide to customize your own motif, you are charged $4.95 to change a single stock or $9.99 to change your entire motif.

What Advantages Does Motif Investing Confer to Me As A Doctor?

As mentioned above. Spending less than 10 bucks for 30 stocks is a steal. If you are computer savvy and a data junkie, Motif Investing offers you all of that. You get data points of all of Motifs, nice graphs, and plenty of information to maximize your “control” of your portfolio. The amount of data available to interpret is amazing, and Motif’s interface is a data junkie’s paradise.

There is a strong social presence on Motif. There are commentary options throughout the entire website, and you can also share your motifs on Facebook, Twitter, and Linkedin. Is this an advantage? I’m not sure, but you have all the options to share your investing prowess to the world. Conversely, the world also has the opportunity to critique your investments as well.

What Disadvantages Does Motif Investing Have?

For the first several years of existence, Motif did not have a DRIP option to reinvest your dividends. Investors lost the ability to dollar cost average commission-free, albeit in small amounts. They now offer their own auto reinvesting program which allows you to invest any cash dividends in any other stock or ETF the service offers. Think DRIP, but only better.

While not exactly a disadvantage, there’s no magic formula in investing. Motif provides a framework to select categories of investments that suit your interests, but it’s unclear to me that long term this will confer advantages. Yes, you feel like you are in more control, but if you look at many of the motifs available, they have incurred losses over the past 12 months, just like the how their underlying stocks have performed individually.

Conclusion

I think that Motif Investing offers an interesting spin for the techie world. You get some advantage of an immense amount of data to make your decisions, and you might get some diversification from owning up to 30 stocks with one trade. However, you still aren’t protected from human idiocy. If you decide to play margin (which is available) and lose big, you’re still out some money. If you like buying and selling to time the market, you can still do it and incur transaction fees.

Most non-finance professionals (read: doctors) aren’t really going to benefit largely from having these options. We doctors as a whole are bad businesspeople and bad investors. Even those of us who claim to understand biotech firms and have medical knowledge of pharmaceuticals are not necessarily going to do well with biotech stocks. Instead of buying individual stocks in a particular genre, you get up to 30. Big deal. If you’re going to get rich with stock investing through Motif, you’ll likely have gotten rich without it.

I may consider using Motif in the future when I have ancillary income. It gives some more diversification to individual stock picking that I itch for, but I definitely won’t put all of my taxable income in Motif.

What opinions do you have for Motif Investing? Have you had experience investing through them?

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How To Become A Rich Doctor – Ride The Wave

Posted on June 28, 2015December 22, 2017 by SmartMoneyMD

how to become a rich doctor ride the wave Easy money does not exist. It does not matter if you are an entrepreneur, lawyer, doctor, or TV personality, you still have to apply effort to generate income. The days of doctors opening up a practice and expecting millions of dollars rolling into your bank are over. I sadly discovered that I was 15 years too late coming into practice.

All is not lost if you’re just finishing your medical training just now. You can still become a rich doctor if you work hard, set realistic goals, and adapt as needed. That’s what I tell myself when I’m two hours behind in my clinic full of angry patients or when I keep hearing at my medical staff meetings that my department is STILL losing money even though I put in more hours at work than I ever have. The following are principles that I try to live by to grow my net worth as a doctor in the 21st century:

Do Not Let The Apparent Wealth of Your Peers Distract Your Goals

It does not matter if your co-resident owns a yacht or just bought the latest iWatch. You don’t know if they maxed out their credit lines to buy rent space at the dock for the boat that they use twice a year. She may belong to old money. It’s also not like that you will benefit from their apparent wealth or if you will magically become successful if you owned the same material wealth. One of our friends recently finished his radiology fellowship, drives a BMW 5-series, and also owns a $1+ million apartment in Manhattan. It is easy to be fixated on the success of others, but it is clear that a self-starting doctor in the first year of medical practice is not capable of living such luxury without the help of pre-existing wealth. It doesn’t happen in the third year of practice either.

Who cares if you drive a 1991 Honda Accord and your front desk lady drives a Lexus? As long as your car gets you to where you need to go safely, it does not matter. Once you build up a strong velocity of money, you can loosen the reins.

Focus on your goals. Don’t try to keep up with the Joneses.

Strategize and Build Alternative Streams of Income

Even if you score a killer job that pays you $300,000 a year, it will take years to build up enough wealth to buy substantial luxury. If you take home 55% of this salary and save 50% annually, you’d only have $412,500 after 5 years. Sure, you could work some investment magic on that amount, but you might also end up with less than what you put in. Not all of that is going to be disposable income if they are locked up in retirement accounts.

Build your income. At the workplace, this means learning how to streamline expenses, working harder, and building your worth as a doctor. Ride the wave. As you build your practice, your patient base will grow accordingly. Treat them well, and they will refer their friends to you. Instead of making $200,000 a year, you might earn $210,000. It’s not much, but it is also earned money. That is step number one.

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Don’t forget that the income wave can rise OR fall. Your reimbursements will go down. You may get deadbeat payors. Remind yourself that as a doctor, you still have job stability. That is one of the few advantages that you traded off after 10 years of no/low income servitude to the medical profession. This is your primary income stream that you maintain in order to find alternative means to grow your net worth.

Think Like An Entrepreneur

Being employed as a doctor will allow you to have a comfortable lifestyle. If you want more than that, you will have to think BIG. The $5 million house with a 7 car garage in the “rich neighborhood” of town is probably not going to be owned by a doctor. Probably not a practicing doctor without alternative streams of income. This may include multiple streams of income:

Passive income – I consider this the best form of income. Money comes in while you sleep. You may have put in work previously, but it continually adds to your net worth. This may be in the form of royalties. If you are involved with investments, growth of your shares will also come passively. In the tech industry, passive income can from from a number of streams, whether it is through referral networks or endorsement fees.
Active income – The sky and your time is the limit. Real estate. REITs. Invited lectures. Perhaps you were a wine connoisseur before becoming a doctor. Maybe your dream job was to run a wine tasting company. You still can as a doctor. It can even provide ancillary income. Do you have other money generating hobbies? Perhaps you’ve always dabbled in photography. Do you want to run a wedding photography studio on the side?

You can generate income through any or all of the methods above. The greater number of income streams you have, the more stable your net worth growth can become.

Plan Your Finances Intelligently

Asset preservation is a key component in building net worth. As a doctor or any high income generator, you have to make sure your finances are in line. This means getting out of debt. The hole you dug yourself into during college and medical school needs to be filled in. I paid off a six figure debt by the time I finished my first year of practice. You can too. Rule number two is to avoid getting into debt. This means you pay off your credit cards every month and make sure that you are not late in payments. Avoid frivolous purchases like the plague. Rent your house while you’re still deciding whether your job will last long term.

Track your investments, spending, and income. I use Personal Capital as an online tool to monitor my finances. From the spending standpoint, Personal Capital tracks all of your purchases and allows you to categorize them. You can monitor exactly how much you’ve spent with groceries, restaurants, entertainment, and other miscellaneous purchases in nice graphs. You can get a quick sense of which categories of spending you can cut back on.

From an investment standpoint, Personal Capital employs advisors (real humans) who can discuss with you how to strategize your portfolio. For portfolio management, they charge 0.89% for the first $1 million invested and a decreasing amount as your assets under management increases. I do not use their advisory services, mainly because my current investment options under my employer are relatively fixed, and my taxable investment amounts are still a pittance. It’s difficult for me to determine whether I’d actually ever have an advisor handle the majority of my investments because I feel that I spend the majority of my educational time allocated to finance. For the busy doctor who has little desire to educate herself (big mistake if you do no self-education), having a low-fee advisory service wouldn’t be the worst thing in the world. There are plenty of stupid things you can do with your hard earned cash.

Conclusion

You can still build a substantial amount of wealth as a doctor in the 21st century. It’s going to be a lot more challenging than what our predecessors went through, but you have more tools at your disposal. Remember that it still will require hand work and a strong desire to build your wealth.

What have you done to contribute to your net worth? How much of your effort in building net worth comes from your medical practice versus other sources of income?

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(Photo courtesy of Flickr)

Younger Doctors Are Wimps

Posted on June 25, 2015 by SmartMoneyMD

Full disclosure: I consider myself in the “younger” doctor category. The experiences and sentiment expressed in this entry are derived from what I’ve encountered during my training and now current job.

There, I’ve said it. My attending physicians said it to me when I was a medical student, resident, and fellow. My coworker who is 30 years my senior doesn’t openly call me a wimp, but we both know what goes on in his mind when I whine about taking call. It gets worse. When I was teaching my medical students, they seemed to elevate apathy to the next level—imagine combining laziness, entitlement, and cleverness together. You end up with someone who will only do what it takes to get the grades and advance to the next level. No more, sometimes less.

Maybe subsequent generations are always wimpier. Doctors in the 1970’s and 80’s were mostly men who belonged to single income households. Many surgeons operated from dawn to dusk and rarely saw their families. These doctors also generated serious amounts of income compared to doctors today. The incentive was good for them to work hard; you put in the hours and the money rolled in.

Times Have Changed.

Economic and social shifts in medicine over the past two to three decades have molded the experiences of doctors.

Economics of Being a Doctor

Reimbursements for professional services have either decreased or lagged behind inflation rates. Some surgical procedures in the 1980’s actually paid three times more than surgeries performed today (not even taking account of inflation). We are constantly pressured to see more patients to keep up with rising overhead costs while the complexity of documentation and regulations have made medical practice much more challenging. I make about forty mouse clicks and type several lines in the Electronic Health Record for every patient that I see in the office—thirty years ago the same could have been documented using one side of a 3”x5” index card! The very technology that was designed to improve communication and quality of care not only slows me down but also digs into my checkbook. There are plenty of physicians who actually bankrupt their practices when they are unable to adapt to the changing financial aspects of medicine.

In some ways, the increased restrictions on how we practice medicine have led many doctors to limit the number of hours they actually spend working. Twenty to thirty years ago, internists typically ran outpatient clinics and saw their patients who end up being admitted into the hospital. A typical week may entail 35-40 hours of outpatient clinical care, another 2-3 hours of managing the business, and 2-5 hours caring for hospital inpatients. Now, the role of caring for inpatients has transitioned to that of Hospitalists—doctors who strictly work on a shift basis caring for inpatients. The doctor who was able to handle his business, hospital patients, and his clinic in 50 hours a week may need 60 hours to do the same thing AND get paid less. From an economic perspective, it is a no brainer to actually put in fewer hours. Yes, the healthcare system is way too complex to be explained solely by this reasoning, but from a practical sense, working less actually makes sense. Ironically, by working less, the new-age doctor by default becomes “wimpier”.

Social Changes in Medicine

One significant social shift in medicine is the increasing number of FEMALE doctors. Most medical schools enrolled nearly a 50/50 distribution of male to female students. What this also means is there has been an increasing number of dual income doctor households. A dual income doctor household confers two advantages: (1) higher earning potential and (2) diversification of income. If one spouse’s job ends up being horrible and he loses his job, the family isn’t going to starve. A dual income household allows flexibility in how much each spouse needs to work. Instead of one spouse working 78 hours a week, you can have both spouses working 40 hours a week to generate an equivalent income. With an easier cash flow, neither working doctor spouse actually has to put as many hours in. With social change, there is now a higher potential to have two wimpy doctors in a household.

Wimpy Doctors Come Ahead Financially

Yes, younger doctors who put fewer hours are wimpy compared to prior generations of doctors. The earning power of younger doctors will unlikely ever compare to that of prior generations due to the nature of the healthcare system. However, the new generation of doctors are savvier. We are resourceful enough to learn the basics of managing our finances and know where and when to seek assistance. Our hours of work will be less, but we can take advantage of increased freedom to broaden our fund of knowledge, prepare ourselves financially, and have more time to our families. Dual income doctor families have an even greater advantage. With appropriate division of earning potential combined with an intelligent savings rate, a dual income doctor household can have a diversified means of building net worth and a higher likelihood of achieving financial independence.

Being wimpy wins.

What have you done to take advantage of the changing face of medicine to improve yourself financially?

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