Medical residents are universally lauded for their mastery of “delayed gratification,” and no one can fault them for wanting to play catch-up once the money starts rolling in. But, the transition from medical student to MD is laden with some unique financial challenges that, without the tools to confront them, could postpone life’s ultimate gratification (retirement) well into the future. Beginning a career ten or twelve years late with six figures of debt can place an enormous burden on new physicians who aren’t prepared to manage their finances with their future in mind.
Caught between the temptations to step up their lifestyles and to quickly pay down their debt, new physicians can find themselves running out of money without any consideration for savings. But then, they’re only at the beginning of their income potential and there will always be time for savings, right? Wrong. The most powerful resource we all have for building wealth is time. You really don’t have control over how much money you will make, but you do have control over how much time you have to save what you do make. The more time you have, the more opportunity you have to build wealth.
Read more at: Adventures in Medicine
To the consternation of young physicians, the general public perception is that all medical practitioners are wealthy, which may be the reason why we hear so much grumbling over the cost of health care costs. What is largely lost on the public is that the vast majority of physicians begin their careers deep in a hole both in terms of money and time. It is difficult for the average person to fully gauge, let alone appreciate the monetary and time commitment that goes into preparing for the profession. Even before they confront the lifelong challenge of building personal wealth from a medical practice, new physicians are lined up well behind the starting line for a number of reasons..
If you’re finishing up residency or fellowship, you’ve spent the last 4, 5, 6, 7, maybe even 8 years being paid about 18 cents per hour. Now you’re out there looking for your first “real” job. So when someone comes along and offers you a 6-figure salary, it’s tempting to accept it, no matter how unfair the offer actually is. Unfortunately, some employers are anxious to take advantage of young physicians who are desperate to take any job that will help them begin to pay off their enormous student loans. So many times young physicians wind up accepting compensation under their physician employment agreement that is not up to par with market standards. After all, it’s hard to know what the market standard is when you don’t have access to national physician compensation benchmark data. Before you accept a physician employment contract offer, be sure someone is looking out for your financial and legal interests.
Many physicians, especially those fresh out of training, are hasty about accepting the first job offer that comes their way because they have enormous student loans to pay off, and they haven’t yet endured a horrific employment experience that has taught them to tread carefully into any given employment arrangement. After all, when you’re out there looking for your first job, the potential employers are great salespeople- reassuring you that your wants and needs will be met.
The question of how much money physicians should make has long been a provocative topic. Even about 250 years ago, pioneering economist Adam Smith summarized the prevailing tone when he wrote, “We trust our health to the physician… Such confidence could not safely be reposed in people of a very mean or low condition. Their reward must be such, therefore, as may give them that rank in the society which so important a trust requires.” (An Inquiry Into the Nature and Causes of the Wealth of Nations; 1776)
With today’s focus on the need to control US healthcare costs and boost the number of primary care physicians, physician payment again is in the limelight.
Physicians are clearly fighting to maintain the incomes they — often justifiably — feel they deserve and for which they have paid their dues. But it’s obvious that just about no one else in society is weeping over any potential decline in physician salaries.
Few experts think that US physicians overall are paid too little, especially compared with most American workers. Some say that US physician fees, income, and services overall are excessive, contributing to US medical spending that’s by far the highest per capita in the world. Others argue that certain types of specialists, such as radiologists and orthopedic surgeons, are paid too much, while others, such as family practice physicians, pediatricians, and geriatricians, are paid too little.
A growing number of experts argue that the prices that physicians and other providers charge need to be curbed, along with wasteful and inappropriate care. That could lead to reduced physician incomes — though no one wants to see the draconian Medicare sustainable growth rate cuts take effect.
However, many consider high physician incomes to be perfectly justified.
Another view is that the US free market more or less accurately determines how much money it takes to attract and keep talented people in medicine. In a country where the top 1% have an average pretax income of $380,000, not counting capital gains, while the median household income is about $50,000, these observers say that it takes the promise of high and secure earnings to convince the brightest young people to choose a career in medicine rather than the potentially more lucrative fields of finance, management, law, and lobbying.
Physician income overall has declined since 2010, yet there are tiny glimmers of hope in some specialties. Frustration is mounting, however, and doctors in every specialty are bracing for what they expect to be further income declines as healthcare elements are implemented, such as accountable care organizations and required treatment and quality guidelines.
Who earns the most, and who is the happiest? Despite a decrease in mean income, radiologists and orthopedists were the top earners at a mean of $315,000, slightly besting cardiologists and anesthesiologists. Urologists and gastroenterologists were also among the top earners. As in Medscape’s 2011 compensation survey, pediatricians earn the least, at a mean income of $156,000, up from $148,000 the previous year. More internists and family physicians saw a slight increase in income than saw a decline.
Some of the major findings from Medscape’s 2012 report:
- Dissatisfaction with medicine is intensifying, although a majority of physicians would again choose the same career path. In 2012, just over half of all physicians (54%) would choose medicine again as a career, far less than in the previous year’s report, where 69% of physicians would choose medicine again.
- The top-earning specialties in 2012 were the same as in the previous year, even though their incomes declined in general. In 2012, radiologists and orthopedic surgeons again topped the list at a mean income of $315,000, followed by cardiologists ($314,000) and anesthesiologists ($309,000). The same 4 specialties were in the leading positions in last year’s survey. The bottom-earning specialties also remained similar: pediatrics ($156,000), family medicine ($158,000), and internal medicine ($165,000).
- Who’s up, who’s down since 2010? “Decreased reimbursement” is the overall buzz-phrase, yet a minority of specialties saw modest gains. The biggest income increases were in ophthalmology (+9%), pediatrics (+5%), nephrology (+4%), oncology (+4%), and rheumatology (+4%). The largest declines were in general surgery (-12%), orthopedic surgery (-10%), radiology (-10%), and neurology (-8%).
- Do men or women earn more? Overall, male physicians earn 40% more than female physicians, although that difference is only 23% in primary care. Experts say that the difference is related to choice of specialties and lifestyle preferences that women choose.
- Don’t write off private practice! Although physicians are rushing toward employment, partners in private practice far outearn physicians in other work environments. Overall, partners in private practice earn significantly more than solo practice owners and employed physicians, who earn less than either group.
- The “rich doctor” myth may be just that, although “rich” is relative. Overall, only 11% of physicians say they consider themselves rich, while about 45% say their incomes are no better than that of many nonphysicians, and another about 45% say, “My income probably qualifies me as rich, but I have so many debts and expenses that I don’t feel rich.” The specialties with the highest percentage of physicians who felt rich were pathology (15%), radiology, oncology, and gastroenterology (14% each).
- Doctors in all specialties are swamped with paperwork. A third of physicians (33%) spend more than 10 hours per week on paperwork and administration.
- One healthcare reform goal of reducing “unnecessary care” garners negative response. The vast majority (67%) of physicians said they won’t reduce the amount of tests, procedures, and treatments they perform (in order to comply with insurer treatment guidelines) either because the guidelines aren’t in their patients’ best interests or because doctors still need to practice defensive medicine.
Those are some of the insights from Medscape’s Physician Compensation Survey Report: 2012 Results. The report is based on a survey that garnered responses from more than 24,000 US physicians representing 25 specialties.
Newly trained female doctors in the United States make nearly $17,000 less than their male counterparts, even though women increasingly are choosing careers in higher-paying medical specialties, U.S. researchers said on Thursday.
They said there has been a widening gender gap in starting salaries for female doctors, rising from a difference of $3,600 in 1999 to $16,819 in 2008.