Understand the Rich Doctor, Poor Doctor

Physician's Money Digest, October31 2003, Volume 10, Issue 20

With the recent medical malpracticeproblems, the question of whetherdoctors make enough (or too much) hasbecome increasingly important. Lawyers say 1 thing,doctors another. Monstertrak.com lists the mediansalary for a family practitioner at $136,000, very closeto the 95th percentile for all US salaries. If thesesalaries are correct, it seems that people would be correctin labeling doctors as "rich." Perhaps income isnot the best way to decide at what point a person isrich. I would like very much to escape from the elitisteducation bubble I'm in and come up with an unbiasedview of physicians' salaries before I myself enter thefield of medicine and get introduced to even more bias.

Reader Joe Orloski, a first-year medical student,writes:

If only I could put my hand on this young man'sshoulder and give him some fatherly advice. "Joe,don't you ever believe what you read in the paper.Don't you ever listen to a lawyer, or anyone else, whostands to gain financially by convincing you to supporttheir position. And don't you ever believe in statistics.Mark Twain was right: There are lies, damnedlies, and statistics."

Joe, you'd like an unbiased opinion. I can't giveyou that. That would be impossible unless I was farremoved from the field of medicine. And if I was farremoved from the field of medicine, I couldn't giveyou an informed opinion. Sounds a little likeHeisenberg's Uncertainty Theory, doesn't it?Presuming that you would like a biased opinion fromone who has lived the life of a physician, let me introduceyou to some important concepts and how theyaffect the "richness" and "poorness" of physicians.

Starting Out in Debt

Joe, I suspect you're already in debt, but let's discusswhat that means to you and your career as a doctor.Let's consider the concept of reserve capacity inhuman physiological systems. Every human systemhas its reserve (eg, cardiac, pulmonary, etc). Thatreserve gives humans the ability to deal with stressesto the system. When that reserve is depleted, thehuman is "sick."

RichDad, Poor Dad

In hematology, when apatient becomes iron-depleted,their bone marrow storesdecrease, but they may notbecome ill immediately. Withno reserves, even a minor crisiscan lead to immediatesymptoms of anemia. In (WarnerBooks; 2000), Robert Kiyosakiexplains this in the languageof economics: You're not rich from currentincome (iron intake); you're rich from your assets(bone marrow stores).

Doctors incur massive losses in debt (reserve) duringtheir training. When they go into practice, theyneed to pay those off, which will probably take adecade or so. Doctors are iron-deficient from day 1.While the medical student was incurring this massivedebt, their nonmedical friend was receiving an income,buying a house and furniture, and getting vested in aretirement plan. The medical student must work adecade to pay off their debt and another to catch upwith their colleague who didn't go to medical school.

Our new doctor is now paying for everything afterthat decade of inflation. The house that their friend paid$100,000 for will likely cost the doctor $150,000.Finally, remember that our young doctor likely won'tmake the "average" Monstertrak.com salary rightaway. It may be another decade before they do that.

Dealing with High Expenses

Businesses in America are always giving discountsto various groups in an effort to get theirbusiness. But nobody gives discounts to doctors. Onthe contrary, I believe that most businesses count ongetting a premium price for their goods and serviceswhen they sell to doctors. They rely on the fact thatdoctors are financially naive and don't have the timeto fully research their financial expenditures.Experienced doctors have learned that you don't tellsalespeople your profession. Unfortunately, as youbecome established in your career, this isn't anoption. Everyone knows who you are, making it unlikelythat you'll be treated as an "average" person.

A huge part of your future expenses will be highereducation for your children. Scholarships get passedout to "needy" kids, not "rich" kids who pay fulltuition. And don't count on your child receiving amerit scholarship. A friend of mine's son won a rigorouscompetition for a coveted scholarship worth severalthousand dollars. My friend went to the awardceremony elated and received an ornate plaque statinghis son was the recipient of this prestigious award.When he asked where the check was, he was told that,because he made so much money, the monetary partof the award was deferred.

Don't expect financial help from anyone. Whenyou're a doctor, you're on your own. You pay yourown way, and then some.

Careless Spending Habits

You know about rebound phenomena in physiology.When an agent in a self-regulating system is artificially suppressed, it will rebound when the suppressionis lifted, often overcompensating. This happensin medicine. And it happens in physicians' finances.

For many years, doctors' finances are suppressed.Young medical students and residents live hand-to-mouth.Their families do without. They feel deprivednot providing better for their families. When theystart their practices, the lid comes off. They overcompensate,even buying compulsively—big car, boat,fancy house, and good clothes. Instead of paying offtheir debt, they go further into it.

A friend of mine just starting his practice bought asailboat. It didn't matter that he didn't know how tosail. He didn't have time to take lessons, but figured,as a doctor, he was smart enough to handle a sailboat.He crashed the boat and had to sell it at a loss.

Practicing in Expensive Areas

In rural Michigan, $136,000 may go a long way,but it doesn't go very far in California, New York, orFlorida. And it doesn't go far in well-to-do suburbs.And where do doctors flock? These are nice areas tolive, with plenty of specialty support. As a young doctor,Joe, you'll be drawn to areas like these. You'll preferto have plenty of colleagues around you for referralpurposes and for call coverage.

By then you'll have realized that you're expectedto provide the same level of medical care in ruralNebraska that a patient would receive in an urban orsuburban location. So why not move to an area whereyou can actually provide that type of service? Andthere you are, practicing in an expensive area with alower income potential because of competition fromestablished doctors.

The salary debate is a complex one. I'm biased,though. I think that you can make a good living andyou and your family can be quite comfortable, if notrich. But to accomplish that, you must work veryhard, keep a constant eye on your expenses, and nevercount on the image of a "rich" doctor.

Louis L. Constan, a family practice physician inSaginaw, Mich, is the editor of the Saginaw CountyMedical Society Bulletin and Michigan FamilyPractice. He welcomes questions or comments at3350 Shattuck Road, Saginaw, MI 48603; 989-792-1899; or louisconstan@hotmail.com.