Does MD Truly Stand for Million Dollars?

September 16, 2008
Louis L. Constan, MD

Physician's Money Digest, February28 2003, Volume 10, Issue 4

Somehow doctors get pegged as representinga top percent of net-worth individuals.While the average physician's salary ismodestly comfortable, it isn't hovering anywherenear Bill Gates'. Have you or your family sharedexperiences similar to the following ones that myfamily has endured?

• Your wife likes to sew her clothes.The people in the fabric store assail her:"You can buy anything you want ready-made.Your husband is a doctor!"

• Your children are playing withthe neighborhood children. They getteased by their friends: "Why don'tyou wear designer clothing? Your dadis a doctor; you can afford them!"

• You go to an appliance store,jewelry store, or car dealership, andthey immediately show you the mostexpensive items they have. They figurethat you can afford it, since you're adoctor. You get seduced by the slicksalesperson who convinces you to buymore than you wanted: "You canafford it; you deserve it."

• Your child applies to a good private college.He's an academic superstar: "We can't give youa scholarship, even though you deserve it. Yourfather is a doctor."


Are you as tired of all this as I am? You seeyourself struggling to make ends meet, andeveryone around you thinks you don't have afinancial care in the world. No one seems tounderstand. How can it be? How can there besuch a disconnection between how society seesour financial position, and how we really are?And what can we do about it?

Part of the problem is that most people don'tknow how much money physicians actuallymake. They only know how much it costs for ourservices. And that seems like a large figure. Adoctor visit may be the most expensive thing theydo all day. A procedure is probably the largestexpense they incur all year.

Of course, they don't understand the largepercentage of that money that goes to maintainingour ability to practice. They can't know thatoffice overhead alone takes more than half. Inaddition, we have huge expenses that ordinarypeople don't, including:

• Overhead. Liability insurance bills, medicalstaff dues, license fees, specialty society dues,and continuing education expenses.

• Retirement. We don't have an employerwith a huge retirement department to handle ourretirement. We do it ourselves, and yes, we makesome costly mistakes.

• A reliable car. Imagine if we drove clunkersthat couldn't make it to the hospital. Everyonewould think we just couldn't cut it as a doctor, andthey wouldn't refer any patients to us.

• Nice clothes. Even though we'd rather wearjeans and sneakers, patients would never trust adoctor if they wore cheap or shabby clothes.


But there's more than a misinformed publicat work here. We deserve some of the blame forthe situation. There are a plethora of articles infinancial management magazines pointing outhow bad doctors are at managing their personalexpenses. After years of sacrifice ingetting our education, we start practicingin a frame of mind that throws fiscalconstraint to the wind. We dig ourown financial holes by living our livesmerrily, overspending, undersaving,and ignoring the day of reckoning.

Why do we do this? Perhaps it'sbecause it's so hard to ignore others'strongly held perceptions. Doctors arerich—we learned this in grade schoolfrom our parents (unless they weredoctors).We've seen it in the media—on television and in the movies. We listento politicians and practically everyoneelse bemoaning the fact that medicalcare is so expensive. Doctors mustbe making a lot of money.

So we go through our lives believingthat we're rich, spending as though we're rich,and failing to save, as though it isn't necessary.We, ourselves, reinforce themistaken societal belief thatwe are, in fact, wealthy. It's aself-perpetuating problem.


Because we're viewed aswealthy, why would politiciansand insurance companiesmake any effort to increaseour reimbursement? Infact, they have every incentiveto reduce our reimbursementas a way of reducing aninequality perceived by the voting and insurancepremium-paying public. So our costs go up,reimbursement goes down, and our financial situation,once tight, becomes desperate.

We know all this, and we know that we needto get our finances in order, yet we don't do it.We seem paralyzed into inactivity. Maybe, if wedon't think about it, the problem will go away.Maybe if we just work harder, then more moneywill come in and our problems will be solved.Maybe the stock market will rise fast enough tosecure our retirement plan. Maybe our childrenwill get settled in life and be less of a drain on ourbudget. Maybe we'll get the house paid off andthat will free up some money—right.

Such fantasies can lead to some very badresults. Instead of feeling more financially secureas we get older, we feel less so. We spend our livesserving patients, sacrificing our own lives tomake our patients' lives better, yet we don't seemto be rewarded for doing this. As our financialcushion contracts, we find that we can't fund ourretirement plan as we should. We find that ourchildren may be forced to narrow their choice toa less expensive college. Ultimately, we may findourselves in our retirement years with less moneythan we should have to maintain our life and notbe a burden to anyone.


How can we avoid this? The first step is totake a realistic look at where we are financially,and take steps to reduce unnecessary expenses.Most financial advisors would like to put us on astrict budget, but physicians resist this with apassion. Who has the time? Who can devote timeand effort to learning such a complex skill? Mostof us are simply not that skilled when it comes toworking the figures.

These are some of the tactics and strategiesthat worked for my family:

• We taught the kids how to rebut the tauntsof their playmates. Although I didn't tell my childrenmy adjusted gross income, I did tell themwhat I paid in taxes. After that, when the neighborhoodkids taunted them, they replied: "Oh,my dad makes a lot of money, but it's justenough to pay our taxes."

• When the kids wanted new clothes, we gavethem a clothes budget. They had only $100 tobuy their clothes for the start of school. This presentedthem with a choice. They could either buy1 designer clothing item or 5items on sale at a discountstore. Guess what they chose?

• We decide what we're buyingbefore going to the store.When we've decided what wewant, the only decision is howto get the best price. Here ourchildren, after they had finallygrasped the picture of frugality,helped us. They had discoveredhow to shop online. Theytaught my wife and me to logon to a price-comparison site,easily pointing out where to locate the best price.Everything is for sale on the Web, from vacationsto appliances to automobiles.

• Everyone in my family works when theycan. When the kids were in school, we insistedthat they got summer jobs. My wife startedworking as soon as the children were gone. Mywife has made important contributions to ourcommunity working in a variety of positionsheld, including teaching, being a librarian,directing Christian education at our church, andtutoring medical students. Her income is a welcomeaddition to the family coffers.


Although we doctors may have financialproblems at the moment, we all have the abilityto change this. It's simple. Repeat after me:

"I reject society's notion that MD means $1million. I will start acting like what I really am—a working person who has a larger income andcash flow than most, but who is limited in theamount of that cash that I can access at any giventime. I am not rich, and I will stop acting asthough I am."

Louis L. Constan, a family practice physician

in Saginaw, Mich, is the editor of the Saginaw County Medical

Society Bulletin and Michigan Family Practice.

He welcomes questions or comments at

3350 Shattuck Road, Saginaw, MI 48603;

517-792-1895; or