5 Numbers on the Road to Being a Doctor

The cost of becoming a capable doctor (one who does both well and good) can come at a great price. Lay folk think it's just all rich doctors out there. But those physicians who stick around can dig a real big financial hole for themselves.

“Strive not to be a success, but rather to be of value.”—Albert Einstein

The cost of becoming a capable doctor (one who does both well and good) can come at a great price. Lay folk think it’s just all rich doctors out there. But those physicians who stick around can dig a real big financial hole for themselves. Just consider a few of the basic numbers:

$200,000+

That’s the average educational debt, according to the American Association of Medical Colleges, for a medical school graduate now entering the doctor world. When my dad went to medical school annual tuition was $500. Yes, it’s a much different world today, but dad always told me that things would only get harder for the medical profession. And after completing 4 years of rigorous scientific study, being hundreds of thousands of dollars in debt can’t be easy or fun. No wonder young docs are a little grumpier. For what it’s worth, coming up with that first $500 for dad to enroll in the fall of 1940 was “all the money in the world” to his mom, he explained.

$300,000+

That’s a ballpark number, from the The Hekman Group, of the annual cost to operate an average successful primary care medical practice. Even smart and confident doctors must get shaken when handling employees, rent, furniture, supplies, equipment, maintenance, utilities, insurance, professional services, and taxes—to say nothing of patient care. While the tide is different today, my dad operated in a small 2-man medical practice set up. To buck the tide, I cite a recent Health Affairs national survey which found that “small primary care physician practices had lower rates of preventable hospital admissions.”

$400,000+

The US Department of Agriculture estimates the average high-income household (ie, physicians) will pay out this much to raise a child to age 18. When I grew up (in a family with 8 kids) I recall that a great many of my dad’s medical colleagues also had large families. Those times are largely gone. Still, even with smaller 2- and 3- child families, at nearly half a million bucks per kid, that’s a lot of money a doctor must earn in business. And that DOA number only covers housing, clothing, child care, and food expenses—not college education costs. That number is just as ominous.

$500,000+

According to the National Association of Homebuilders, that’s the average cost to build a new single-family home—it’s more for a better home in a better neighborhood. My father made it very clear that since a physician works very hard, he/she was entitled to live a nice, comfortable home. We did—in a big old Jersey Shore house, though I remember it more for its character than its luxury. Some of dad’s contemporaries did live in near palaces, but he never begrudged them that. “Do you know how hard he works?” was dad’s first and only line of cover for his colleague’s lifestyle.

$2 million

When my dad retired from medical practice about 20 years ago, I’m guessing he had (in savings and income) the equivalent of about $1 million, may be a little more. Turns out that was more than enough. He lived comfortably in retirement for 15+ years and left a decent estate. He wasn’t extravagant, but did travel and play golf a lot. I think he was very happy. A very rough estimate is that today’s doctor needs twice what my dad needed, probably more. My father had economic success because he started investing early, rode out stock market storms, and had an able financial advisor. It helped that he was a child of the Depression era and knew the value of a buck. Translation: he could be cheap.