The Financial Devastation of Physician Addiction

Physician's Money Digest, July 2007, Volume 14, Issue 7

"He who cannot obey himself will be commanded. That is the nature of living creatures." —Friedrich Wilhelm Nietzche

14,000–Number of physicians that were disciplined for substance abuse and reported to the National Practitioner Data Bank from 1999 to 2004.

As a successful otolaryngologist at a small group practice based in Canada, Dr. Thompson* spent his days making patients his top priority. He was focused, caring, and a dedicated doctor. In the early 1990s, Dr. Thompson's life slowly started to change. He began cutting back on his hours at the office, and when he was at work, he was not able to get his job done. Three years later, the prominent otolaryngologist was missing work completely, struggling to connect with friends and family, and financially bankrupt.

In 1996, Dr. Thompson entered rehab to battle a 3-year addiction to cocaine, in the form of a natural, topical anesthetic sometimes used in his profession. Even though he did not use at the office and alternatives exist for the medical use of the drug, cocaine had found its way into Dr. Thompson’s life.

Many medical professionals like Dr. Thompson struggle with addiction across the United States and abroad. While these workers spend all of their time focused on patient care, their lives are often ravaged by unhealthy means of recreation and coping. This is damaging both to the individual addict and those around them.

In addition to programs addressing early intervention and physical and mental treatment for addicts, other aspects of life must also go into recovery, particularly a physician's finances. With all of a doctor's money going toward supporting an insatiable problem and loss of income while seeking treatment, nothing is left when it is time for recovery. It is important to understand the nature of this ongoing problem and what steps to take to protect and rebuild finances that have been devastated by physician addiction.

Naming and Knowing the Problem

While it is difficult to accurately estimate the number of health care professionals who struggle with addiction, a random sampling of the American Medical Association master file reports a 10% to 15% incidence of drug- and alcohol-related dependence among practicing physicians in the United States. The stress involved with work combined with the resources to acquire substances leads quite a few practicing physicians into an addiction that they cannot control.

Abraham J. Twerski, MD, founder and medical director emeritus of the Gateway Rehabilitation Center and associate professor of psychiatry at the University of Pittsburgh School of Medicine, specializes in this type of addiction.

"One of the problems in physician addiction is similar to problems of anybody who gets into the position of being actually in control of things, such as a CEO who controls 300 employees," Dr. Twerski says. "A physician is really controlling other people's lives. The more a person has actual control in reality, the more difficult it is for him to realize that he can't control [drugs and alcohol] because he is so used to being in control that this is just an impossibility."

Obstacles to Early Intervention

Along with denial, early intervention is also difficult with physician addiction because doctors can continue functioning in their daily routines for long periods of time before they are forced to confront how their actions endanger their practice. This also leads to elaborate and dangerous cover-ups.

"The tragedy with doctors is that the cover-up is enormous. Doctors will get into trouble and physicians, their friends, will cover up for them," Dr. Twerski says. "The mistake the doctors make when they're [addicts] is [believing] that if they come forward and go into treatment, this will expose them and they will lose their practice, and it’s just the other way around. It's the refusal to go into treatment that causes them to lose their practice."

Impaired physicians place themselves at an enormous risk for medical misconduct, consequently jeopardizing patient care and increasing the likelihood of a malpractice suit.

Shielding Your Assets from Disaster

With a physician battling addiction, continuing professional duties at work while impaired, as well as being under the influence during regular activities, increases outside liability as well as the risk of a malpractice suit.

"I would guess that people who are addicted have a higher incidence of malpractice. In a malpractice case, if there's liability beyond or outside of coverage limits, then personal assets can be vulnerable. Working with someone in the asset protection field to shield those assets, to the extent that they can be shielded, from future potential claims is very important."

Once in recovery, physicians must also be forthcoming about their problem when filling out malpractice insurance applications. Though this will result in higher premiums, a physician who fails to provide this information and is later discovered will not receive any coverage.

While asset protection is smart planning for any physician, regardless of whether or not they are battling addiction, there is a higher risk involved with these individuals. For this reason, additional steps are suggested to help guard assets when dealing with addiction.

According to David B. Mandell, JD, MBA, cofounder of the Wealth Protection Alliance, removing signatory privileges and power of attorney is the most effective way to shield your finances from a person ill-equipped to handle them, no matter what the cause of their incapacity. Difficulties may arise with addicts unwilling to give up their right to funds, including the ability to sign checks or otherwise make withdrawals from an account. Keep in mind, however, that any unprotected funds will have to be rebuilt following any misuse.

Specially designated assets, such as educational and retirement funds, already have some protection in place. For educational funds, money is legally protected if it is invested in a trust, or some other sort of binding account.

"The adult is the trustee for those funds for the kids […] and legally they have the fiduciary duty to the kids. It’s something where they would be basically violating that trust to take those dollars out. If they're doing it to support a drug habit, they may not care about that," Mandell says. "The more practical option is to remove their ability to even access that account. Find out who has the legal right to withdraw funds and, to the extent that you can, remove their ability to do that."

For retirement funds, money can be protected by employee-owned plans without personal risk liability. For personal plans, however, improper handling could lead to individual risk liability, so it is particularly important to safeguard those plans.

Facing the Possibility of Bankruptcy

In some cases, bankruptcy is an undesirable inevitability, although declaring bankruptcy can help avoid creditors and start the road to financial recovery.

"[There are] a lot of assets that you can, depending on what state you're in, protect in bankruptcy. So, you could literally keep millions of dollars and get rid of any creditors. It depends on what those assets are and where you live," Mandell says. "Proper prebankruptcy planning is very important. And then once you get out, there are a lot of consultants out there to help you build up your credit."

Although it can take years for a physician to overcome an addiction, and some never reach recovery, the odds of succeeding in treatment and returning to live a fully productive life are encouraging. This is because some of the habits that may have contributed to a physician’s substance abuse may also be what creates such a high recovery rate. These are highly driven individuals whose careers depend on their sobriety. The resources and the motivation to recover are plentiful.

As for Dr. Thompson, 7 years later he is completely clean and back at work full-time. He credits his successful recovery to the treatment programs that changed his life and the people who continually support him. He regularly attends recovery meetings and is happy to be held accountable by the College of Physicians and Surgeons, who require that he pass periodic urine screens, to confirm his continued recovery.

Hope on the Horizon

Recovery has been slow, and so has the process of rebuilding finances in terms of paying back taxes and adding to savings plans. Even though it has been difficult, Dr. Thompson says that his life is better now than it ever was, even predating his drug use.

While finances are just a part of the issue of addiction, they can play a large role in a person's success and happiness. Finding ways to control finances while struggling through any situation can only help the process of healing.

"If a person is in trouble, having someone take over managing their finances would be especially good for them. If not, they'll just burn through cash at an alarming rate and be left with basically nothing," Dr. Thompson says. "It's definitely not a nice thing to be involved in any addiction. Finances are just one aspect of it; it affects many other aspects of your life."

He concedes that not having had the financial resources to pursue his cocaine addiction may have prevented things from escalating as far as they did.

"During my active using phase, I still had access to cash. There was still money coming in from different things and money at the bank, so if I hadn't had access, I probably wouldn’t have been out as long using."

*Some names have been changed to protect the identities of the persons interviewed or discussed.

Additional Resources

The following are some resources that may be helpful for those facing addiction, their colleagues, and their families. This is by no means a finite list and we would encourage anyone who suspects they have a problem to seek medical attention immediately.

Information by Doctors for Doctors

The Federation of State Physician Health Programs is a nonprofit organization that provides a forum for education and exchange of information among state programs, enhancing awareness of issues related to physician health and impairment. The organization also offers advocacy for physicians at local, state, and national levels, and assists state programs in their quest to protect the public. Through their Web site (www.fsphp.org), physicians can find resources available to them within their state (click on the "State programs" button and then scroll down to your state).

  • The American Psychiatric Publishing Textbook of Substance Abuse Treatment, 3rd Edition, edited by Marc Galanter and Herbert D. Kleber, reflects the commitment of psychiatry to addressing the problem of substance abuse and features a chapter on impaired physicians.

"A 35-Year-Old Physician with Opioid Dependence" (JAMA. 2004;292:1351-1357; http://jama.ama-assn.org/ cgi/content/extract/292/11/1351) is an article by John R. Knight, MD, detailing the experience of a specialist physician who became addicted to hydrocodone. The article includes sections on helping colleagues, treatment options, and recommendations for a successful future.

  • "Physicians and Addiction" (NEJM. 2002;346:1510- 1511), by Abraham Verghese, MD, is a compelling article detailing the patterns of physician addiction, including the powerful tendency toward denial that ultimately puts their patients at risk. Dr. Verghese also includes instructions on how to successfully perform an intervention for a physician addict.

Financial Resources

  • Rebuilding your credit may be imperative if addiction has affected your life. Begin by checking your credit rating at the following Web sites: www.equifax.com, www.transunion.com, and www.experian.com. Be sure to check all three scores because each organization determines their scores utilizing different methods.

For information on medical malpractice insurance, visit The Insurance Information Institute's Web site at www.iii.org.

  • Getting an impartial, unbiased perspective is important when rebuilding your finances. You may want to visit the Certified Financial Plannerâ„¢ Web site at www.cfp.net to find the planner best suited for your situation.