Atlanta Financial Blog

3 Tough (Yet Inevitable) Financial Questions Early Career Physicians Must Answer

3 Tough (Yet Inevitable) Financial Questions Early Career Physicians Must Answer

Julianne F. Andrews, MBA, CFP®, AIF®
September 2, 2020

There is no doubt about it, becoming a physician is not easy. You spend years training to be able to make life-altering decisions, sometimes at a moment’s notice. Chances are you feel comfortable making these types of calls, but less confident when it comes to making major decisions that affect your finances. And who can blame you? Decades of demanding medical education may have prepared you to become a great physician, but offers little in the way of financial guidance. But discomfort or trepidations aside, you’ll have some tough decisions nonetheless.

  • Private or Corporate? One of the first major decisions nearly all physicians encounter is whether or not to join a private practice with the intent to become a partner, or join a corporate practice and take advantage of being a W-2 employee. The major difference here is whether your career path will entail your embracing business ownership or being employed by a larger company. The following considerations may help you weigh your options.
Business Ownership/ Partnership W-2 Employee
Need to open and maintain own retirement plan, possibly for employees, as well. Possible need for plan manager. Employer sponsored retirement contributions with possible employer match.
Potential to make higher retirement contributions by adding profit sharing plan or other retirement plan vehicles to traditional 401k. May need to open additional IRAs or perform Roth conversion for optimal savings. Limits on retirement plan contributions. May need to open additional IRAs or perform Roth conversion for optimal savings.
Must obtain any and all insurance policies to cover a range of personal and professional liabilities. Some malpractice coverage held by and paid for by the corporation.
Real estate needs for patient care, surgery, etc. Facilities provided for use.
Increased autonomy. Limited autonomy.
Uncapped income potential. Fixed income potential.

Keep in Mind: Within the industry as a whole, larger corporations are buying out and acquiring smaller hospitals and practices at an alarming rate. Many physicians even wonder if opening a private practice is sustainable when a handful of mega-corporations continue to expand, grow, and monopolize the scene. As such, many physicians are trading the autonomy and earning potential of business ownership with the security and longevity of a corporate position. Of course, there is no right answer, only personal preference and fiscal reality, but balancing the two will be the key to keeping your finances on track.

  • How Will I Keep Up with Technology? Technology innovations have left no portion of the healthcare industry untouched. Today, patient records are stored and secured electronically, and machines are becoming more capable of performing procedures that once were done by humans. Tough diagnoses are uncovered in minutes by technologies that didn’t even exist even five or ten years ago. Not only will physicians need additional training to learn how to integrate these technologies into their practice, but may have to rethink how they perform their role as a care provider. The training and the tools will prove costly, especially for those who choose to take the business-owner route. Of course, one option that is growing in popularity, is partnering with an outpatient facility so that you don’t have to purchase, maintain, and insure costly equipment on your own.
  • How Will I Account for Shrinking Margins? The trend continues toward shrinking margins between declining physician reimbursement from insurance providers and increasing medical related expenses such as staff, equipment, and real estate. Unfortunately, the trend shows no signs of reversing with CPI inflation rates on healthcare related expenses surpassing nearly all other sectors year over year. And as some physicians and large corporations move to value-based compensation models, the discrepancy between income and expenses could potentially increase, putting significant pressure on a physician’s ability to earn a higher income. How will you maintain your desired standard of living when expenses wax and compensation wanes? This may sound like an impossible task, but with the proper planning and guidance, one that can be managed to optimize your financial picture.

Of course, none of the answers to the above questions will come easily and should always be considered in the context of your overall financial plan. But the best part is that you don’t have to evaluate your options alone. The advisors at Atlanta Financial specialize in helping physicians answer these types of questions through our MDFIT™ process. This process allows us to help physicians take on their career-specific challenges and position themselves for the highest probability of financial success.

Would you like some assistance in aligning your finances with your career path?

Contact us today for your no-cost, no obligation consultation. We look forward to helping you find your MDFIT™.

Share This:

Share on facebook
Share on linkedin
Share on twitter
Share on google

Atlanta Financial New Partner Announcement

Atlanta, GA, November 18, 2020 – Atlanta Financial is delighted to announce the appointment of Chris Blackmon, CFP®, CPA as Partner. Chris’s promotion from Senior Wealth Manager is in response to his personal contribution to the unprecedented growth within the firm.

Read More »

The Unstable Future of the Physician’s Income

While compensation is certainly not the sole driver for aspiring physicians to enter the medical field, there is no doubt that physician compensation in the past has definitely been something that makes the long years of schooling and residency more palatable.  But, current regulatory and economic pressures is challenging that post-residency reality and putting significant financial strain on doctors now and moving forward.

Read More »

The Social Security Administration Has Announced Cost of Living Adjustments & Tax Changes For 2021. Here’s What You Need to Know

On Tuesday, October 13, 2020, the Social Security Administration released important facts and figures for 2021 – including cost-of-living adjustments (COLA) for retirees and tax changes for the currently employed.  As Social Security continues to contribute a large portion of monthly income for many, we thought this information would be timely.

Read More »

Wondering What the 2020 Elections Might Mean for You?

The Election is finally over (at least mostly), and we are busy analyzing the outcomes of the Presidential and Congressional races and the possible impact on policy, the economy, the markets and your finances.  Rest assured we are gathering the latest thoughts of economists, strategists and money managers, and evaluating whether any changes might be required in our planning work with clients or our management of your portfolio.  In the meantime, we thought you might find the following Q&A about the election results interesting and informative.

Read More »