Financial Savvy for Health Professionals by huanghengdong


									Financial Savvy for
Planning Out Your Future as
a Health Professional

• Introduction
• The Future for the Health
• Current Salaries
• The Cost of Achieving the Dream
• Fine Tuning the Direction of Your
• Is a Private Practice In my
• Financial Considerations for New
How did you get here?

 The decision to become a doctor
 was not something that just
 Maybe there was a parent or
 relative who inspired you…
 Maybe it was after a trip to the
 doctor’s office that clinched it for
 Or maybe it was a profound
 interest in Science and Medicine
 that made you know that you
 were fated to become a doctor.
Whatever the reason for your

• Here you are, in the midst of that long
  journey, finally approaching the long
  anticipated goal.
• So far, your journey has been about
  long hours of academic and clinical
  study, lab reports and tests, long nights
  of studying and anxiety over MCATs,
  GPAs and applications to Med School.
• The cost and financial sacrifice has
  been high for many of you continuing in
  Med School, long after many of your
  peers have gone on to work in the real
• Maybe you have avoided long term
  relationships, put off getting married or
  struggle to support a family on limited
Whatever your story is..

• You know deep in your heart that
  it has been worth it.
• The question is, in this economy,
  will it be worth it?
• What is the future outlook for
• How much debt can one incur
  before it’s not worth it?
• Will you ever be able to afford a
  private practice?
• These are questions well worth
The Good News…

 …is that jobs in the Health
 Profession are expected to grow
 at a faster pace than most career
 industries. The most recent
 statistics (2008) by the Bureau of
 Labor Statistics reports that there
 are over 14.3 million jobs
 currently available. Within the
 next 10 year period, 2008-2018,
 an additional 3.2 million jobs are
 expected to be developed.
The fact is that our population is
not only growing but aging. The
demand for medical professionals
to meet the needs of a growing
and aging population is
considerable. With life
expectancy rates increasing, the
need for highly trained health care
providers to treat the population
will continue to be in demand.
Although improvements in
technology contribute significantly
to the quality and efficiency of
care, this is a field that relies on a
highly skilled/trained workforce.
So where will the jobs be?
 Currently, health professionals work in
 three major settings: hospitals,
 ambulatory care and nursing facilities.
 While hospitals employ a large
 percentage of these providers, hospitals
 comprise a little over 1.3 % of the health
 care facilities, with 87.3% of medical
 care being provided in private and group
 Going forward, it is predicted that
 ambulatory care will play an even more
 significant role in health care and that is
 where there is expected to be significant
 growth. The largest increases are
 expected to be in Medical Offices (34%),
 Home Health Care (46%), Other Health
 Offices (41%), Outpatient Care (38.6%)
 and Medical Diagnostic Labs (39.8%).
 Hospitals (10%) and Nursing Facilities
 (21%) will have less growth.
    Healthcare Professions by
    category (Bureau of Labor Statistics, 2008)
       Management level (finance & business) -
       Professional - 43.8%
       • Counselors - 1.2%
       • Social Workers - 1.4%
       • Dieticians and Nutritionists - .3%
       • Pharmacists - .5%
       • Physicians and Surgeons - 3.6%
       • Physicians’ Assistants - .5%
       • RNs - 15.3%
       • Clinical Technicians - 1.9%
       • EMT and Paramedics - 1.0%
       • LPN and orderlies - 4.3%

       Office support and administration -

*   Note that occupations with smaller numbers have not been included,
    hence the percentages indicated do not total up.
The current status of the Medical
Field and Increased Specialization
• As of 2008, there were 661,400
  physicians in the US. 12% of them
  identified themselves as self employed,
  53% work in medical practices and 19%
  work in hospitals.
• While 32% of all doctors work in primary
  care, an increasing number of doctors
  choose to continue on in their education
  and specialize. The AMA (2009)
  reports the following top seven areas of
   – Internal Medicine - 20.1%
   – Family and General Practice - 12.4%
   – Pediatrics - 9.6%
   – Ob/Gyn - 5.6%
   – Anesthesiology - 5.5%
   – Psychiatry - 5.0%
   – Emergency Medicine - 4.1%
Rising educational costs
outstrip inflation

• We all have heard about the rising cost
  of a college education in general.
• It is not uncommon to meet students
  who have graduated from college with a
  Bachelor’s Degree, with debt in excess
  of 50,000 dollars.
• Knowing that, we cannot be surprised
  that there are many medical school
  graduates who will complete their
  education by borrowing in excess of
  200,000 dollars. And regardless of the
  total amount borrowed, the Association
  of American Medical Colleges reported
  in 2007 that over 85% of all public
  medical school graduates and 86% of
  all private medical school graduates
  have some level of educational debt.
Is the cost worth the

• Most students who have taken on
  educational debt to finance medical
  school justify the debt by pointing
  out the high earning potential of a
• While the salary is just one of many
  rewarding reasons why a person
  pursues an MD or DO or DDS, it
  makes sense to keep an eye on
  current employment and salary
  trends. After all, life does not stop
  at graduation. There are
  considerations about the future to
  be made: Residency and Sub
  specialization, debt repayment,
  private practice, family, etc.
Salary Expectations

• Bureau of Labor Statistics (2008)
  report the annual median salary
  for Primary Care physicians at
• The annual median salary for
  physicians in some specialty/sub
  specialty is significantly higher at
• In general salaries will vary
  depending upon geographic
  region, number of years in
  practice, hours worked, skill
  level, personality and
  professional reputation.
Salaries of the top 4 popular

Specialty         Mean Hourly         Mean Annual
                  Wage                Wage
Family & GP       $83.59              $173,860
Internist         $91.10              $189,480
Ob/Gyn            $101.13             $210,340
Pediatrics        $79.67              $165,720

Although these salaries have probably increased
since 2008, it is important for students currently
enrolled in medical school programs to consider these
numbers. These are average salaries of doctors who
have already established some level of medical
practice. Current residency programs may pay a
quarter of this salary annually. Depending on the
length of the program, a new doctor may have to wait
anywhere from 3-7 years before collecting a salary
that approximates these figures. Once you factor in
educational loan repayment, you will have a much
more realistic idea of what your disposable income is.
Dealing with Money Matters

• Whether you pursue a specialty that
  can guarantee you higher earning
  potential or start up a private practice
  earlier than planned, the direction you
  take in protecting your financial future is
  something that you must start thinking
  about now.
• Although you have probably spent most
  of your time studying, training and
  competing for the best educational and
  training opportunities, it is now time to
  start thinking about the financial side of
  the business. Even if you plan on
  working in a hospital or group practice,
  there are many financial concerns you
  will have, starting with your educational
What happens after the ink
dries on the diploma?
• For many of you, the temptation to run
  out and splurge, to buy that item that
  you always dreamed of owning is
  appealing. After all, you earned it after
  all of that hard work. And of course,
  you’re a doctor now!
• But as appealing as that may be, you
  have a lot of other things to consider.
  Not only do you have college debt
  hanging over your head, you also have
  to start thinking about the other things
  that you want to accomplish in your life.
   – Purchasing a home
   – Starting a family
   – Opening a private practice
   – Doing volunteer work
   – Taking a vacation
A Financial Strategy will get
you where you want to go

• In addition to debt repayment, you
  need to consider:
   – Life insurance
   – Disability Insurance
   – Educational Expenses for your
   – Purchasing a New Home
   – Starting a Private Practice
   – Saving for retirement

     Most financial planners caution young
     doctors to take this part of their life as
     seriously as they took the years
     leading up to graduation. The same
     planning and sacrifice has to be
     utilized if you plan on attaining the
     future you worked so hard for.
Do I jump into a private
practice right away?

  A private practice is not for everyone.
  At the end of the day, you are a small
  business owner. Do you have what it
  takes to run your own business?
  There are pros and cons to both sides.
  Many individuals like the idea of
  working for themselves and being able
  to reap all of the earnings from their
  own hard work. Maybe you would
  prefer to work in a setting outside of the
  hospital. Perhaps you envision setting
  up a practice in a suburban or rural
  community that has a strong need for
  your services. Many private
  practitioners like the independence they
  have to forge a practice that fits their
  own values, interests and lifestyle.
Or do I work for a hospital
and collect a paycheck?

  On the other hand, some people like to
  work as part of a team or be in the
  midst of the medical advancements and
  training often found in the larger
  regional or teaching hospitals. Maybe a
  group practice appeals to you because
  you are able to share some of the
  bigger expenses of a practice:
  equipment, office space, staffing and
  insurance while remaining more
  independent. Maybe you just want to
  practice Medicine and don’t want the
  financial headache of billing, hiring staff
  or worrying about HR. This is the time
  to visit practices and a variety of
  settings, to talk with doctors and get
  some advice from your mentors.
  Which work setting fits you?
    Things to consider if you
    start a private practice.
•    Start with a Plan - It tells you where you’re going and
     how you want to get there. If you know you are going
     to need to borrow for your start up, you will have to
     have projections, financial statements and a pro
     forma to demonstrate what you think it will cost to run
     your business over at least 3 years.
•    Have you consulted a lawyer/accountant to
     determine what type of business you want to
     register as? Have you filed the appropriate paper
     work, obtained a tax id number, established banking
     in the company name?
•    In addition to Malpractice Insurance,
     Are you covered for corporate liability, workmen’s
     comp, health and disability and personal life
•    Credentialing with Third Party Payers - Without
     these contracts, your ability to compete as a starting
     practice is very limited. Even if you have not had a
     positive experience with many of the larger health
     insurance companies, this is a fast way of getting
     referrals. But be aware that the amount of time it can
     take to be approved can be problematic. Also, keep
     in mind that most procedures must take that into
     consideration. Have you applied for hospital
     privileges at the local hospitals in your area?
Next steps to establishing a
successful practice
•   Medical Facilities: Finding the right office location
    and obtaining the equipment and supplies you need
    can be a challenge. Many practices take advantage
    of existing clinic space, or rent space in medical
    office buildings to save on some of the office build
    out costs.
•   Staffing: Hiring the right people is key to a
    successful practice. You need to find motivated,
    responsible, experienced staff to get things rolling.
    Here is one place you don’t want to skimp. Aside
    from the nightmare of discovering that your billing
    manager has been stealing from you, the cost of
    hiring and training new personnel can take up time
    that is better spent seeing patients.
•   Identifying Sources: Referral, support and back up
    coverage are extremely important. As a private
    practitioner, you may not have the opportunities to
    consult with colleagues on a daily basis, so
    networking is extremely important. Good tech
    support and a user friendly EMR system can make
    Record Keeping and Billing much easier.
 Am I what I do?
• It is natural after spending so
  much time in your life pursuing the
  degree to begin to identify
  yourself as nothing more than a
• It doesn’t help if you work 6 days
  a week, 8-10 hours a day.
• It’s hard to just be You when you
  are continually sought out to field
  medical questions by family,
  friends, and neighbors.
    You are so much more than
        what you do!
•   Keeping your profession in perspective to the
    rest of your life will allow you the balance to
    really enjoy the various aspects of your life:
    work, relationships, family, recreation. It will
    also help you avoid many of the mistakes that
    many middle aged professionals struggle with
    as they review the direction their lives have
    taken. It is very hard to recover the time one
    has lost. That’s why a little financial planning
    now can help you to have the kind of life you’ll
    want years from now. Whether it’s time
    teaching or engaging in meaningful research,
    traveling on a medical mission, playing golf
    on Wednesday afternoons or showing up at
    your child’s soccer game, having the time and
    financial independence to pursue your
    interests is well worth all of the hard work that
    you have put into your life.

•   The last thing you want to do 40 years from
    now is wake up with regrets…that’s not what
    all this work has been about.

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