Step by Step: Financial Strategies for Physicians

When we graduate from our medical schools, we are filled with the knowledge of how to help people heal. These skills help us do amazing things. They come at a price though. I graduated in 1999 with $160,000 in student loans. That seemed like a lot and not knowing how to deal with it created stress and admittedly, some resentments. Nowadays, I’m seeing new graduates with student loan debts over $200,000 and recently spoke with a young physician with over $400,000 of student loans. Many doctors are overwhelmed with trying to figure out how to juggle student loans, the purchasing of practices as well as raising families in a house of their own. There are steps to ensuring success with these.

  • Spend a little extra to find (and keep!) a great practice manager and staff. Most doctors think that their “team” only means the people in their office. It’s much broader than that.
  • Work with a financial advisor. Now that I do this work, I am inspired by the numerous ways we help physicians organize their finances, protect incomes, join forces with other doctors by expanding a practice, help with practice valuations, business exit plans, set-up office 401k’s and key employee retention plans. We can get you organized on a personal as well as a business level to make sure you are saving for retirement and paying off debts in the best possible order.
  • There are several insurances that can make or break a career. Individual Disability Insurance is a must which many people overlook. They protect homes and cars, but don’t think to protect their most important financial asset– their ability to earn an income. If you are a business owner or are looking to open your own practice make sure to obtain Overhead Expense Insurance. If you get injured and cannot work, it can cover various business expenses, and may even provide for a salary for a replacement physician while you recover. Malpractice Insurance is another option that you should consider.*
  • Have a great banker that works specifically with physicians. Many banks having lending programs for startup practices, with very little to nothing down. These programs prevent some of the added, high costs of obtaining SBA loan, and they are specifically targeted for the healthcare industry.
  • Choose a business structure. Deciding between an S- Corp, C-Corp, LLC or sole practitioner status can determine how you pay taxes and your personal liability level. Hiring an attorney, accountant or business consultant can help.
  • Have a pro forma / business plan and set milestones for growth. Example: When I hit a certain income or number of patients, I’ll hire another doctor or expand. Stick to your plan.

First things first, slow down to set things up the right way. There are many steps. Don’t worry, you can take them one at a time and check them all off. Make sure to surround yourself with a great team.

*Neither Guardian nor its subsidiaries issue Malpractice Insurance. Registered Representative and Financial Advisor of Park Avenue Securities LLC (PAS). OSJ:901 South Mopac Expressway, Barton Oaks Plaza, Ste 150, Austin, TX 78746,512-626-5027, Securities products and advisory services offered through PAS, member FINRA, SIPC. Financial Representative of TheGuardian Life Insurance Company of America® (Guardian), New York, NY. PAS is an indirect, wholly-owned subsidiary of Guardian.

Joshel R. Brown, DPM

Financial Advisor

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