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These past few weeks have turned the entire world topsy turvy and called into question many beliefs that were previously taken for face value.
One of those fundamentals that has been shaken to its very core is the stability a physician has with his or her job and/or income.
Decades ago, my father, a physician himself, told me that no matter what, physicians will always be in demand and have a great, reliable, income.
Granted the vast majority of us did not go into medicine chasing the dollar signs, for if we did there are far easier ways to make money for a group of intelligent individuals.
But it would be a lie to say that the potential earnings of a career in medicine did not have some impact in our career choice.
The Healthcare Paradox.
Whenever there is a demand for a particular profession, that profession typically enjoys job stability as well as increased earning potential.
It is a basic tenet in economics that forms the backbone of our financial system, the law of supply and demand.
As demand increases, the product or service in question can charge a premium as more people are willing to pay for it.
This is exquisitely demonstrated during the holidays as the “must have” toy of the season is quickly sold out creating secondary markets where people are willing to shell out multiples of the original cost to secure one for their child.
The COVID-19/Coronavirus global pandemic that we are witnessing has created a huge demand for qualified healthcare workers to care for those who are affected by the virus.
One would think that with this increased demand, physicians should have an all-time high level of job security and income protection.
One would, sadly, be incredibly wrong.
The fact of the matter is that although yes there is a huge uptick in demand for treating viral patients, the “bread and butter” cases for the majority of medical specialties has shown a massive decline.
Many states, mine included, have passed laws that have made it illegal to perform elective outpatient surgeries.
My place of employment, a multi-specialty physician group consisting of over 70 physicians, at least a third of which are surgical, has already felt, and will continue to feel, the economic impact from these legal mandates.
One of the three prongs of our ancillary services, the ASC (Ambulatory Surgery Center), which was a typically strong source of revenue, will instead be a financial anchor during this crisis.
There will be fixed costs that are unavoidable whether or not the ASC is utilized or not and all physicians will have to bear this burden.
Radiology, the second prong of our ancillary services, is also not immune, and I have already begun to see the dramatic financial implications COVID-19 has on my practice.
In order to “flatten the curve” people are rightfully staying at home to reduce exposure to/transmission of the virus.
Patient visits to my workplace have thus dried up considerably and this has impacted almost every specialty, surgical or not.
With less clinical visits, there are less imaging studies being ordered.
What was once a thriving, incredibly busy, medical practice that got to the point where I barely had time to go to the bathroom or have an uninterrupted lunch, now has me twiddling my thumbs.
In fact the day before I am writing this post, I was able to complete over 6 credit hours of Continuing Medical Education (CME) at work during my downtime.
As I get reimbursed in the “Eat What I Kill” model, less volume directly impacts my financial bottom line.
This financial doomsday scenario extends beyond the walls of a medical private practice as it also impacting hospitals/academic centers.
I belong to several physician Facebook groups, and a common message being spread there is that physicians are getting furloughed or even worse have their contracts terminated due to the drastic decline in patient volume.
The Unthinkable.
During my 17 years of medical practice, I have never seen anything like this.
There are many physicians that truly have their jobs/incomes at risk and this number will only rise depending on how long this pandemic lasts.
Those physicians that were previously operating on the fringe of profitability may not be able to financially recover from an extended financial hit that we are currently experiencing.
Something that I took for granted, my income, is not as secure as I had once thought.
My board of directors met and analyzed the financial situation based on current and projected numbers and the financial outlook was not good, to put it mildly.
The board of directors demonstrated forward thinking and made the tough decision of reducing each clinician’s salary draw by 40% until this crisis, hopefully, passes.
Add in the increased risk of exposure to the virus to one’s self and family by placing ourselves on the front lines and it is easy to understand the types of stress that every physician is facing in this current medical climate.
[And do not get me started on the sad state of affairs we are in by putting healthcare workers on the front line without proper personal protective equipment (PPE).
Throughout the globe we see other nations having their physicians fully equipped with appropriate gowns and masks (who are still dying from the virus), yet physicians in America are told to face the enemy with makeshift PPE such as bandanas and scarfs.]
How FIRE Is Still My Saving Grace.
I am not sure about you, but a 40% decline in take-home pay is quite a financial jolt to your household, whether you are FIREd or not.
However I know I am more fortunate than most because I discovered the FIRE philosophy.
There has always been a debate about whether extra money should be put towards the market or towards paying off a mortgage.
I, for one, am glad I chose the latter as I no longer have to worry about a mortgage payment hanging over my head.
For me it was this peace of mind that made owning “Every Blade Of Grass” on my property a priority.
Another vital concept in FIRE has helped ease my financial woes, that of having an Emergency Fund.
I admit that I previously had the mindset that an Emergency Fund was a little bit of overkill as I thought I would have a steady reliable income that could weather any emergency that cropped up.
I hated the cash drag that my Emergency Fund had, as it could be earning so much more if I deployed it rather than leave it in this low-interest rate savings environment.
But this Emergency Fund is now acting like a beacon in this perfect financial storm where investments are crashing all around me, coupled with the threat to my previously reliable income.
There will still be significant financial ramifications on my household because of this pandemic and likely my FIRE journey will have to be prolonged.
But, like the rest of the nation, I will pick myself back up and resume my path once the dust settles.
Note:
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-Xrayvsn
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Private practice is taking an even greater hit, in that, I don’t know if we can last long enough to come back. Our ob practice is what’s keeping us afloat, currently and it helps to be an old and established practice that went into this crisis with no debt….. yet. Thanks for your eye opening post. We are all in the same boat, but for different reasons, and not having any kind of debt is first and foremost, GOOD. Hope for a speedy end to this crisis.
The biggest and most troubling thing is the unknown of how long this can last. A one month hit with rebound back to normal is survivable. If this lasts several months the financial damage is going to be catastrophic and you are right it will be the private practices that will fold up.
Hoping this passes soon and we can return to some sort of normalcy. Thanks for sharing your thoughts
It’s a painful time. Even in places where you’d think there would be an abundance of patients, we are feeling it. Our public health efforts have been so successful ahead of the anticipated surge that our ED volume is down 40+%. Once the surge hits it may be very different, but as someone who is also in an eat what you kill model, I’m expecting to earn far less in the coming months. Rare perfect storm where risk and stress increase just as remuneration nose dives. Hang tough, Xray, and thanks for your continued service.
Yeah I think all docs are going to be feeling this pandemic on their wallets. Never a good thing to hear the term unprecedented thrown around so much
I get the eat what u kill.. so if you aren’t producing you don’t get paid. Right
Are the board of directors -which I assume are all just pure admins- are they taking a pay cut as well? Thays what really gets me the most. these admins aren’t making sacrifices nor are they on the frontlines.
Good for you for being financially free. I hope your job is able pull through all this. Stay safe out there.
That is correct on the eat what you kill model of how we get paid. In order to not have wild month to month income fluctuations each physician typically chooses a salary draw that is fixed through the year. If you end up bringing in more than that draw you get paid out (typically 2x a year they settle it up but you can put in request to get paid the extra amount besides the two standard times). Our actual board of directors is compromised mainly of fellow practicing docs (who also got hit with the paycut). The CEO and… Read more »
Interesting times indeed- my 63 year-old anesthesiologist husband was set to retire in 6 months with a nice pension to boot. He was coming off a 4 week vacation, due to return this week to the hospital. Things are bad in our area, and going to get worse. I was so fearful for him, as anesthesiologists are really the intubation people in the hospital, and it is obviously not what you want to be doing if given a choice. In a weird turn of events, he fell coming up our stairs, broke his finger, and can’t return to work, as… Read more »
Wow, that was certainly a lot of events that seemed like it was destined for your husband to leave the workforce. Losing a bit of a potential pension increase certainly pales in comparison to maintaining your health/safety, so I think the right decision was made personally and would have done the same thing if I was in that predicament.
Anesthesiologists are definitely in harms way with intubations and your husband at his age would certainly be at an even higher risk. Stay safe and thanks for the comment.
Thanks for the post. The impression that physicians have job security certainly comes into question. Before my retirement I never really felt pinched for cash. I did not have an emergency fund until about 1 yr prior to retirement. I was lucky. Part of me wants to volunteer to help with the crisis. The other part of me wants to stay away until I know I can volunteer and still remain safe. I am in the vulnerable group. I think it will just be one of those things that we will do what we have to do to get through… Read more »
Appreciate the great comment. Yes, job security concerns was something that never crossed my mind before this. I was lucky that I did have an emergency fund just in case, but it certainly was not something I had planned on relying on before this. Hopefully this is a small blip in the healthcare world and economy in general.
Thanks for sharing your thoughts in these tough times. A lot of people are struggling. Front-line workers are fighting a war but the enemy is invisible. And with dirty gowns and reused surgical masks, they feel like they are going to battle without armor. Worse, some are now being told they will soon get a pay cut. I could take a 40% income hit without too much damage. I’ve done that twice before. But many of my peers would/will be hurting big time. The biggest shock for me has been the breadth and rapidity of it all. Office work stopped,… Read more »
Thanks WD for sharing your insight. I’m afraid what is playing out in my workplace is playing out all across the country. I too feel like I can continue with my current 40% reduction on my salary draw but that is only because the biggest prior expense I had, my mortgage, is off the books. If this happened while I had my mortgage and before I built up my passive income streams, I could easily see myself in hot water. Yes, it is an incredible perfect storm where there seems to be no safe haven for your investing dollars. I… Read more »
Thank you for sharing your perspective. I haven’t thought about it, but you’re right about elective procedures. Nobody wants to go to the hospital right now if they can put it off. Hopefully, the demand will pick back up after COVID-19 is under control.
Good luck and thank you for being a doctor.
Thanks Joe. Yeah I think countrywide all medical practices are hurting, private and academic. Certain specialties are especially hit hard (surgical ones that rely more on elective procedures are probably hit the hardest). From a radiology perspective, screening mammograms have dried up considerably, other routine studies likewise have dropped as people are holding off on them. I know dentists have closed up offices left and right as well so that is another profession that is going through hell right now. Will be interesting how the demand plays out if we do recover from this as we were a fairly busy… Read more »