Attention residents and med students:

Can you afford to be a family physician?

By Robert Youens, M.D., M.M.M.

What physicians do for a living is an interesting thing to me. While practicing medicine is our livelihood, and our services are greatly valued in our society, there is a common perception that doctors are not supposed to talk about money. It’s a paradox that puts doctors in a difficult position because you want to be self-sacrificing and a person of service without admitting to being at least partly “in it for the money.”

It also creates a problem in our medical schools when our best and brightest, who have worked very hard to get to where they are, go into the world with a deep desire to serve their patients, but without the business sense to maintain a healthy practice. I do not believe it is taboo to desire fair compensation for your efforts. For that reason, I gave a talk on this topic at the 2007 Student and Resident Conference to dispense a little advice to our next generation of family physicians.

Talking about income is generally a personal and private thing, but my purpose is to let students of medicine know that there are happy family physicians who are earning an income that is a livable wage. These physicians are doing well for themselves, their families and their communities. I do not believe that family physicians need sacrifice their free time or their income desires to do what they most enjoy. Family medicine is not a specialty of suffering for “the cause” and I discourage students from going into this specialty because money is not important to them. Good physicians go into this specialty because they enjoy the breadth and depth of the subject matter and what it will allow them to do for themselves and others. You are going to work hard anyway, so you might as well work efficiently and be reasonably compensated. My contribution is to offer a concrete example showing that this is and can be done.

Please take this advice in the spirit in which it is intended. I enjoy being a family physician and am happy to have chosen it to be my profession. This discussion is not about dedication to the cause or what a wonderful specialty it is. I believe physicians should have intimate knowledge of and be integrally involved in the financial aspects of health care—personally, in their organizations, communities and the nation. Who else would we leave it to?

Will you be average?

First, we’ll look at a few factors that affect the average family physician income, which falls between $140,000 and $176,000 a year. This is not a fixed number, it depends on several factors: where you are in the country, what kind of practice you have, where you’re located, your gender and your age.

In general, family physicians in the West-South-Central region of the United States make more than physicians in New England. In multi-specialty groups, physicians tend to make a little more than in a two-person or smaller group. Rural doctors tend to make more than urban doctors, male doctors tend to make more than female doctors. Physicians’ age matters—you tend to make a little more money as you get older, then it tapers off. The wage discrepancies, particularly with gender and age, aren’t inherent in the business, rather they vary because of lifestyle and practice choices.

Being categorized as a “high earner” hinges on one big common-sense factor. If you see more patients, you make more money. With the overriding model for family physicians being fee-for-service, the incentive for doctors in private practice is to see more people, and family physicians can see a good number of patients in a day and still provide good care, partly because of the continuity of established patients.

Other factors that play into being a high earner include practicing the full scope of family medicine in the hospital setting and being in a larger practice. Being in a larger practice could allow you to provide clinical lab, physical therapy, occupational therapy and imaging services in-house; handle negotiations with payers and contracts thoroughly; participate in quality improvement, marketing, strategic planning and benchmarking; handle billing and collections in-house; and plan to purchase an EHR. Generally if you provide good medicine, good service and a good product, a lot of this stuff just falls into place. In my practice, we put in an X-ray, in-house lab and a bone density scanner not to generate revenue, but to provide a good service to our patients.

There’s a reality to face when you join the working world: you’ll be paid based on productivity. I don’t want to hurt anyone’s feelings, and I’m all about the lifestyle thing, but somewhere along the way, you’ve got to work. You get what you invest. Most people tend to make money by turning more units and seeing more people, which means putting in the hours.

There are several low-impact factors on income: current use of an EHR, the number of staff meetings you have, educational level of in-house billing staff, fee-for-service versus capitated revenue, percentage of co-payments collected at the time of service, aging of accounts receivable, and practice management courses for physicians or staff. That last one hurts my feelings because I dedicated four years of my life to getting a master’s of medical management only to find this information that says it’s a waste of time!

What about medical school debt?

The average medical student graduates with $130,000 in debt. The average resident income is about $40,000, and the average family physician recruit guaranteed salary is $140,000. One of the most important considerations you should take is how long you take to pay off your debt. Referencing Table 1, if you pay your debt off a little more quickly, you could save more than $37,000.

You may be wondering if you’ll still be able to live on your wages when you re-pay a higher amount of your debt. This is illustrated in Table 2: if you shorten the time frame to pay your debt, you’ll be able to live off $71,910 a year as a physician, which—if you’re a family medicine resident—is more than you have now.

The real world

To show what real family physicians can expect in their real life, real-world office, I’ll set up an example. In this three-physician group practice, the physicians are in their 40s and 50s in a rural setting and private practice. The physicians do a hospital practice, see nursing home patients and have no emergency room calls. This particular group does not do obstetrics, every sixth weekend they work and every sixth night they’re on call. Their workweek is 4.5-to-5 days a week, they have six weeks of vacation a year and they happen to have in-house lab and X-ray.

There are some additional details, but their business is this simple. Referencing Table 3, the physicians see a good amount of patients a year, pay their expenses and can still divide the profit to earn $312,000. Subtract personal deductible expenses such as malpractice insurance, auto, meetings and travel, dues, and books, to get $288,000 per physician per year.

With this in mind, averages are averages. I don’t wish for you to be average, I want you to be special in the sense that you understand the dynamics and finances of this business. You can be a family physician and do just fine, but you have to understand the math. Dollars in and dollars out makes your profit, and you have to work smarter, not necessarily harder. It’s an efficiency issue.

The point of this is, the day you get out of your residency is probably not the day to buy your BMW. And, when you get to the point where you can afford the BMW, you may decide you want to be practical and buy a pick-up truck instead. The family physicians in my example are making good money, but they’re not extravagant people.

What makes talking about money okay for a physician is the fact that I wake up every morning excited and humbled about the task at hand. I’m going to help people. No sphere of the human condition is outside my purview. I’m a family physician and I can afford to do what I love.

Author’s note: There is the world as we find it and the world as we would like it to be. This paper discusses the world as it is. In the world as I would like it to be, family physicians would be properly paid for their services without third-party intrusion into the doctor-patient relationship. In my role with the TAFP and otherwise, I recognize the world as it is and work toward the world as I would like it to be.