Specialists offer pearls for physicians’ financial health

Although a career in ophthalmology can offer a lifetime of high earnings, many physicians often find themselves seeking information to help them achieve financial independence.

Retina specialist Chirag P. Shah, MD, MPH, teaches a seminar in financial planning for physicians at Harvard Medical School and has presented the session on financial health.

He teamed up with fellow retina specialist Jayanth Sridhar, MD, to write the book, The Financial Freedom Rx: The Physician’s Guide to Achieving Financial Independence.

During a conversation with Ophthalmology Times®, Shah and Sridhar offered pearls about personal finance that are most relevant to ophthalmologists.

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Sridhar noted some of the differences in financial planning for physicians compared to other professionals, pointing out that although it varies by specialty, on average, physicians have relatively stable, high incomes once they leave training.

“Because of the length of medical school and residency (and potentially fellowship), the financial payout is deferred for a long time, while budding physicians are incurring loans and other expenses along the way,” he said. “Thus, doctors are not as wealthy as many people think. ”However, Shah noted that a sudden change in income often can impact the way a physician may think about money. He noted that this feeling of delayed gratification can sometimes lead to explosive spending when a physician is finally making an attending’s salary.

“There is also this image of a ‘rich doctor’ with a fancy car and home,” he said. “That will come with time, but it may not come in the first few years out of training. It is good to be thoughtful about saving, budgeting, and investing to ensure that you are preparing for the future while eliminating educational debt.”

The practical finances between ophthalmologist and other physicians are not necessarily different, according to Sridhar.

He noted that ophthalmology is around the average for both income and length of training, although, again, this varies with the job and the subspeciality.

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“One big difference between ophthalmology and some other medical specialties is that most of our work is outpatient, so we tend to keep a schedule closer to ‘normal’ working hours,” Sridhar said. “We have a little more time and opportunity to educate ourselves on finances and introspect on the things that are actually important in our lives.”

Changes in the health care industry can affect the way physicians plan for their finances, and Shah pointed out that a key challenge is reimbursement rates, which often decrease while overhead increases.

Further, many medical practices are being bought by private equity, which works out well for the more senior doctors but, in general, can financially hurt junior doctors.

“Presently, physicians do not have the luxury of making as many financial mistakes as we could have during the heyday of medicine,” Shah said. “Physicians still can do very well. But we have to be smarter about managing our finances.”

Although some professionals can benefit from “job hopping” as a way to boost their salary, Sridhar advises physicians to stay in 1 job.

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“From a financial perspective, unless you started in a very low-paying job, you are often better off with 1 job than moving around a lot because of the transitional costs,” he said. “A lot of the investment is up front in terms of building your patient base and reputation. Especially if you are talking about a practice where you build equity or you are earning some sort of partnership, there is often a time investment to get to that point.”

One caveat, Sridhar said, would be that in academic medicine, there are reasons why a physician may choose to job hop to move up the ladder, so to speak — but that’s more for academic advancement or prestige than financial gain.

Shah said it is important for physicians to set reasonable financial goals and avoid comparing themselves to others.

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“You may say, ‘I want to make more money because my partner does’ or ‘I want a fancier car because my college roommate has a sweet ride,’” he said. “When we think about what comprises happiness, it is not just having enough, but it is knowing that ‘enough’ is absolute. It is not relative. It is not compared to the next person."