Unique Financial Challenges That Physicians Face

Tackle the unique financial challenges of the medical profession. Our guide offers solutions and strategies for physicians at every career stage.

By: Varun Verma, MD

Published: Dec 11, 2023

📂 Physician Perspectives

Written for:

✅ Medical Students

✅ Residents and Fellows

✅ Early Career Physicians

✅ Mid Career Physicians

✅ Established Professionals

Unique Financial Challenges That Physicians Face

Physicians, like professionals in any other field, face a range of financial challenges. However, there are several unique financial challenges that are particularly relevant to physicians:

  1. High Educational Debt: Physicians typically undergo extensive education and training, which can result in significant student loan debt. The cost of medical school and the length of time it takes to complete medical training can lead to substantial financial obligations. Recent figures show the average debt for those graduating medical school is above $200,000. We all have contacts from our personal networks that went to private undergraduate or private medical schools or Caribbean medical schools and are finishing with $400-500,000 of debt. This is like starting your working career with a mortgage.

  2.  Long Training Period: Medical training, including undergraduate education, medical school, residency, and fellowship, extends for many years. This prolonged training period delays earning a full physician's income and may contribute to financial stress. Many of us have friends that went into finance or other fields and essentially started earning a decent paycheck at age 21 after finishing college. Even other fields like law don’t have an extended training period like residency or fellowship and they can start earning a living wage much sooner than physicians.

  3. High Malpractice Insurance Costs: Medical malpractice insurance can be a significant financial burden for physicians, especially those in high-risk specialties. Premiums can vary widely based on location, specialty, and past claims. Surgical fields tend to have the highest malpractice costs, and another consideration physicians need to stress about is who will pay the ‘tail’ coverage when they leave a practice.

  4. Overhead Costs: Physicians who own or operate their medical practices are responsible for the overhead costs, such as rent (or mortgage), utilities, staff salaries (front desk, medical assistants, associates), and equipment (which can be quite expensive depending on your specialty). Managing these expenses can be challenging, especially for those in private practice.

  5. Regulatory Compliance: Physicians must navigate complex healthcare regulations, billing codes, and insurance requirements. Just to get started physicians need to pay for and maintain a medical license in each state they practice and a DEA. Compliance with these regulations can be time-consuming and may require additional administrative staff, increasing overhead costs.

  6. Uncertain Reimbursement: The reimbursement landscape in healthcare is constantly changing, and physicians may face uncertainty regarding how much they will be paid for their services. This can be particularly problematic for those who rely heavily on fee-for-service models. For example - many physician groups have decried the fact that the 2024 Medicare Physician Fee Schedule rule includes a 3.34% decrease to the fee schedule's conversion factor, which is used to calculate Medicare payouts to docs.

  7. Student Loan Forgiveness Eligibility: Some physicians may be eligible for certain student loan forgiveness programs, but navigating the eligibility criteria and requirements can be complex.

  8. Disability and Life Insurance: Physicians may require substantial disability and life insurance coverage due to their high income potential and the potential impact of a disability on their ability to practice medicine. 

To address these unique financial challenges, many physicians seek advice from financial planners or advisors who specialize in healthcare and medical professionals. Developing a sound financial plan that considers these challenges is essential for physicians to achieve their long-term financial goals and maintain financial stability throughout their careers. Andwise can help - please book a complementary session with Tanya Frias CFP https://www.joinandwise.com/blog/complimentary-financial-education-consultation-for-medical-professionals

Ready to take the next step? Second Opinion Financial Strategy Checkup for Physicians

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1. Schedule Your Checkup

2. Validate Your Financial Strategy

3. Enhance Your Financial Health with Confidence

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Our Second Opinion Financial Strategy Checkup is specifically designed for physicians looking to validate the effectiveness and alignment of their current financial strategies with general best practices in the field. Drawing on the medical profession's familiar concept of seeking a second opinion, this service offers a professional review of your financial strategy's overall health, without crossing into personalized financial advice.

Led by Tanya Frias, Director of Financial Education and Planning at Andwise, this session provides an unbiased assessment, ensuring that your financial planning, as recommended by your current advisor, adheres to the principles expected in sound financial management for medical professionals.

  • Validate Your Financial Strategy: Receive an expert review focusing on whether your financial strategy aligns with recognized best practices, helping you understand its strengths and potential areas for improvement.

  • Educational Insights: Benefit from educational insights into financial planning principles relevant to physicians, enhancing your ability to make informed decisions about your financial health.

  • Professional Assurance: Gain professional assurance on the general direction and structure of your current financial planning, providing peace of mind without the need for in-depth, personalized financial advice.

It's important to note that this session is designed for validation and educational purposes. It offers a high-level review rather than personalized financial planning or specific investment advice.

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