Finances were reported as the second leading cause of physician depression for men and women in 2018. Doctors have a huge weight on their shoulders when it comes to making it through rigorous training and taking on the responsibility of caring for someone else’s mom, son, or sister throughout their careers. In addition to a high demand professional role, doctors also have family and relationships that add to their daily happiness, but can also add to their stress. This is where finances come into play. There is a common misconception that all doctors make a high income and are living “the life.” Doctors, like anyone else face challenges like student loan debt, medical bills, children's education, bad spending habits. They also face a higher risk of litigation than most professions.
Due to these many stressors, physicians have the highest suicide rate of any profession and more than twice that of the general population. Sadly, one physician commits suicide every day in the United States. These startling statistics led us to dive into the causes of financial stress and why this takes a toll on doctors, resulting in depression or even worse outcomes.
We talked to experts in the field and found that there are five main causes of financial stress on doctors. These experts include doctors as well as professionals outside of the hospital or clinic who serve as professional advisors including a practice consultant and a financial planner.
As with most medical training programs, finances are secondary in physicians learning curriculum while they’re in training. They have so much to learn in their specific field in order to become an MD that finances aren’t a priority. Even though they are faced with many financial decisions early on, it can be difficult for them to stop and gather enough information in order to determine what to do when faced with financial decisions. A solution that would help physicians immensely would be to introduce financial planning concepts early on in their training and have resources available to help them with money decisions.
Fear of the unknown can also add stress and/or cause people to ignore a problem and let it get worse. Finances are not something to ignore. Bad spending habits and increasing debt can spiral out of control if someone decides to ignore their situation because of the lack of financial literacy, which typically results in more stress.
Dr. Dike Drummond’s advice: “Net worth. And if you are wondering "What's that?" Then you need to see a financial planner. Get a plan. Get a retirement trajectory because I work with a lot of doctors who are afraid of money because they've never sat down and looked at what's in all the buckets. When they do that, they typically feel better.”
Similar to the lack of time for personal financial education in medical training, business management is also a topic that is typically not covered. For doctors who decide to start their own practice, they are often left to figure out how to manage accounting and finance for the practice or don’t know who to hire for those services. Starting a practice from the ground up brings many challenges, including how much to pay yourself and your employees. Picking the right or wrong advisors to guide your practice is a skill of its own and can make or break your practice.
According to Tom Loeblein, a medical and dental practice consultant, “When physicians find themselves with insufficient funds to cover their expenses, their focus becomes on “survival of self.” If they have families they are often the majority breadwinner which puts additional stress on the situation. This “survival” mode clouds their vision and they lose their focus on being the leader they are called to be in their practice. Before you know it, employees sense the tension and the practice fails to perform as it should – thereby causing additional financial stress. The key is to begin working with a professional that will help you make sound financial decisions early in your career. They help you with “behavior modifications” in order to keep from making critical financial mistakes.”
In 2019, medscape.com reported that the overall average salary for a physician was $313,000 a year. While a physician’s income is much higher than the national median income $61,937 in 2018 according to the US census, higher incomes often lead to higher expenses and cost of living.
When talking about the financial pressures physicians face, dr. Sanjiv Lakhia, a Physiatrist in Charlotte said,
“I think there are several factors that contribute to this. A majority of physicians literally jump into the ‘1%’ income bracket overnight transitioning from a resident’s salary to that of a practicing clinician. Unfortunately, at least while I was in training, very little education is provided to young docs on how to develop financial literacy and more importantly, financial discrimination. Society holds physicians up to a certain wealth standard and expectation that can be unrealistic to maintain. If not careful, physicians can quickly find themselves living a glamorous, expensive lifestyle with little room left over to cultivate appropriate levels of retirement savings. Stress can quickly mount to meet very high production standards at work in efforts to maintain a standard of living that is hard to pull back from. Interviewing and retaining a qualified Certified Financial Planner™ from the very beginning of one’s career is a critically important, strategic move to help physicians navigate the challenges of wealth creation.”
Listen to Dr. Lakhia's full interview on the Prosperous Doc podcast episode below:
No matter how much income a physician makes, if they are spending too much and not saving enough or taking care of their financial future that can lead to a lot of stress. Finding a financial planner that can keep a physician focused on their goals can help keep spending in check and lead to a less stressful lifestyle.
While physicians do typically have a high salary when they finally begin their career – because medical school and residency take many years – their actual income over time is not as high as it may seem, especially when compared to other industries.
The Physician on FIRE shares his opinion on the source of physicians' financial stress:
“… Money problems are surprisingly prevalent among physicians. We may have high incomes, but we’re so far behind our peers who may be ten years into their careers by the time we start ours. While we’re trying to climb out of debt, we see high school and college friends becoming VPs in business and partners in law firms and we’re trying to figure which student loan repayment program is best.
That can be depressing.
I’ve seen many a physician try to spend their way to happiness. Some spending does indeed bring us joy, but if we’re just buying toys we don’t have time to play with and we’re not getting ahead financially, spending can be counterproductive to our happiness.”
Not only are doctors behind their peers when they finally enter their careers after 10-15 years of education and training, they also tend to rack up a load of debt through undergraduate and medical or dental school. When the grace period of 6th months ends after graduate school, they are faced with the decision to start paying off their student loans or choose to go into forbearance during residency. With little free time to think about finances or to consider a part time job to cover monthly student loan payments, doctors making a low-income as an intern are often forced to delay repayment. When they choose to go into forbearance, doctors free up cash flow but they still have normal life expenses and are forced to “live the intern life” surviving off ramen, rice, and beans while they get on their feet in the real world. Though it may make the most sense to delay repayment, they are also accruing more interest on their student loans every day, adding more debt.
Unsurprisingly, most doctors' college debt is from medical school. The median medical school debt, not including loans from premedical education, was $195,000 among 2018 graduates with medical school loans. Adding in undergraduate debt, doctors are facing a median debt load of $200,000 and even more if they attended a private school.
Because physicians have a lot of stressors in their lives about half of them become burned out after time. One might ask- if they are so unhappy in their job, why don’t they leave?
The answer is not that easy. For one, these doctors have dedicated many years and hundreds of thousands of dollars to becoming a doctor. Another reason is the stress of finding a job with the same income or the challenge of finding a job outside or medicine or their specialty.
On a Prosperous Doc podcast episode, Dr. Dike Drummond, explained his struggle with this issue when he was miserable working as a family medicine doctor. Click the play button below to listen to the full conversation.
"People thought I was crazy [when I decided to quit medicine]. I wondered if I was crazy. Lunatic, right? To give your 20s up and you only practice for 10 years and now you're gone? Really? Most doctors at some point in time have to make a decision whether or not they're in this for the long run. And that decision more typically comes in your 40s and 50s. Most financial planners will say, "Hey, you're in the cat bird seed on a still what is traditionally high income. I wouldn't throw that away without some plans, some financial plans, to take care of yourself and your family and your legacy. But for me, I knew that I couldn't physically continue to do what I had been doing. It felt like an act of self-preservation.”
More than one in three physicians or 34% have had a medical liability lawsuit filed against them at some point in their careers by age of 55. Nearly half of physicians 55 and older reporting having been sued.
Dr. Dearmin is a pediatric emergency medicine doctor who has made it her mission to support physicians facing malpractice litigation and healers recovering after adverse patient outcomes. Litigation is damaging to doctors careers’ and personal lives. With it comes an immense amount of stress on doctors who already report high burnout and suicide rates.
In her blog titled, “Breaking Our Silence Around Malpractice Litigation,” she says “Just like cancer, our silence around such a tough experience has the potential to take physicians and other healers' personal and professional lives from them, their families, and their patients, figuratively and literally…. the experience of adverse or near-adverse outcomes and litigation is widely known to result in PTSD in practice.” Malpractice litigation can damage a physicians reputation and even negatively affect their career trajectory. The fear or reality of litigation can cause an immense amount of stress on a doctor if they were to lose a malpractice lawsuit, resulting in the termination of their job.
Physicians can become unhappy or depressed due to a variety of factors, but their job stress and financial stressors are often the top two causes. While they are not typically taught how to handle these stressors or plan for their financial future as part of their training, there are resources available that can help. Financial professionals like SDT can help navigate the difficult landscape that lies in front of physicians and can help them to determine decisions that are more likely to lead to financial security and reduce their anxiety and stress.
Spaugh Dameron Tenny can help you clarify your financial goals and determine your risk tolerance. Our advantage is that we have more than 50 years of experience, processes and specialization with physicians and dentists who have faced the same issues and challenges as you. So, whether you are well established in a practice, or just finishing your training, we invite you to explore our services.
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Shane Tenny is the managing partner of Spaugh Dameron Tenny. Along with hosting the Prosperous Doc® podcast, Shane has a true passion for behavioral finance, helping clients and audiences understand how to develop successful strategies based on their unique temperaments. An accomplished and highly engaging speaker, Shane is regularly interviewed for television and podcasts, is actively involved in the Financial Planning Association®, and contributes to industry advisory boards.
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