Medical practice career choices commonly become medical business failures

by Curt Graham, MD

Never in the history of medicine have doctors faced such a ruthless gauntlet of threats, financial debts, and practice restrictions than they do today.  These factors, among others just as crucial, don’t begin to tell the story about why 40% of medical doctors readily admit to intense frustration in their practices, in addition to the percentage of doctors quitting medical practice completely.

They’re not retiring.  They’re adapting.  Extended hours to see more patients to make enough income to stay financially solvent is just one highly stressful necessity causing eventual burnout.  Coupled with the recognition that private medical office practice for most doctors is not lucrative enough to reach their original goals and dreams for their careers, reasonable satisfaction with medical practice becomes a moot point.

Profound disappointment increases as they realize it will take them a couple decades to pay off their education debts (avg. $150,000 plus), let alone make enough revenue to support a family and cover office overhead.

If you have missed the obvious, doctors the day they graduate, are financially hamstrung right from the start.  The roots of this dilemma are found in the medical education program itself.

Discouragement intensifies dramatically when they are faced with malpractice litigation.  You know…it’s the penalty for using all their best medical knowledge, skills, and judgments to prevent and to treat illness, yet isn’t enough.  The most well trained and experienced doctors are subject to malpractice lawsuits, even when they haven’t done anything wrong in their medical practice treatment of patients.

Governmental fee restrictions and intrusions are constantly increasing, which is firm validation that it will be harder to financially survive in practice.   Their future practice income for the majority of physicians will barely keep them in the middle class of Americans.  For those minority of physicians in the highly profitable surgical specialties such as plastic surgery, orthopedics, cardiac surgery, and anesthesiology, most do quite well in their practices.

The easy solution for most medical school graduates is to join a managed care group as an employee where they at least can earn some money right away.  Once they become aware that they aren’t able to practice medicine the way they intended to, they try private practice.

The path into a medical practice career has other unexpected potholes

Upon entering college and into their pre-med curriculum the idea of becoming a doctor is challenged repeatedly.  The high competition for getting into medical school is strongly influenced by their grades.  The hard studies and required courses weeds out many pre-meds.  Of the one’s who make the grade after four years, there is no guarantee they will even be accepted by a medical school.  Who wants to academically struggle for four years only to discover your dreams have just been squashed on the rocks?

Individuals not accepted to a medical school may keep re-applying yearly with the expectation of being accepted later.  Rather than wait and hope, pre-med students can apply to dental schools where the competition is considerably less, with the idea they can get into medical school later.

The way things are today, they’d be a lot better off being a dentist for many reasons.  So, here’s a student who wanted to become a medical doctor and is often left stranded without a backup career in mind—didn’t think he needed one.

Once accepted to medical school, a student is expected to graduate in four years.  In days past some medical schools apparently had programs for planned attrition the first year—like the bottom 10% of the class would be dropped from the school.  I’m not aware of any of the 142 medical schools in the USA doing that today.

Medical students eventually choose the area of medicine they want to practice.  Some choose a surgical specialty and discover they don’t have a surgical talent or skill. Others, for the first time, begin to understand what they are talented to do, as opposed to what they think they want to do.  This tendency may lead a student to becoming a specialist in something they are not skilled to do, but manage to practice in a career in that medical category anyway.  It’s not a rare circumstance.

After all of these hurdles have been accomplished, the new set of hurdles comes into view—specialty training and/or medical practice.  Let me paint a mental picture of this new doctor’s situation at this time in his/her medical career path.

1.  The average new doctor now has an educational debt to pay around $150,000 or more.

2.  The new doctor does not have a job, but may have some connections.

3.  To open a private practice requires either family money or bank loans — estimated to be around $50,000 at the very least.  Debt is now
$200,000 plus.  How long would it take you to pay that debt off?

4.  Common practice choices are:
A. Private solo practice if the money is available to get started.
B. HMO managed care organization if spots are open.
C. Group practice if one is available.
D. Contract partner with another physician already in practice.
E. Hospitalist (employee)
F. Join the military, get further training there.
G. Concierge practice (Cash only).

5.  Often, they are supporting a spouse and children.

6.  The geographical area where they will practice, and the situation they will practice in often is not even close to what they intended or wanted.

7.  Surveys by the AMA indicate that about 14% of doctors move their practice, or move to another area to practice each year.  It means their
first choice was not good enough—but who can predict outcomes?

The tragedy is in having no reliable options that guarantee any degree of medical practice success

Like all professionals starting in any business, there are no guarantees.  The hope is that with one’s passion, entrepreneurial attitude, and persistence will inspire the survival of their medical career.  Those aspirations at their most earthshaking levels must not only be maintained for the duration of a medical practice career, but also must be fortified intermittently with signs of professional progress and practice profitability for those inspirational drivers to continue to exist.

Unfortunately, passion dissipates with time; hope falls short of the mark and medical professional careers relapse into mediocrity because of a doctor’s expectations for their highest career potential turns to, “I’ll just have to settle for what I can get from my practice.”

At this point in their practice, usually about 5 to 7 years after starting medical practice, 95% of physicians have absolutely no idea how to go about improving their practice income.  That’s because they have never been educated in successful business management and the business knowledge required to reach their full potential.  Without it they simply limp along doing the best they know how—they don’t know what they don’t know.

The highly regarded business expert, Michael Gerber, describes the realistic dynamics of this in his book, The E-Myth: Physician.  It should be required reading for every pre-med student.

WAIT—There may be a couple secrets that can salvage the medical careers of the majority of the medical professionals in trouble.

First, for any health care provider in June 2011 and disregarding the ominous December 21, 2012 prophecies, understanding that medical practice is a business, provides a proven foundation for success.  The most profound whitewashing of that one fact by the medical schools today should be punishable by law.  It should also be extended to all pre-med programs across this nation.

Every successful small business owner in the world understands that their business profitability and survival depends on the foundational business principles and time validated concepts that must, not should, be followed.

It’s rare to find a doctor who has been educated in business strategies and the more complex issues of how to use them profitably and efficiently.

Can you rationalize with any degree of intellectual logic why there is such a widespread neglect by the medical academicians to institute business education as a primary curriculum element for all physicians?  There isn’t any today!  If medical practice is a business, then why should anyone expect a doctor to survive in medical practice with no academic knowledge about business?  It defies logic and common sense.
Second, why should any physician or other health care professional expect to do well, earn a good income, have a successful business from medical practice, or even survive financially without any, even basic,  business knowledge?

The traditional belief, “if you hang up your shingle, patients will come,”  is the greatest mental deterrent to successful medical practice that exists.  You might wonder why so many medical practices today are failing because of financial deficiencies.  What could possibly be the cause of that?

Third, considering the tsunami of attrition of medical doctors and their medical practices happening today, you must be aware of the causes.  If we were able to eliminate the many current devouring parasites destroying medical practice today and deal with the one issue of physicians lacking even basic business knowledge, practices would continue to fail.

Doctors would be exactly in the same situation as they are now in—living with mediocre, or just plain lousy, medical practice profits and unable to fund a retirement plan.

It’s an acceptable fact that the parasites of malpractice, law tort reform, litigious patients, and governmental control of health care will not change from how they are today or in the foreseeable future.  It seems quite obvious that I will find rare supporters who believe as I do.

Time to eliminate private practice altogether?

A tour spent on an HMO medical staff will convince any doctor that private practitioners should hang around a while longer.  Concierge medical practice does seem the safest of all the private medical practice models for a doctor to use in the present medical political environment.

With the increasing pressure and restrictions by our government on private practice doctors, even the smartest business and marketing experts such as Dan Kennedy are forecasting the quick rise in numbers of the cash-only models of medical practices.

Comparisons with other professional career choices show a significant difference in profits and satisfaction between a medical career and almost all others.  For the time spent in academic education, cost of education, the skills, talent and intelligence required, the stress of long hours and critical actions, among others, doctors are at the ultimate bottom of the income and lifestyle list. The reasons for that are many.  The solutions to that dilemma are unresolved—just floating along with the current.

And, now I’m back full circle to my original premise, what idiot would ever consider a career in medical practice?  If they would take the time to investigate what’s in front of them, it would be a blessing to them.

Winston Churchill made a point about a crisis during WWII, which seems appropriate here—“It’s not enough that we do our best; sometimes we have to do what’s required.” Private medical practice is increasingly required to bend to the external forces that make the rules, but that doesn’t mean there aren’t other alternatives.

Alternatives more enticing are those in other businesses separate from medical office practice.  This is especially disheartening when physicians discover that most successful business owners earn much more income than physicians.  And, they need much less education and spend much less on education than medical doctors.  More disturbing than that are the thousands upon thousands of people who barely made it through high school or dropped out of college who now earn three times the income of doctors, and work much less.

The question really is, why are there still college students who will continue on into the medical profession knowing all these drawbacks of the profession?  Would you judge them dedicated, just masochistic, or plain ignorant of the issues?

The practice of medicine is a highly honorable profession to be a part of.  No question about that.  However, honor attained at the detriment of so many sacrifices being made, may not be a virtue, but an illusion.

These health care warriors seem undeniably capable of withstanding the perpetual onslaught of our society, which dwells on them as prey.  One has to wonder what it is that makes them think it’s worth compromising most everything in their lives, from family to free time, just to continue a struggle against everything that can destroy them and their private medical practice at any point in time.

Next time around, I’m going to select a different career.

Curt Graham is a physician, author, marketer and expert in medical practice business and marketing strategies. He can be reached at Marketing Your Medical Practice Today.

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  • health blog

    I really think the business of medicine has become much more complex than it was even 20 years ago. Certainly sound business practices are needed, but private practice and private groups are still viable, if for no other reason than that the competition from hospital owned physician practices is so weak. It seems like they insist on running a physician practice like a hospital, making overhead so high that they are guaranteed to be a loss leader in primary care.

  • Martin Young

    My feelings exactly. And I live on another continent.

    A good point to take from your post is that things are no better over ‘there’ than they are ‘here.’

  • ninguem

    As mentioned, is competition really significantly less for dental school?

    I don’t know.

  • J.K. Hargan, DMD, MD

    I sincerely appreciate your thoughtful insights and opinions. I take acception, however, to your comments regarding the competition to enter into Dental School and those entering those schools. You are factually inaccurate there. Also, dental school applicants are not frustrated individuals who did not get accepted into medical school. On the contrary, they tend to be more coherent in their long term goals and have an inherent elevated maturity knowing they will be responsible for actually treating patients (not just healthy ones); responsible for debt and liabilities to patients, staff, family, in only four years time.
    I have successfully completed both dental school and medical school, with honors in both realms. I can accurately state as fact, dental school is far more demanding in management of time, and the first two years have very few differences. I offer this comment with no animocity toward the author or anyone leaving other comments, of which i have read none at this time. But if you want to know what is even more stressful in “private practice”, it is dealing with patients that have heard and believe comments like this author’s re: “dentists aren’t really doctors” (summation), and not being presented with complete histories and meds from these same patients, thus compromising the ability to safely provide treatment.

  • J.K. Hargan, DMD, MD

    In my opinion, hospital “employees / doctors” will very likely be the first to be released as hospitals begin to realize they must cut their biggest costs / “loss leaders” to stay solvent (in the not so distant future). Then where will these doctors go? Start a private practice all over again?

  • Sideways Shrink

    I am one of those private practice shrinks who won’t see those who are “too sick” that primary care likes to complain about. On the other hand, while I am young and nimble enough to deal with my patient’s medical complexities combining with psychiatric cocktails I might prescribe, I also do psychotherapy for private insurance rates! However, the chronically mentally ill, typically schizophrenic or frequently hospitalized patients who have bipolar disorder who do not “prefer” to take medication (to quote Melville’s Bartleby the scrivener) are best treated in a team setting in a community psychiatric clinic, not by a shrink in private practice.
    However, due to the $150K of student loans I have been chipping away at and the ridiculously low RVUs accorded to psychiatry compared to medical neurology, for example, I do no take Medicare or Medicaid. I have no office staff. (You learn a lot about your patients when you book their appointments and take their co-pays. You learn something about their moral bearing, their sense of humor, and if they have a sense of entitlement or not.)

    As a 43 year old, I am among the younger of my those in my specialty. Rarely is psychiatry brought up without the specialty and/or its practitioners slandered on KevinMD. There are even bloggers who, for some unknown reason, slander psychiatrists on the blog Shrink Rap, which is by psychiatrists for psychiatrists. So go ahead and slander shrinks, make sure there will be no new ones coming up to give you a consult 20 years from now when you need one or to whom you can refer a patient. Knock Your Selves Out.

    • horseshrink

      Been there. Done that. Bought the shirt.

      Lost my shirt.

      Used to take Medicaid, managed care and a “thousand” different insurances. Left behind a large, bankrupt practice and took with me a 6 figure payroll tax debt (now finally paid off.) Live and learn.

      Private practice again?

      Thought about a cash only practice. Problem: I like working with really sick patients, who can almost never afford to see a cash-only shrink. Plus, the purpose of psychiatry is clearest amongst the sickest, who should be at the head of the financial triage line instead of under a bridge.

  • Sideways Shrink

    Well, I am a socialist so I am not comfortable with a cash only practice. And when I realized I could only see SO MANY people on a sliding scale and pay my student loans. I did some research in my wealthy tech city in the northwest. I discovered that if you are unemployed or uninsured and don’t qualify for government aid like Medicaid or Medicare and can’t afford the astounding fees many shrinks charge for 10 – 15 minute medication management visits, there is no where to go for sliding scale medication management services. So my solution is that I founded and am half-way through the nonprofit incorporation IRS process with a board of directors to provide just this sliding scale care. We are not going to accept any government money at all: no Medicaid, Medicare or government block grants,etc. The most mentally ill are the most needy, but I was raised in poverty with crazy (diagnosis not my problem) alcoholic parents, so serving that population of vulnerable patients is too close to home. I learned that in all those years of therapy. But, having been poor, I am not going to lose my shirt. On the other hand, I don’t mind asking retired Microsoft executives for donations and grants to give back to the working poor who need mental health care.

    • horseshrink

      10-15 minute med checks. 20-25 patients a day.
      Brave, new psychiatry.
      Widget psychiatry.
      How fast can we listen?

      What a mockery of public notions that we listen to our patients.

      Why the change?

      Boiling frog style habituation to CPT based third party payer reimbursement schedules. $$/min significantly higher for brief med check than for a 50 minute appointment.

  • Marc Gorayeb, MD

    What a depressing rant from a “marketer and expert in medical practice business and marketing strategies.” Is he channeling his clients, or is this his world view? Either way, he or his clients need to re-acquaint themselves with Josey Wales: “Now remember, when things look bad and it looks like you’re not gonna make it, then you gotta get mean. I mean plumb, mad-dog mean. ‘Cause if you lose your head and you give up then you neither live nor win. That’s just the way it is.”

    Achieving your vision of your career involves risk and tenacity. To win the gunfight, bring a bigger gun. If you need to merge with other practices in order to compete against the hospital, negotiate with insurers, push back against the government’s thumb, then do it.

  • ninguem

    Notice the meme of doctors leaving their solo or small group practices to join larger entities.

    Contrary to received wisdom, large group practice is less efficient than small group practice. Lots of middle management. Overhead rises.

    Doctors may well be making more money in those arrangements. The reason, though, is the larger entities find ways to extract higher payment from insurance and government.

    It does nothing to help the cost of American healthcare. In fact, it may well make things worse.

    • Primary Care Internist

      and some of these larger practices basically force their primary care docs to refer unnecessarily to specialists to feed all those nuclear scanners etc.

      I cannot for a second believe that, e.g., mayo clinic outpatient centers treat the elderly multiply-comorbid patient more effectively, or cost effectively, than the local solo or small office primary care docs in suburban NY, where i live. I know this at least anecdotally – how many of us have friends and relatives that saw the local small office doc for cough and just got reassured, vs going to the mayo, and getting chest ct, multiple blood tests, pft’s and pulmonary consult?

  • Gastroenterologist

    “And, now I’m back full circle to my original premise, what idiot would ever consider a career in medical practice? If they would take the time to investigate what’s in front of them, it would be a blessing to them.”

    You are 100% correct and I am proud to see a physician finally have nerve to say what you have stated publically. The state of private medical practice is under attack and in the present climate, it is not likely that we will survive. I have told many future students of medicine to NOT enter the medical field due to the enormous outside pressures on the survival of the business of medicine as well as the pressures of practice and the 24 hour nature of the job that tears you away from family, with the risk of malpractice and little to no reimbursement for the effort. The respect that physicians have in the community is declining at the same rate as reimbursement. I am so disappointed at how things have changed in the 20 years that I have been in practice. We are devalued by payors and patients. Payors refuse to negotiate and one large payor in Houston is now offering contract rates less than Medicare! I can’t pay the rent with MCR rates and have resorted to taking no NEW MCR patients in the outpt setting. You should know that my opinions are shared by MANY frustrated physicians and that I am a well established and regarded physician in my community . All of us are being hit. The only way to fight back is through the voters and to get the word out to future physicians that this is NOT a good profession any longer so that med school applications drop enough to scare the government into realizing that they have over taxed physicians. We need to present a united physician front to CMS and the government so that we have negotiating power. Until we can legally unite, we have little hope of gaining on this attack.
    Does anyone have a solution? I am nearly ready to drop out of medicine all together because I am so angry, or become a concierge practice, but I am worried about doing this as a subspecialist.

  • Primary Care Internist

    “… one large payor in Houston is now offering contract rates less than Medicare!…”

    where i am, in ny, EVERY payer is less than medicare! you are right, it is an unsustainable business model. i believe that nobody is entitled to anything, but because of the length of training, and the fact that most people don’t have the physical stamina and mental intellect and patience to pursue a career in medicine, there is a societal obligation to treat physicians well. When physicians leave practice, it takes over 10 years to train and put into practice a replacement. This is as opposed to the guy (or girl) who decides to be a salesman, realtor, or buy a convenient store or gas station or whatever. These decisions are perhaps more risky in the short run, but carry little or no investment in education or years of life lost. And someone smart enough to become a boarded MD can almost certainly make a couple of gas stations work, for about the same income as a primary care doc.

    there is only one answer, and it is simple – STRIKE! when things are really bad (in my opinion we are there now), all MDs and DOs need to go on strike for one week a year – no hospital, no office, no mid-level supervision, phones straight to voicemail with message to go to the ER etc.

    Unless everyone participates (including ER docs) nothing will change for us.

  • endo doc

    The problem we often face is also of motivation.Running a mill day after day is not easy.I think research and education should form a part of the practice.More interaction and better communication with colleagues is a must.
    Despite all of this private solo or multispecialty practice remains the number one choice for most graduationg fellows in my field-Endocrinology,I guess for perceived monetary benefits!

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