In Part Three of this ongoing series about my personal financial journey as a working doctor, I present a few scenarios of how I earn my income. (Yes, I do feel like a gerbil on an exercise wheel sometimes). In Part Two of this Series, I detailed how I accumulated medical school debt, and next week's edition will discuss my spending patterns and cost of living issues.
I want to emphasize the purpose of this series: to provide a real scenario of a doctor's earning/spending/work patterns so that people can understand concerns about the current state of physician compensation. I am not whining about how little I earn, especially in comparison to average U.S. workers. I consider myself very fortunate and I have a good life, thanks to my earning potential as a physician. However, I would like to disabuse the notion that doctors are all filthy rich and motivated entirely by money. I hope that providing a complete picture of one woman's financial profile--mine--will help ground the dialogue about physician compensation in reality.
THE ENTRY-LEVEL SCENARIO
After graduating from family practice residency, I did not start a "real" job right away. I did per-diem and urgent care work for a couple of months and saved money for a three-month rest period. I already had a full-time job lined up in the rural community where I live now, with a plan to start in January 2005.
The job was at a community health center where the providers--four family docs, a midwife, a women's health PA, and three general family practice PAs--provided full-spectrum family care for Medicaid and uninsured patients as well as a good handful of insured patients who chose to come to the clinic because of the great reputation it has. The clinic was a Federally Qualified Health Center (FQHC), which meant I would be eligible to apply for federal loan repayment. I ultimately obtained loan repayment, but the first year I worked at this clinic was not a repayment year.
Here are the details of that first FQHC job:
- Hourly salary: $49.81
- Clinic hours/week: 36
- Admin hrs/wk (max): 4
- Days on call/month: 7
- Payment per birth: $360
- Births/month: 3-5
The benefits included with the job:
- Health/dental/vision: $325/month (50% of total). Annual benefit: $3,900
- CME stipend: $1,000/year (prorated for FTE). Annual benefit: $1,000
- CME days off: 5 days/year (prorated for FTE). Annual benefit: $1,992
- Paid time off: 15 days/year (prorated for FTE). Annual benefit: $5,977
- Profit sharing: Varying %/year. Vested after 7 years. First year: $2,000.
- Paid vacations: 8 paid vacation/year (prorated for FTE). Annual benefit: $3,188
If you do some fancy math, you'll come up with the following yearly totals:
- Base salary: $95,635 (based on 40 hours/wk, 48 wks/year)
- Payments for births: $16,200 (average 45 births/year)
- Value of benefits: $18,057 (assuming 1.0 FTE)
Total potential income for first year FQHC job: $129,892
Now, in real life this gross salary did not translate into $129,892 into my pocket. Why?
- Not yet vested in profit-sharing. Subtract $2,000.
- Health plan benefit not paid in cash. Subtract $3,900.
- Adjustment in base salary to 0.8FTE. Subtract $19,127
- Adjustment in CME/PTO for decision to reduce to 0.8FTE1. Subtract $2,431.
Adjust total income for first year FQHC job: $102,433.
Of course you're asking: Why drop down to 80% of a full-time position? Several reasons:
- Our Medical Director encourages doctors not to work 40 hours/week, to avoid burnout.
- Practicing obstetrics means occasionally canceling clinics to attend a birth, resulting in unpaid hours. In my experience, the number of clinic hours lost per birth is about 4, so based on the number of births I average, I miss 12-20 hours of clinic per month.
- Opportunity to pursue other jobs (see below) to maintain inpatient skills and topic-specific knowledge bases.
Turns out none of the doctors or midlevel providers at my clinic worked 40 hours a week. The most committed doctor there works all of 32 hours per week, exclusive of call. Primary care is a grueling job, even more so because the patient population at this clinic is largely poor, undereducated, and disproportionately in poor health, compared to a private practice catering to insured patients. If you think you could endure 36 hours of clinic and only 4 hours of administrative time in this clinic, we've got a job waiting for you. Don't say I didn't warn you about the salary.
Now, to be fair: the salary scenario outlined above is about 30% less than I would have made at a comparable job near the Bay Area. This rural community is very economically depressed, and wages are lower here across the board than they are near the regional cities. I considered earning more by living somewhere else, but I felt strongly about being a rural doctor, and I knew the higher cost of living near the cities would essentially eliminate the salary differential. (Turns out I didn't score as well as I'd hoped in the cost of living department, but I'll get into that next week.)
Because I'm the kind of person who enjoys variety and wants to maintain my skills, I picked up some nighttime "no-doc" shifts at the hospital (this was in the days before we had a hospitalist program), which paid a little bit of money, and worked one Saturday outreach clinic for our local family planning clinic. These side jobs brought in another $10,000 that first year. They also added 6 nights of call and one Saturday clinic per month to my work load.
Total first-year income, FQHC + moonlighting: $112,433
What was my work schedule like to earn this income?
- Clinic 3 full days and 1 half-day per week
- At least 8 hours of administrative time per week, only a maximum of 4 paid
- OB/clinic call 1 day/week and 1 weekend (Fri/Sat/Sun) per month. Average 7 days/month.
- "No-doc" coverage for hospital: 6-7 nights per month, usually corresponding to OB call days
- One Saturday outreach clinic/month
- Average hours/week: 64.5
A NOTE ABOUT ADMINISTRATIVE TIME
You may be wondering what I mean when I refer to administrative time. This is the amount of time set aside for a physician to catch up with the mountain of paperwork generated by her direct patient care. This paperwork includes:
- Approving refill requests
- Completing preauthorization forms for procedures, consultations, nonformulary prescriptions
- Completing medical certification for disability programs, family medical leave, jury duty excuses
- Maintaining certification with local IPOs, medical societies, state medical boards
- Reviewing test results
- Finishing progress notes
- Returning patient phone calls, or giving nurses instructions to return them
Every patient you have in your panel will generate at least some paperwork, some more than others. This is a simple fact of life in contemporary medical practice.
Now, my clinic has developed a fairly stingy protocol for determining how much admin time they will pay for, depending on how many patient care hours you put in:
- 0-15 hours: 0 hours admin
- 16-19 hours: 1 hour admin
- 20-23 hours: 2 hours admin
- 24-27 hours: 3 hours admin
- 28+ hours: 4 hours admin
The maximum number of administrative hours you can earn under this system is four per week. Considering that you have to do at least seven clinics (clinic = half day seeing patients) per week to earn the maximum admin time, this breaks down to about half an hour of admin time per clinic. Now, keep in mind that you see at least 10 patients per clinic, so this system of admin time allows you four hours to catch up with the paperwork generated by 70 patients.
It should go without saying, but I'll say it anyway: all of the providers at my clinic put in many more admin hours that they are paid for.
Enough. Let's return to income scenarios.
LOAN REPAYMENT SCENARIO
After my first year at the FQHC, I was approved for federal loan repayment (LRP). Our clinic scores high on the Health Professions Shortage Area (HPSA) rating scale, so I was granted $25,000 per year, tax free, for two years of loan repayment. Subsequent years of loan repayment were available but not guaranteed, and I had to reapply at the end of the initial 2-year period to be considered for further support.
The value of the LRP stipend is greater than the stated amount because it is tax-free. Assuming a 33% tax bracket, the actual amount of the annual award was $33,250. Therefore my income for the second and third years of my working life were:
2nd/3rd year income, FQHC+LRP+moonlighting: $145,683 minimum
This figure is a minimum because during these two years, my income from hospital work was evolving, which I will discuss below.
LRP was a great boost to my income scenario. It essentially underwrote the low FQHC salary, which is the intention of the LRP program. For LRP awardees, further years of support are available based on yearly applications, and can pay up to the following maximum awards:
- 3rd year LRP: $35,000
- 4th year LRP: $35,000
- 5th year LRP: $25,000
- 6th year LRP: $20,000
- 7+ year LRP: $15,000
- 40 hours/week, at least 32 hours of which are spent in direct patient care
- No more than 8 hours/week of administrative time
- For OBs and FPs who do OB, at least 21 hours of direct patient care are required. The remainder of the clinical hours can be fulfilled by providing inpatient care to the FQHC's patients
- Maximum 35 days away from the FQHC site allowed per year, for any reason: vacation, sick days, CME
- Days off greater than the 35 allowed must be made up, and therefore extend the end date of LRP
I was lucky enough to fall into the category of "FPs who do OB" and therefore ended up reducing my clinic hours to 24 of patient care and 3 administrative hours/week. At the end of my 2-year commitment, I decided not to reapply for more LRP. The reasons are complex, but I was beginning to burn out on primary care and the 32 hours/week I was doing in the office was limiting my ability to pick up hospital shifts, which were both better paid and--at this time--more interesting for me. It is important to understand that I did not leave primary care solely because of low compensation, but it was a factor.
What was the work schedule like during my LRP years?
- Clinic 3 full days (24 hours) per week
- Admin time 8 hours per week, 3 of which were paid
- Hospitalist shifts 1-3 days per week, usually overlapping with OB call
- OB call 1-2 days per week and 1.5 weekends (Fri/Sat/Sun) per month. Average 12 days/month.
- One Saturday outreach clinic per month
- Average hours/week: 68-80
AFTER LRP: AN EVOLVING HOSPITALIST PROGRAM
All the clinics in my FQHC network decided to turn their patients over to hospitalists in early 2006. At that point, all the doctors in our network suspended their inpatient duties, except for myself and one of my colleagues. Compensation for hospitalist shifts also increased:
- Hospitalist day shifts, pre-2006: $200
- Hospitalist night shifts, pre-2006: $100
- Hospitalist day shifts, post-2006: $300
- Hospitalist night shifts, post-2006: $125
- Encounter fees, post-2006: $20-$90 per encounter, depending on complexity
- Independent contractor status, i.e. no benefits, no retirement plan, no partnership perks
I know it seems like a laughably small amount of money, but this was a locally-grown hospitalist program that was extremely lean in its operating expenses. It has grown since then, but is still extremely lean. You can earn higher compensation if you work for one of the big hospitalist agencies, but my hospital decided to go with the efforts of local doctors, which I thought was a good thing.
It should be noted that the raises in hospitalist income were the only significant raises I ever received during my working life up here. The FQHC gave me one small raise after the hospitalist switch, in order to reward me and the other OB providers for continuing to do some kind of call. The raise was about $2.50/hour.
With the changes to the hospitalist program after 2006, my actual second and third year incomes were:
Second year income: $162,496
Third year income: $178,242
The increase between year 2 and year 3 represents a greater number of hospitalist shifts I picked up. As time went by, I began to see hospitalist work as the only way for me to meet my financial goals and still continue to work in a rural setting.
Our hospitalist program continues to evolve. We were able to implement another pay increase at the beginning of this year, which is not reflected in the totals noted above because they have had their impact on my year 4 income, which still remains to be determined.
Now, on to a few considerations about income potential.
RURAL DOCTOR'S PRINCIPLES OF EARNING A LIVING
As a doctor in the middle of her fourth year post-residency, I realize I am a rank amateur when it comes to grasping the complexities of medical economics in settings other than the FQHC and the grassroots hospitalist program I have worked for since my arrival in Rural, CA. I have never, for example, worked within a private practice setting, or for one of the big staffing agencies that provide hospitalists for other hospitalist programs. I have never tried locum tenens. Yet I do know a lot more doctors than I used to, more experienced doctors who have run the gamut of these other settings, including:
- A very able internist who finally closed his solo practice this year after netting only $32,000 last year after expenses
- Another very able family doctor who joined the FQHC system after her private practice failed, and forced her into bankruptcy
- About a half-dozen internists and family doctors who either gave up on primary care or never bothered to enter it. They work for a big hospitalist agency--call it Hospitals-R-Us--at the other hospital in my area, where they see 15+ patients a day and make $180,000-$200,000 per year, depending on how much they work. Burnout among them is high, however.
- There is no easy way to make a living, in medicine or in any other field. The only sure way to be unhappy in medicine is to assume you can make a big salary AND put in very little work.
- Any salary scenario a recruiter offers you is subject to a lot of contingencies that will reduce the ultimate income you earn. These contingencies may include: productivity goals, margins of expenditures, and full-time commitment, any of which you may or may not be able to meet. Take-home message: Your results may vary. Make sure you generate potential scenarios to estimate the range of income you might actually earn based on the recruiter's scenario.
- A doctor's potential income depends upon the scalability of the source of income. Some work scenarios are scalable; others are not. I will discuss this in more detail below.
- Multiple streams of income, i.e. more than one job, helps increase total income and buffers a doctor from downturns in revenue at any individual work setting.
This is an important question because one of the problems with medicine is that it is endless. There is always work to be done, patients to see, and shifts that must be filled. Assuming you are not a workaholic and don't work just for the fun of it, it behooves you to determine whether working more really earns you more. The easiest way to calculate earning potential is to look at income, although some type of work might earn you the esteem of your community, professional accolades, or just the feeling that you have done something good for humankind. These are also important rewards of work, but much more difficult to quantitate.
Drawing from my income scenarios, you can see that some type of work are scalable--doing more of it earns you more money--and some are not. The FQHC job is not scalable; the clinic is only open from 8-5 Monday through Friday, so the most you could work and expect to get paid for is 44 hours per week. This assumes you have the fortitude to see patients for 40 hours per week, and your only reward for doing that would be to get paid 4 hours for the 20 or so hours you put in completing administrative tasks. This is because the FQHC doctor is an employee, and bound by the rules of the clinic.
I suspect that private practice is not much more scalable than the FQHC. Certainly, private practices attempt to scale up by increasing efficiency in clinic flow, documentation, and billing, but at the end of the day you can only see so many patients. I know there are doctors out there who see 15-20 patients in each clinic (the infamous 10 minute visit), but I very much doubt many of them can do that 40 hours per week. The scalability of such a model is also dependent upon the efficiency of the practice's staff and systems, otherwise the doctor will get stuck with another 40 hours per week in paperwork and follow-up, very few of which will increase his or her earning potential. Efficient systems are expensive. I'll be interested to see how EHRs improve the scalability of private practice settings. (Issues of quality of care and patient satisfaction in a practice that limits the doctor to 10 minutes per visit are obviously important, but not considered here.)
Shift work--i.e. hospitalist and ER work--is almost infinitely scalable. If you are willing to work a lot, you can earn a lot. I know one hospitalist who likes to embark upon long sailing trips, up to six weeks at a time. When he is landlocked, he likes to work every day. He will work 30 consecutive hospitalist shifts cheerfully, and his paychecks provide proportionate reward. I think he's insane, but that's a separate matter.
I think this is one of the reasons doctors are leaving primary care to be shift workers. There is at least some guarantee that the work you do will result in an increase in income. Putting in hundreds of unpaid hours trying to run an efficient private practice, and probably falling short of the mark, provides no guarantees.
SUMMARY, AND PREVIEW OF NEXT WEEK
In presenting my personal income scenarios--how much I make, how I make it, and how many hours I have to put in to make it--I hope to establish a concrete set of information to bring to the often heated dialogue about physician compensation. I make no claim to providing a comprehensive or even representative survey of how an average doctor makes a living. I hope you consider this to be a case study of sorts, and perhaps other physicians might be similarly moved to share their financial details to further amplify the discussion.
Ultimately, it's not how much you make, but how much you keep that matters in building a comfortable life. Next week I will present what it takes for me to keep a roof over my head, (good) food in my stomach, provide for my current insurance and future comfort, and fund my many recreational pursuits. If this were reality TV, I might call it In Pursuit of the Bottom Line.
NEXT WEEK: Part Four: Cost of Living, or Getting a Life
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Posted by: Professional Business Plan | October 26, 2009 at 11:17 PM