Although a career in ophthalmology can offer high earnings over a lifetime, many physicians often seek information that will help them achieve financial independence.
Retinal specialist Chirag P. Shah, MD, MPH, teaches a seminar on financial planning for physicians at Harvard Medical School and presented the session on financial health.
He teamed up with retinal specialist Jayanth Sridhar, MD to write the book. The Financial Freedom Rx: The Physician’s Guide to Achieving Financial Independence.
In a conversation with times of ophthalmology®, Shah and Sridhar offered personal finance beads most relevant to ophthalmologists.
See also: Four tips for building a proactive practice
Sridhar pointed out some of the differences in physicians’ financial planning compared to other professions, noting that physicians, on average, have relatively stable, high incomes once they graduate, although this varies by specialty.
“Because of the length of medical school and residency (and possibly the fellowship) the financial payout is deferred for a long time while aspiring doctors bear loans and other expenses along the way,” he said. “So doctors are not as rich as many think. However, Shah noted that a sudden change in income can often affect the way a doctor thinks about money. He found that this feeling of belated gratification can sometimes lead to explosive spending when a doctor finally earns his doctor’s salary.
“There’s also this picture of a ‘rich doctor’ with a fancy car and a home,” he said. “That will come with time, but it may not come out of training in the early years. It’s good to think about saving, budgeting and investing to ensure you prepare for the future while eliminating educational debt.”
The practical finances between ophthalmologist and other doctors are not necessarily different, according to Sridhar.
He found that ophthalmology averages in both income and length of training, although again this varies by profession and sub-specialty.
Related: Ophthalmology practices are eyeing private equity investors
“A big difference between ophthalmology and some other medical specialties is that the majority of our work is ambulatory, so we tend to work a schedule that’s closer to ‘normal’ working hours,” Sridhar said. “We have a little more time and opportunity to educate ourselves about finance and to deal with the things that really matter in our lives.”
Changes in the healthcare industry can affect the way doctors plan their finances, and Shah pointed out that a key challenge is reimbursement rates, which often fall while overhead costs rise.
In addition, many medical practices are bought by private equity, which works well for the more experienced doctors but can generally hurt the young doctors financially.
“Currently, doctors don’t have the luxury of making as many financial mistakes as we could have done in the heyday of medicine,” Shah said. “Doctors can still be very good. But we need to be smarter about managing our finances.”
Although some professionals can benefit from “job hopping” to supplement their pay, Sridhar advises doctors to stay in a job.
Related: Increase the reach, relevance and revenue of your practice with clinical trials
“From a financial perspective, unless you started in a very low-paying job, you’re often better off with a job than with a lot of moving because of the transition costs,” he said. “A lot of the investment is done up front to build your patient base and reputation. Especially when you’re talking about a practice where you’re building equity or forming some sort of partnership, it often takes an investment of time to get to that point.
One caveat, Sridhar said, would be that in academic medicine there are reasons a doctor might decide to change jobs, so to speak, to move up the ladder – but that’s more for academic advancement or prestige than financial Profit.
Shah said it’s important for doctors to set sensible financial goals and avoid comparing themselves to others.
Related: Financial planning during a pandemic: Part I
“You can say, ‘I want to make more money because my partner does,’ or ‘I want a fancier car because my college roommate has a great car,'” he said. “When we think about what constitutes happiness, it’s not just about having enough, but knowing that ‘enough’ is absolute. It’s not relative. It’s not compared to the next person.”