The Hippocratic Oath says nothing about taking out a bank loan to outfit your own office to start your practice, nor does it include investing in real estate to diversify your income. Of course, most doctors didn’t opt to enter medicine with the intention of building an empire of medical care (although some end up doing so anyway). Large hospitals, insurance-run medical groups, and entities that operate with high revenue health care dollars all consider this perceived aversion to business an advantage for them; if doctors or “providers” don’t want to worry about running the business side of medicine, then it is the role of the entities to handle the “grungy” part. The cynical side of me keeps reminding me that much of health care functions on the backs of the physicians.
Student loans plant the seed for debt aversion
It would be unfathomable for a business owner to fund a venture entirely out of her savings. Our tax system is structured to allow businesses to leverage and borrow. Cash flow allows these financial structures to self-sustain. Medicine, on the other hand, is a conservative field. Doctors are debt averse. Look at all of the articles on Public Service Loan Forgiveness (PSLF). If you can strategize and plan meticulously where you train and work, you can find ways for Uncle Sam to pay for your education.
Sure, we’ve all had patients who seem to take advantage of our health insurance system and other social support systems. There are people who have a seven-figure net worth who pay zero taxes or are able to structure their taxable income to allow for federal support services. It would only seem fair that doctors try to use PSLF to help the cause, especially if that is the only tax strategy we have.
Most business types wouldn’t bat an eye going into a low six-figure debt to build up their entities. Many businessmen/women leverage far more than that without the concern that doctors have about debt. Doctors? No way! Most of us will cringe at five-figure loans and will try to find ways to get that number to zero. There’s nothing wrong with hating debt, but this might also prevent you from making the appropriate decisions to become a successful entrepreneur.
What about other health professions?
There are many health professions who are also “doctors.” Some of them are very good at business. Dentists, chiropractors, and optometrists are a few groups that come to mind who are incredibly politically and financially savvy. These guys also rack up a considerable amount of educational debt, but they aren’t afraid of going more into debt to build up their practices. This business success comes in part from a strong professional organization that encourages practice building outside of mastery of the science as well as the nature of the profession.
These health professions are largely outpatient based without having to rely on unwieldy equipment or hospitals. Some of these doctor professions don’t even deal with medical insurance, which allows them to offer services without full constraints of the health care system. Who knows.
Overall risk aversion
The reasons why doctors shy away from business, in general, are nuanced and complex, but common barriers include:
- Variability in practice modality among specialties. This prevents you from getting adequate business training from medical school. In residency, you are likely too busy to be able to learn anything outside of the medical knowledge. You might not have had access to the right mentors either.
- Health insurance complexity. This may indirectly limit doctors from being their own bosses in their practices.
- Fear. No one likes to be put outside of her comfort zone. What’s it feel like owing a huge chunk of change in student loans, and taking even more risk in real estate, outside investments, or other gambles that might amount to total loss?
- Stable income in context of employment. We went into medicine to run a stable career. Why risk blowing the earnings so that you could do something outside of what you already know?
- Lack of [perceived] time and/or ability. Unfortunately, our profession tends to leave little time left to do anything outside of medical practice. Most doctors would prefer to do their work and spend the rest of their free time with their families.
“Smart Money, MD” is an ophthalmologist who blogs at the self-titled site, Smart Money MD.
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