[Editor's Note: We know you visit The White Coat Investor to learn about investment strategies and planning, and we’ve always strived to teach financial literacy to physicians, high earners, and anybody else who finds their way here. But the COVID pandemic has also shined a light on physician burnout and its dangers. That’s why we feel compelled to run articles and columns like this one—to make sure white coat investors stay mentally healthy. We know mental wellness is what leads to a long, fruitful financial life, and we’ll continue to run pieces like this because combatting burnout has become such an important part of everybody’s financial journey.]
By Dr. James M. Dahle, WCI Founder
I have met a surprising number of doctors who feel trapped in medicine. It makes me sad that so many of the people who are primarily responsible for the healing of the sick and injured in our country don't actually want to do it.
Every spring, I see the bizarre contrast between the enthusiasm of pre-meds who just got accepted to medical school or the excitement of the MS4s who just matched into their chosen specialty and the thousands of practicing physicians who want to leave medicine ASAP. Something apparently changes over that 10-20 years, and I find it both fascinating and sad.
I don't know why that poll bothers me so much. I guess it makes me feel a little lonely. Or maybe like a sucker for continuing to work after financial independence. Like I'm missing something. But it is what it is. More than 1/3 of doctors would leave medicine right now if they could afford to do so and almost all of them are working more than they would prefer. We all thought we were Rick Hodes when we applied to medical school, but in reality, only one out of 10 feels “called” to dedicate even 40 hours a week of their life to it when we're getting paid to do it!
Many doctors feel trapped in medicine. Some of those doctors actually are, but the vast majority already have the keys to their cage. Today I'm going to discuss the four ways doctors get trapped, and what doctors can do about them.
Trap #1: Student Loans
I remember getting a check every month of medical school from the U.S. military. It was really nice and helped keep the wolf away from the door. However, when it came time to apply to residency, when it came time to get a “big boy job” after residency, and especially when it came time to go to the far side of the planet to care for those defending freedom, I confess to feeling at least a little bit trapped. Using a contract to pay for medical school like I did comes with a commitment. It is no different for those who pay for their schooling with student loans. When you took out the loans, you made some decisions about your future earnings. When it comes time to start writing the checks for a significant part of your net income, it's no surprise that you feel trapped by your prior decisions.
The cost of becoming a doctor continues to outpace the increase in income of doctors, especially net income, leaving more and more doctors feeling trapped in medicine by their student loans. With median loan burdens in the $200,000-$300,000 range, there are a large number of doctors owing $300,000-$600,000 by the time they finish their training. Combining a median physician income with a median physician debt burden isn't too bad, but combining a top quartile debt burden and a lower quartile income is a real problem.
Want to hear about a real disaster? Consider the thousands of U.S. citizen doctors—yes, many of whom attended Caribbean medical schools but a fair number who also went to U.S. MD and DO schools—who do not match every year. That number is going up as new medical schools open and medical school classes expand while residency slots remain nearly static. If you think it is bad to owe $400,000 while making $180,000, imagine if you only make $40,000 hustling at two jobs.
To make matters worse, medicine as a profession isn't anywhere near the bottom of the heap as far as debt-to-income ratios go. In fact, it may be at the very top. Dentistry, optometry, pharmacy, law, and veterinary medicine are all significantly worse. I fear that soon the only way a middle-class student can ever enter these professions is by taking advantage of either PSLF or IDR forgiveness programs.
Exiting Trap #1
So how does one get out of this trap? You get rid of your student loans. Voila! Trap gone. All a typical physician needs to do is live like a resident for 2-5 years after residency and send in the difference between those attending paychecks and a resident lifestyle to the lender. They should get out of this trap in less time than it took me to pay off my commitment to the US Air Force (four years).
If you're in a less fortunate position than the physician with the median income and the median debt, there are some other options. PSLF is likely the best one. IDR forgiveness takes much longer (20-25 years) and comes with a tax bomb, but is not a bad option for those with terribly high debt-to-income ratios or those who failed to match. Even living like a resident for 5-10 years isn't the end of the world.
Hard work and good financial planning are the keys to getting out of this trap.
Student loans and the many programs and options are challenging to navigate.
If you need help, check out StudentLoanAdvice.com, a WCI company.
Trap #2: Lifestyle Expectations
You know what else traps doctors in the profession? The fact that they can't make as much money doing anything else. If you and your family are used to a lifestyle that requires an income of $200,000-$400,000, you need a very large nest egg to maintain that without working. You want to know why so many doctors are driven to create passive income or become entrepreneurs? This is a big part of it.
Like student loans, it is often fueled by debt. Big mortgage payments. A couple of big car payments. Maybe another mortgage payment. All of a sudden, you need $15,000 a month in net income just to live hand to mouth. That big house in the nice neighborhood comes with a high-flying set of Joneses too. Nicer cars. Private schools for the kids. Piano lessons and comp sports teams. Fancy vacations. Who wants to be that family in the neighborhood that people are hesitant to invite to do anything because they don't want to embarrass them (or impoverish them).
Exiting Trap #2
Once more, this is a cage of our own making. The exit is also under our control. Aaron Burr might have said, “Talk less, smile more” . . .
but doctors need to “Spend less, save more.”
For some reason, people think I'm “anti-spending.” That couldn't be further from the truth. One big reason we saved a lot of money early in our lives was so we could spend more later. I have zero problems with you buying a luxury, as long as you can afford to pay cash for it and you can reach your financial goals despite buying it. However, if one of your financial goals is to get out of medicine ASAP, it probably isn't compatible with spending $7,000 on a coffee maker or $130,000 on a Tesla. It might not even be compatible with going out to eat once a week, driving a new Honda Civic, or buying a brand new violin for your child. You'll have to decide for yourself.
In reality, barring massive student loans (see problem #1 above), no physician is ever really more than 10 years away from financial independence (FI). If you combine a physician's income with a truly middle-class lifestyle, there's enough of a gap there to create FI within a decade. Open the cage and walk out.
Trap #3: Lack of Ownership
Sometimes doctors love medicine or dentistry; they just don't like their job. They hate working for “the man” (usually corporate medicine or dentistry) who is “keeping them down.” Physician ownership of their practices has plummeted over the last couple of decades, and dentistry is trending in the same direction. Without a doubt, ownership has its costs and hassles. However, it also comes with its own rewards, including a generally higher income and far more control over your practice.
A recent survey by Geneia found that 69% of corporate doctors talk about work in a more negative way compared to 51% of independent physicians. It affects patient care, too—72% of corporate docs reported lower empathy for patients as a result of physician burnout vs. just 57% of independent physicians. All those numbers are obviously way too high, but they're definitely higher for employed docs. The annual Medscape burnout survey tells a similar story:
As you can see, 36% of those in solo practice are burned out compared to 48% of those in a “healthcare organization” (where they are far more likely to be employed).
Exiting Trap #3
Feel trapped in your job? Why not get (or build) a job where you feel less trapped? Self-employment obviously comes with its own stresses (not the least of which is making payroll), but that control and sense of building something, along with not having someone else dictating how you practice and which EMR you use, is worth an awful lot. In my experience, mid-career docs are far more concerned about control over their practice than income. Look for opportunities to move into partnerships, concierge models, and your own practice to feel less trapped in medicine. You'll also probably make more money, which helps with Trap #1 and Trap #2 above.
Trap #4: Fear and Identity
Many doctors, especially those who took the traditional path into medicine, have never had any other real job, much less another career. Being a doctor is a major part of their identity. They may have some interest in a non-clinical or even a non-medical career, but they're afraid. Afraid to fail. Afraid to lose a job. Afraid they'll hate the new career just as much. These two barriers might seem “soft,” but they are hardly insignificant.
Exiting Trap # 4
Having student loans paid off and a sizable nest egg certainly reduces the financial risk of leaving a clinical career or even medicine altogether. However, I think a far more significant factor is going cold turkey from a psychological standpoint. As regular readers know, I've been cutting back on the number of ED shifts I've been working for years now. I went from 15 a month (full time) to 12 for a couple of years and then eight for three more years. This year, I went to six, the minimum required to remain a partner in my group.
I'm far less vested in medicine as an identity than I was five or six years ago. Why? Because I had a gradual transition. I'm not really planning to cut back any more any time soon, but I can tell you that it would be way easier to do so psychologically than it would have been to leave medicine a half-decade ago.
Dave Ramsey uses a boating analogy when people want to go from employed work to self-employed work. He says don't make the jump until you get the boat close to the dock. What he means is that you want to minimize the cost, pain, and risk of the transition. The best way to do that when leaving a clinical career is to do so gradually. Pick up some part-time work on the side. Take Wednesdays off in clinic. Yes, there will be a pay cut, but you can still live just fine on 80% of your prior salary, especially as income from the new work starts coming in. Then, when the boat gets close to the dock, make the jump.
Check some stuff out. See how much you like it. See how good you are at it. See how much you can make doing it. Most of the time you can do all that without burning any bridges behind you. If things aren't working out, retreat. If they are, burn the boats and move into your new career and life.
Don't feel guilty about being a different person at 35, 45, or 55 than you were at 22. Nobody wants to be cared for by a doctor who doesn't want to be there anyway.
If you’re a physician who’s feeling burned out, The White Coat Investor can help. With our Burnout Proof MD program, we can assist you in getting back to the place, mentally and physically, that will allow you to be at your best and to make sure you continue forward with your financial plan. End the struggle and remember why you wanted to be a doctor with Burnout Proof MD.
What do you think? Why do so many doctors feel trapped in medicine? What can they do about it? Comment below!