Podcast #75 Show Notes: Increasing Your Primary Care Income: An Interview with Doc G of DiverseFI

Laurel Road

I’ve frequently said that the intra-specialty variation of physician income actually dwarfs the inter-specialty variation of pay. Doc G of DiverseFI.com is proof  of that. As an internist he topped out at $950,000 a year. He started as a hospitalist but knew after a few short months that wasn’t for him and he was going to do primary care. The first thing he did when he left the hospitalist job was gather a group of advisors together, people who had been practicing for a long time. He said, “there is a medical group that works at the hospital. Should I go work for them or should I go into private practice?” After getting all sorts of information and really thinking about it, he realized that he probably didn’t have enough experience yet to do private practice. At that point in his life, he didn’t understand anything about running businesses. But instead of just admitting defeat at that point he was very thoughtful about setting up a timeline of five years where he would work for a medical group as an employed physician and then would eventually become a private practitioner.

So lesson #1 is seek advice and make a plan.

Once he joined the independent medical group, the first thing everyone told him is “well, you’ll never get a bonus.” He had a base pay, this was in 2002, of $125,000 a year. Every single other physician in the group said, “You know what? You’ll never make more than that 125. You’ll never get a bonus.” He listened to people who said you can’t, but he realized that what they were really saying is, “I can’t.” They were saying, “I can’t get a bonus,” but it didn’t necessarily mean that the same would happen to him. You’ll always find a group of people who isn’t excelling at their job or who isn’t excelling economically, but that doesn’t mean that you can’t yourself.

So maybe Lesson #2 to believe in yourself. Believe it is possible. Or as Henry David Thoreau said,

“Go confidently in the direction of your dreams! Live the life you’ve imagined.”

Don’t believe the naysayers. What do they know about what you are capable of?!

 

Doc G was like most other doctors when he started out. He came out of medical school, finished residency. In his mindset, the only thing he had time for was to learn how to be a good doctor and to build a practice. He wanted to outsource everything. His money was just another example of something he could outsource. If you feel that same way currently, get in touch with this episode’s sponsor, Adam Grossman. He can help you get your finances organized. But as you’ll learn from Doc G’s story later on, even if you get assistance, no one cares about your money as much as you do, so pay attention to it from the beginning. If you have an advisor, it still behooves you to completely understand every single investment you’re in and why.

Podcast #75 Sponsor

This episode is sponsored by Adam Grossman of Mayport Wealth Management. Adam is a Boston-based advisor and works with physicians across the country. Unlike most other advisors, Adam offers straightforward flat fees for both standalone financial planning and investment management. Whatever stage you’re at in your career, Adam can help you get organized with a personalized financial plan and can help you implement it with a low-cost index fund portfolio.

Adam is a CFA charterholder and received his MBA from MIT, but more importantly, you’ll benefit from Adam’s own personal experience with many of the same financial obstacles and opportunities that face physicians.

To learn more, visit Adam’s website mayport.com/whitecoat to download a free e-book especially for physicians.

Quote of the Day

Our quote of the day today comes from John Stuart Mill who said,

Isn’t that the truth? It’s amazing how much pessimists can be admired even when they’re wrong time and time and time again.

Introduction

Before we get back to Doc G’s lessons on increase your primary care income. I want to mention a few things about Doc G. His father died when he was eight. He was a prominent oncologist. His first post ever on his blog, DiverseFI, was called Irony and Life Insurance. In his words:

Its kinda sad, kinda uplifting

I didn’t pay for college. I didn’t pay for medical school. In fact, I started my adult life with zero debt. Unlike some, it wasn’t because I won scholarships, or had a mentor, or created a stupendous hack to break the system. I didn’t even work my way through (I’ve always worked, but never enough to pay off such debts).

Nope. My mom paid for it. Every single cent.

But it wasn’t free.

My dad died. When I was eight years old. He had a brain aneurysm and collapsed while rounding at the hospital. A life’s worth of hopes and dreams. Gone. My mom, me, and two brothers left behind.

My mother, the accountant, took the two hundred thousand dollars of life insurance and invested it in the early eighties. And it grew, and grew, and grew. Compounding through a wild ride in the stock market.

That money sent three children through college. Both my brothers through graduate school. Me through medical school. The last was distributed to each of us in the form of fifteen thousand dollar checks in the early two thousands.

It is sad and uplifting. If you don’t have life insurance and people are depending on you, call one of our recommended insurance agents and get some today. I share this not just for the lesson about insurance, but also in light of our discussion on financial independence, it isn’t just about the money. Doc G says, “it really plays a big role in everything I do. Even when I look at my career now, it’s hard for me to leave medicine because of my connection to my father, but then it’s also easier to leave medicine because he died at the age of 40. I know that our time on this earth is limited. If medicine is not bringing me as much joy as it used to be and I am financially independent and have the resources to work less, maybe I should be taking advantage of that.” Financial independence allows us to build the life we want.

His blog talks about the philosophy of FI. How do we think about financial independence? How do we think about money, and how does that affect us? His message is actually that financial independence in some ways is sort of irrelevant.

“I say that is because I think our goal in life is to realize our own purpose, realize our identity and make connections with people. I think financial independence is a tool that allows for that, but sometimes in our community, it ends up being the goal. In my opinion, financial independence is more Plan B. Plan A is life. I feel like you’ve got to work on building a good life. I’ve said a few times in my blog, “If you can find a job that you enjoy and that you love and it’s fulfilling your sense of purpose and identity, then in a sense, you’re financially independent before you even make a dime.” The reason why is, barring disability and death, you can keep doing what you love and it’s going to support you and you’re always going to have enough money. I’m still a big fan of being frugal and saving and investing and being smart with your money, but I think if you look at life and think more about your purpose, identity and connection, financial independence will come if you’re careful enough.”

Doc G is considers himself third generation wealthy or financially independent, having had a grandfather who retired early as well. Many of us are first generation wealthy and worried about how that will affect our children. I asked Doc G for what tips he had for docs who worry about how their kids are going to turn out given that they’re having a much different upbringing than we had themselves. He is a big believer that you learn through financial modeling, by watching. It wasn’t so much that his parents told me here’s what you do, it was that he lived through their behavior. We talk about stealth wealth a lot in this community. It’s not that they said, “Hey, you shouldn’t spend frivolously,” it’s just that they never did it. It’s not that they said, “Hey, you should save 50% of your income,” it was just there was always a lot more coming in than ever going out. If you’re going to grow up in a household where you as adults make a decent W-2 wage and there is money coming in, he thinks the best way to teach your children is to be financially savvy yourself. If you are not frivolous, he thinks your children are most likely not to be frivolous. They learn by watching you.

What do you think? What are you doing to teach your children?

Main Topic

Like I said before Doc G was like most doctors and didn’t take control of his investments in the beginning. I find the experience that led him to managing his only money interesting.

“My wife had been investing through her 401(k) at work. She had started right when we came out of college. I was coming out of medical school, she was coming out of college. She was working for a big business and they had a 401(k). Basically, there was an algorithm in the system that asked a bunch of questions and told her what asset allocations she should have. She followed this five minute questionnaire. It put her in an asset allocation which we now would look somewhat like a lazy three fund. It was an allocation mostly of S&P 500 and total market index with a sprinkling of international and bonds. The next 15 years, her money grew and then our money separately with our financial advisor grew. One day I decided to compare them. I found that her money grew at about 10% over 15 years or so and that his money grew at about 9% over the same 15 years but I also then was paying between a point five and 1% AUM. I looked at the numbers and realized, hey, what’s going on here? I can do just as good of a job on my own but then I’m not paying some advisory fee. It made a lot sense to just take over everything myself, and that’s what I did.

Interesting, right? No one cares about your money as much as you do, so pay attention to it.

But back to the main topic of increasing your primary care income.

Remember lesson #1 was seek advice and make a plan and lesson #2 was believe it is possible.

disability insurance disability doc

Within a year and a half of taking that job in which he was told he would never get a bonus he had actually doubled his salary. He eventually left that group and opened his practice. He spent that five years watching pretty carefully how the group was run and learning as much as he could about business so he could hit the ground running. He points out that when you work for a medical group, maybe they keep 50% of your collections and you can take home 50%. Let’s say you have a good year and you bill $500,000. You take home 250,000 and 250 goes to run the practice. What happens when you say, “I’m going to be a little more aggressive. I’m going to see two extra patients a day for the whole year. Maybe that’ll come out to 50,000 more dollars in revenue. When you work for a group practice and your total revenue is $550,000, you get half and they get half. You walk out with 275.

BUT

When you’re in private practice, you realize fairly quickly that seeing an extra patient or two a day doesn’t really cost much in overhead. When you go into private practice and you decide to see an extra patient or two and now you bring in 550 of total revenues, you’re taking home 300,000 instead of 275 because you don’t have to split that difference with anyone. Immediately by going into a private practice, he could take advantage of economies of scale to basically pay himself greater.

So lesson #3 sounds like go into private practice.

Next he started what he called a lazy hustle, not because it’s easy but because as a physician, you already have all sorts of experience and training, you don’t have to go out and get new training to find a side hustle. You can just do it in addition and it doesn’t cost anything.

When he went into private practice, with no medical group telling me what he couldn’t be involved in, he started doing a lot more medical expert work as well as became a medical director of a nursing home. When he did that, the nursing home not only paid him a stipend for all the administrative stuff he was doing for their monthly meetings and for supervising the other physicians, but they also sent him a ton of patients that needed to be seen and taken care of.

Lesson #4 Start a lazy side hustle.

To top out at $950,000 he took it one step further. He realized in his private practice that he was doing so much nursing home work and that he also had two offices that were distant from each other geographically and had tons of employees and  realized that his office practice was somewhat awash, and where he was making all his money was when he was doing the nursing home visits and doing some of these lazy side hustles. So he closed his practice, told his 2,500 patients, “I’m going to start doing a concierge based home practice. If any of you want me to go see you in the home, I’ll be more than happy to travel out to your house and see you. It’ll cost $1,800 a year. Otherwise, I will not be practicing in any other form.” That pretty much cut his overhead drastically. He said,

“I was able to utilize those tactics to continue seeing patients in a way that I enjoyed. I was able to cut down on my paperwork hugely by going down from 2,500 patients to 100 patients, but I was still able to bring in quite a bit of revenue that I then kind of placed in one bucket and I had my lazy side hustle revenue in another bucket. It also freed up some time to take on other things like a hospice medical directorship. I was able to put it all together in such a way that I maximized my revenues but I also cut my overhead to the bone.”

Lesson #5 Find ways you can cut your overhead and see patients in a way you enjoy.

That will probably look different than what Doc G did. But be creative. What could you do?

Ending

Doc G’s closing comments when I asked him what advice he would give to our 15,000 listeners:

I think that no one will manage your money as well as you do, so pay attention to it from the beginning. I think that anyone, especially a high income earner, can make it to financial independence, but if you don’t understand your own head space, if you don’t think a little bit more about the philosophy, you’ll never get there. Most people don’t get to financial independence. You’ve got to be somewhat thoughtful about the way you’re going to go at things. I think money and financial independence sometimes are somewhat irrelevant, especially for high income earners. I think it’s really, really important to focus on your purpose and identity and the connections you make. I think if you do those three things right and then are a little bit frugal, you invest, you pay a little bit of attention, you’ll find yourself not only financially independent, which is important, but hopefully content and happy, which I think is even more important.

There are so many resources out there to help you along this journey to financial independence. Read more of Doc G’s thoughts at DiverseFI.  And just a last reminder to make sure you are signed up for the free financial boot camps series. This is a great place to start on your financial path.

Full Transcription

Intro:                       This is the White Coat Investor podcast where we help those who wear the white coat get a fair shake on Wall Street. We’ve been helping doctors and other high income professionals stop doing dumb things with their money since 2011. Here’s your host, Doctor Jim Dahle.

WCI:                         Welcome back to the White Coat Investor podcast. This is Episode Number 75, Increasing Your Primary Care Income, an interview with Doc G of DiverseFI .com. This episode is sponsored by Adam Grossman of Mayport Wealth Management. Adam is a Boston based advisor and works with physicians across the country. Unlike most other advisors, Adam offers straightforward flat fees for both standalone financial planning and investment management. Whatever stage you’re at in your career, Adam can help you get organized with a personalized financial plan and can help you implement it with a low-cost index fund portfolio.

WCI:                         Adam is a CFA charter holder and received his MBA from MIT, but more importantly, you’ll benefit from Adam’s own personal experience with many of the same financial obstacles and opportunities that face physicians. To learn more, visit Adam’s website, mayport.com/whitecoat to download a free eBook especially for physicians. That’s mayport.com/whitecoat.

WCI:                         Our quote of the day today comes from John Stuart Mill who said, “I have observed that not the man who hopes when others despair but the man who despairs when others hope is admired by a large class of persons as a sage.” Isn’t that the truth? It’s amazing how much pessimists can be admired even when they’re wrong time and time and time again.

WCI:                         Thanks for what you do, by the way. The work you do each day is difficult. It’s challenging. It does not come without emotional burdens, and it’s difficult to leave it in the clinic or at the hospital. I want to be one of those, even if you don’t hear it from anybody else today, that thanks you for the hard work you’re putting in and for the sacrifice that you’ve made in your life.

WCI:                         Be sure you’ve signed up for the financial boot camp email series. This is a 12 email series that we send out automatically when you sign up for the White Coat Investor monthly newsletter. You get one email a week. It’s a short read as well as some homework to help you catch up with the other blog readers and podcast listeners, and really get you into the same place as other people very quickly, within just a few weeks.

WCI:                         All right. We’ve got a special guest today on the podcast. We’ve got Doc G from DiverseFI.com, a physician financial blogger, previously a medical blogger who actually just told me that his first introduction to the whole financial independence community was when I reached out to him to ask him to review my book on his blog in 2014. Welcome to the blog, Doc G.

Doc G:                     Thanks. It’s an honor to be here and an honor to talk to you in person.

WCI:                         Yeah, sorry. I guess welcome to the podcast is what I should have said. Tell us a little bit about your upbringing and your family. Tell us what kind of got you here, I guess.

Doc G:                     I feel like I was incredibly lucky. I grew up in a very supportive household that really understood finances. My father actually died when I was eight-years-old, and he was a physician. That kind of pushed me in the direction of becoming a physician but his life insurance basically ended up paying for my schooling and paying for my medical school. As sad of a story as that was, it actually started me on a solid financial footing.

Doc G:                     My mother eventually remarried. My stepfather was a healthcare administrator and a businessman. My mom is a CPA. They modeled for me really great financial behavior. They had several real estate properties. They also had side businesses. My stepdad used to sell coins as well as run his business. I grew up in this very financially intelligent household. That really carried me. As I became an adult, most of what I did was follow in my parents’ footsteps. I didn’t actually think very much about the understanding of what financial independence was or what it meant. In fact, when you reached out to me to review your book, it was the first time I read the information and developed a vocabulary to understand what financial independence actually was. Before, I was just kind of doing what my parents did. I was saving a lot. I was investing. I was buying and renting out real estate property, but I didn’t really understand the full picture of what I was doing.

WCI:                         Now, this is interesting because, I mean, a lot of us talk about how we didn’t learn anything from our parents as far as finances and really had to pull ourselves up by a bootstrap and were first generation wealthy, but you’re kind of coming from a little bit different perspective in that I don’t know that it’s quite as silver spoon upbringing but certainly a different place than a lot of docs come from. I think a lot of us worry about raising our kids and them being spoiled, them not being able to learn how to work hard and how to carry those lessons throughout life and that our kids will never be as well off as we are, but you seem to have overcome that. What tips do you have there for docs who worry about how their kids are going to turn out given that they’re having a much different upbringing than they had themselves?

Doc G:                     I’m a big believer in that you learn through financial modeling by watching. It wasn’t so much that my parents told me here’s what you do, it was that I kind of lived through their behavior. We talk about stealth wealth a lot in this community. It’s not that they said, “Hey, you shouldn’t spend frivolously,” it’s just that they never did it. It’s not that they said, “Hey, you should save 50% of your income,” it was just there was always a lot more coming in than ever going out. I don’t think my stepdad or my mom every sat me down and said, “You know what Doc, go into real estate. This will diversify your portfolio and provide cash flow.” They didn’t really talk about those things.

Doc G:                     I think if you’re going to grow up in a household where you as adults make a decent W-2 wage and there is money coming in, I think the best way to teach your children is to be financially savvy yourself. If you are not frivolous, I think your children are most likely not to be frivolous. I think they learn by watching you.

WCI:                         Good tips. I appreciate that. Tell us a little bit more about your education and training. I mean, you’re a practicing physician, correct?

Doc G:                     That is correct. After college, I came back to Chicago to do medical school. I did residency in St. Louis and general internal medicine. When I first came out, I actually thought I was going to be a hospitalist and I worked for a hospital’s company for about three months and found that I really didn’t like the company I was working for and then went into general internal medicine. Since then, I’ve done some training in hospice and palliative care and actually act as a medical director of hospice and palliative as well as nowadays doing mostly a nursing home practice in general internal medicine.

WCI:                         Where are you at now in your financial life? How far are you out of training? You still have student loans? Are you financially independent? Tell us a little bit about where you’re at.

Doc G:                     I’m financially independent. I didn’t know I was financially independent until I read your book, but I’ve probably been financially independent for years before. I, again, never really had that vocabulary. My mom’s an accountant. I said, “Hey Mom, how much do I need before I can think about not worrying about work so much?” She said, “You should have about 10 million in the bank.” I said, “Ten million? Well, I’m not there yet.”

Doc G:                     I asked, at the time I had a financial advisor. I asked my financial advisor, and he took all my information and he did the Monte Carlo simulations, but he didn’t, for one, he never asked me how much I spent. Now that I know what I know, it’s ludicrous that he would kind of try to figure out where I am in the retirement pathway when he didn’t ask me how much I was spending a year. The other thing is, he didn’t want to really include any of my income or my real estate in my overall numbers. It didn’t make a lot of sense. Once I had a clue that there was this whole grouping of blogs and books and ways that I could actually take control of my finances myself, it all became very clear very quickly.

WCI:                         Tell me about that financial advisor. We talk a lot about financial advisors on this podcast. How did you end up with a financial advisor? How’d you find him? What do you think of the whole experience in retrospect? Tell us about that.

Doc G:                     I was like every other doctor, right? I came out of medical school, finished residency. In my mindset, the only thing I had time for was to learn how to be a good doctor and to build a practice. I wanted to outsource everything. My money was just another example of something I could outsource. I happened to have a good friend who was a financial advisor. I decided I actually used … he sent me to someone and that gentleman, unfortunately, died a few years into him being my financial advisor. I eventually went back to my friend. He took care of our finances.

Doc G:                     In all fairness to him, he did a very good job, but something stunning kind of happened. My wife had been investing through her 401(k) at work. She had started right when we came out of college. I was coming out of medical school, she was coming out of college. She was working for a big business and they had a 401(k). Basically, there was an algorithm in the system that asked a bunch of questions and told her what asset allocations she should have. She followed this five minute questionnaire. It put her in an asset allocation which we now would look somewhat like a lazy three fund. It was an allocation mostly of MP500 and total market index with a sprinkling of international and bonds.

Doc G:                     The next 15 years, her money grew and then our money separately with our financial advisor grew. One day I decided to compare them. I found that her money grew at about 10% over 15 years or so and that his money grew at about 9% over the same 15 years but I also then was paying between a point five and 1% AUM which was discount because I was a personal friend.

Doc G:                     Looking back, I can’t say that he treated me poorly. What I can say is that at that time in my life, I wasn’t interested in learning the knowledge necessary to do it myself. I paid a premium for that. Then I got older and I looked at the numbers and realized, hey, what’s going on here? I can do just as good of a job on my own but then I’m not paying some advisory fee. It made a lot sense to just take over everything myself, and that’s what I did.

WCI:                         What’s in your portfolio now? What are you invested in?

Doc G:                     I am a big fan of simplicity. In fact, I remember your post, which to me was mind boggling. I think it was, what, 150 portfolios that are better than yours? I like simplicity quite a bit, so I have mostly a three fund portfolio. I have about a third of my money in taxable, a third of my money in a tax brokerage account, and then about a third of my money in real estate. That’s been pretty stable over the last bunch of years.

WCI:                         Some of our listeners might not know what a three fund portfolio is. Can you explain what that is for them?

Doc G:                     Sure. Basically, I have about 60% of my money in a total market index on Vanguard so it’s VTXS. I have about 30% of my money in a total market international index, and then 10% in bonds. Three fund portfolio is basically a US based index, either S&P 500 or total market index, some type of international based index and then bond. You can set up the different asset allocation depending on what your risk tolerance is and where you are in your career.

WCI:                         You’ve also got about a third of your money in real estate. If you consider that as part of the asset allocation as well, it sounds like you are … you said about 10% of the index funds are in bonds. It sounds like you have a fairly aggressive portfolio with about a third real estate and, what, that’s got to be about 60% stocks and then 10% bonds or so.

Doc G:                     Yeah. People don’t realize when you own your own business, the business asset class can help protect you. We’re lucky we’re in the business of medicine. It’s an incredibly stable business. I always knew that I had a very stable income coming in every month from my business asset class. Therefore, I feel very safe being on the more aggressive side and having less of a bond allocation.

WCI:                         All right. For those just tuning in here, we’re talking to Doc G who’s a blogger who blogs at diversefi.com. That’s diverse F-I dot com. Now, Doc G, your tag line is personal finance with a twist. What’s the twist?

Doc G:                     The twist is that I’m not your average FI. Again, I came to it from a middle class family. I consider myself second generation FI. In fact, I actually consider myself third generation FI because my grandfather retired at the ripe old age of 49 in the ’60s. Therefore, I look at things in a very different way. There are front runners who have already figured out a lot of the mechanics of financial independence. I can go look at your website and find a host of materials that tells me how to become FI. It can tell me the mechanics of a 401(k) or a Roth conversion, all these things that I really don’t cover in my blog. Mostly in my blog, I talk about the philosophy of FI. How do we think about financial independence? How do we think about money, and how does that affect us?

WCI:                         What would you say the message of your blog is? I mean, what sets you apart from the dozens of other bloggers out there competing for the attention of blog readers?

Doc G:                     I definitely get hassled for this a little bit, but my message is actually that financial independence in some ways is sort of irrelevant. The reason why I say that is because I think our goal in life is to realize our own purpose, realize our identity and make connections with people. I think financial independence is a tool that allows for that, but sometimes in our community, it ends up being the goal. In my opinion, financial independence is more Plan B. Plan A is life. I feel like you’ve got to work on building a good life. I’ve said a few times in my blog, “If you can find a job that you enjoy and that you love and it’s fulfilling your sense of purpose and identity, then in a sense, you’re financially independent before you even make a dime.” The reason why is, barring disability and death, you can keep doing what you love and it’s going to support you and you’re always going to have enough money.

Doc G:                     I’m still a big fan of being frugal and saving and investing and being smart with your money, but I think if you look at life and think more about your purpose, identity and connection, financial independence will come if you’re careful enough.

WCI:                         Now you’ve been blogging anonymously so far. How come, and do you expect that to change?

Doc G:                     I have had a medical blog for years that was not anonymous. With the financial blog, I decided to be anonymous just because my wife and I are both still working. I wanted to have the freedom to provide proof of concept. In other words, I wanted to be able to go in depth about finances or even talk about things like net worth without feeling uncomfortable about family, friends or fellow employees for my wife learning about our finances directly.

WCI:                         It doesn’t sound like you intend to change that at any point in the future then.

Doc G:                     At this point, probably no. We’ll see. As you know, things change. For now, I think I’ll remain anonymous.

WCI:                         Has that made it difficult to grow the blog or to get sponsors and that sort of thing?

Doc G:                     Not horribly. I do miss the fact that I do like giving talks. I do like being out there. Obviously, I can’t do YouTube stuff. I can’t talk to the visual media as much as online. That’s the only way I would say that it hinders me.

WCI:                         Now, one of the most talked about concepts and posts on your blog is about how you boosted your primary care income. I’ve frequently said that the intra-specialty variation of physician pay actually dwarfs the inter-specialty variation of pay. You’re kind of proof of concept of that. Can you tell us a little bit about what you did as a primary care doctor to boost your income to increase your financial offense?

Doc G:                     There’s several ways I did that. I mean, one of the first is that I was very thoughtful about my career starting from day one. As I had mentioned before, I started as a hospitalist and I knew after three months I didn’t like the company I was working for. I knew I was going to do primary care. That’s what I was trained to do.

Doc G:                     The first thing I did before I left my hospitalist job is I gathered a group of advisors together, people who had been practicing for a long time. I said, “Well, there’s a medical group that works at the hospital. Should I go work for them or should I go into private practice?” After getting all sorts of information and really thinking about it, I realized that I probably didn’t have enough experience yet to do private practice. At that point in my life, I didn’t understand anything about running businesses.

Doc G:                     I was very thoughtful about setting up a timeline of five years where I would work for a medical group and be an employed physician and then would eventually become a private practitioner. Once I joined the independent medical group, the first thing everyone told me is, they said, “Well, you’ll never get a bonus.” I had a base pay, this was in 2002, I think I had a base pay of $125,000 a year. Every single other physician in the group said, “You know what? You’ll never make more than that 125. You’ll never get a bonus.”

Doc G:                     I listened to people who say you can’t, but I realize that what they were really saying is, “I can’t.” They were saying, “I can’t get a bonus,” but it didn’t necessarily mean that the same would happen to me. Within about a year, a year and a half, I had actually doubled my salary. Kind of the first message that I learned is that when people say you can’t, you listen to them, you take their advice, but you don’t necessarily fully believe them. You’ve got to figure that out for yourself. You’ll always find a group of people who isn’t excelling at their job or who isn’t excelling economically, but that doesn’t mean that you can’t yourself. That was one of the big first lessons I learned.

WCI:                         You eventually left that group and opened your practice. That five years, I presume you were watching pretty carefully how the group was run and learning as much as you could about business so you could hit the ground running. What did you do that’s different from most docs when they open their practice?

Doc G:                     I did a few things. One is just kind of the mechanics. When you work for a medical group, let’s say that medical group says we’re going to keep 50% of your collections and you can take home 50%. Let’s say you have a good year and you bill $500,000. You take home 250,000 and 250 goes to run the practice. What happens when you say, “I’m going to be a little more aggressive. I’m going to see two extra patients a day for the whole year. Maybe that’ll come out to 50,000 more dollars in revenue. When you work for a group practice and your total revenue is $550,000, you get half and they get half. You walk out with 275 or whatever it is.

Doc G:                     On the other hand, when you’re in private practice, you realize fairly quickly that seeing an extra patient or two a day doesn’t really cost much in overhead. When you go into private practice and you decide to see an extra patient or two and now you bring in 550 of total revenues, you’re taking home 300,000 instead of 275 because you don’t have to split that difference with anyone. Immediately by going into a private practice, I could take advantage of economies of scale to basically pay myself greater.

Doc G:                     The other thing about it is when you work for a medical group, a lot of times if you want to start what I call a lazy side hustle, I use the term lazy not because it’s easy but because as a physician, you already have all sorts of experience and training, you don’t have to go out and get new training to find a side hustle. Medical expert work is a perfect example or something that I like to do a lot of, being a medical director of a nursing home. You already have all the skills and training necessary. Taking on one of these side hustles it’s kind of lazy. You can just do it in addition and it doesn’t cost anything to enter these side hustles.

Doc G:                     When I went into private practice, I had no medical group telling me what I couldn’t be involved in, and so I started doing a lot more medical expert work as well as became a medical director of a nursing home. When I did that, the nursing home not only paid me a stipend for all the administrative stuff I was doing for our monthly meetings and for supervising the other physicians, but they also sent me a ton of patients that needed to be seen and taken care of.

Doc G:                     Right away I found in private practice that just economies of scale as well as taking on some lazy side hustles could take me from the $250,000 I was making in the medical group up to between four and $500,000 just in my private practice. That happened fairly quickly.

WCI:                         Now, what do you think is possible, I mean, for a primary care doc these days that owns his or her own practice and really hustles, really aggressive, makes good business decisions, runs a good business, I mean, what can they be making a year?

Doc G:                     I topped out at $950,000, I think, in my biggest year. The way I did this is I took it one step further. I finally realized in my private practice that I was doing so much nursing home work and that I also had two offices that were distant from each other geographically and I had tons of employees and I realized that my office practice was somewhat awash, and where I was making all my money was when I was doing the nursing home visits and doing some of these lazy side hustles.

Doc G:                     Back in 2013, I actually closed my practice. I told my 2,500 patients, I wrote them a letter and said, “I’m going to start doing a concierge based home practice. If any of you want me to go see you in the home, I’ll be more than happy to travel out to your house and see you. It’ll cost $1,800 a year. Otherwise, I will not be practicing in any other form.”

Doc G:                     When I did that, I did something else that I found out later was quite magical. I pretty much cut my overhead drastically. If you get back into that model where you’re billing 500,000 a year and you’re overhead in the office costs you 250, you end up taking home 250. Well, what happens when you’re billing 500,000 but you get rid of your office space? You go see patients in their own home or in the nursing home, which is zero overhead. Your overhead for the practice goes down to $100,000. What happens? If you bill $500,000 but your overhead is only $100,000, you now make quite a bit more.

Doc G:                     I was able to utilize those tactics to continue seeing patients in a way that I enjoyed. I was able to cut down on my paperwork hugely by going down from 2,500 patients to 100 patients, but I was still able to bring in quite a bit of revenue that I then kind of placed in one bucket and then I had my lazy side hustle revenue in another bucket. It also freed up some time to take on other things like a hospice medical directorship. I was able to put it all together in such a way that I maximized my revenues but I also cut my overhead to the bone.

WCI:                        Now, what do you say to a doc who worries about doing a concierge practice or some sort of cash-only practice or doctors for patient care style practice that feels like they’re abandoning a bunch of patients that really need care but that don’t happen to belong to a very good payer? Maybe they’re Medicaid, Medicare, Tricare, unfunded or whatever. What advice do you have for them?

Doc G:                     I certainly hear those arguments, and I certainly, in a perfect world, would like all patients to be cared for no matter what. On the other hand, I also see a huge amount of doctor burnout. I see a very high level of physician suicide. I see residents spending 90% of their time in front of a computer screen or doing paperwork and only 10% of their time seeing patients. Our system has problems. Those problems are burning doctors out. I think the best we can do is strive for some type of middle ground.

Doc G:                     For me, my middle ground was I moved to a concierge practice but then I also wedded that to seeing nursing home patients that were the least served who often would have a doctor who would do a drive-by once every six months and otherwise was nowhere to be found. By doing nursing home work and then even adding in some hospice work, I was still able to feel like I was helping my community, I was helping the underserved but could also get rid of part of my practice that was burning me out and was just difficult and painful.

WCI:                         Let’s change topic a little bit here. People love hearing about financial mistakes. It’s very good to learn from mistakes of others. Otherwise, you’ve got to make them all yourself. We’ve all made financial mistakes. I certainly have and blogged about them numerous times. Luckily, I made most of mine early and with small dollar amounts of money. What have your biggest financial mistakes been so far?

Doc G:                     I’ve certainly made a few. There’s no question about it. Thankfully, I think, like you have, I’ve been protected from them being huge mistakes. I did have a whole life insurance policy for a short period of time. Family member decided to become an insurance agent and I was hooked into that in my late teens, early 20s. I got rid of that fairly quickly just as he decided he didn’t want to do that for a living anymore. It didn’t hurt me too much, but obviously it was expensive at the time.

Doc G:                     I would say my biggest financial mistake was not taking ownership of my finances from day one. I was lucky. I found a financial advisor who generally treated me pretty well. Yes, I didn’t make the returns I could have, but he was in no way fleecing me. I do believe he was really looking out for my own good.

Doc G:                     As I get older, I realize it was fairly reprehensible that I didn’t take control of my finances from the beginning. This is my life. This is my money and no one will manage it as well as I will. If mistakes are made, then I want them to be my mistakes. That’s been a big part of the learning curve.

WCI:                         Yeah, that’s one great thing about managing your own money. You’re never going to Bernie Madoff yourself.

Doc G:                     Very true. You do the best you can. I think for any young person out there, a big message I would send out is even if you have an advisor, it still behooves you to completely understand every single investment you’re in and why.

WCI:                         Your website mentions you’ve written of books. Can you tell us a little bit about those?

Doc G:                     Sure. As part of the medical blog that I’ve been writing since about 2006, I’ve written a number of stories about medicine, health care as well as a number of fictional stories. I self-published two books in which I put groupings of blog posts together. The first one came out, I’d say 10 years ago, maybe a little bit less, eight years ago and the last one about five years ago. I write in various forms and various places. I pulled together some of the topical information. Most of it is about medicine. It’s about the practice of medicine, about some of my experiences in hospice. Some of it is creative writing that often brings in medical topics.

WCI:                         What do you think? Financially speaking, was it a boon to you or was it, turned out to be a lot of work and not much money?

Doc G:                     It was probably a lot of work and not much money, but some of that was my fault. I did do a lot of the work upfront. After the books came out, I realized that if you really want to do a good job and make money on your book, you’ve really got to push the marketing. After doing that for a few months, I realized that I was starting to reach some success, but it was not bringing me joy or making me happy. I had enough going on economically that I really didn’t need the income. It was pretty easy to just let things lie. I still sell a few books every month but it certainly was not an economic boon.

Doc G:                     What it was though, it was an emotional boon. It certainly helped me clarify my thoughts and opinions. I will tell you, I’m a big believer that writing in general was a life hack. If you’re willing to put it out there in public, you’ll be amazed at what opportunities come along.

Doc G:                     Throughout my career, I’ve been given opportunities to publish my information in periodicals or to travel, to give talks. All of that has enriched my life and made my career much more enjoyable. I think I’ve gotten a lot of returns from it even if they haven’t all been economic.

WCI:                         Your father died quite young. How has that affected your financial philosophy?

Doc G:                     It has in a lot of ways. In some respects, my father died when I was eight and he was a prominent oncologist. All I wanted to do was be like him. When I went into my career, my purpose and identity were very much wrapped up into medicine. For most of my career, they have been. As I get to this age where I realize that I want to slow down in medicine, maybe someday I will want to retire early, it’s very difficult to let go of this connection that I have with my father. Leaving medicine or even becoming financially independent, was a little bit of a shock to me because it made me realize that this will give me the freedom to cleave myself from this profession that so long has been a part of my identity and connection to him.

Doc G:                     Even the life insurance thing. I tell the story, my first blog post ever on this blog, DiverseFI, was called Irony and Life Insurance. It was the story of how my father’s life insurance paid for all of his children to go to college and for me to go to medical school. I was able to graduate without debt. Here I was, realizing that I was financially independent and I was calling to cancel my own life insurance.

Doc G:                     It really plays a big role in everything I do. Even when I look at my career now, it’s hard for me to leave medicine because of my connection to my father, but then it’s also easier to leave medicine because he died at the age of 40. I know that our time on this earth is limited. If medicine is not bringing me as much joy as it used to be and I am financially independent and have the resources to work less, maybe I should be taking advantage of that. It really plays into everything on both sides.

WCI:                        You recently had a blog post about half retirement. What do you mean by that?

Doc G:                     I’ve been slowly … I’m going to use a few catch phrases from my blog, so you’ll have to excuse me. I’ve been slowly downsizing to early retirement. What I mean by that is when I realized that I financially had enough, I just started systematically getting rid of the things that were more difficult in my job. The first thing I did is I got rid of my concierge practice because people could call me any time day or night or it could be five in the afternoon and someone could call from across town and want me to go see them immediately. The first thing I did was get rid of the concierge practice.

Doc G:                     Since then, I’ve been slowly whittling away things I don’t like in my job. There’s certain nursing home I worked at. I decide I didn’t want to work at them. They were too far away geographically, so I got rid of those. I wrote recently about my half retirement because right now pretty much half of my job is being a medical director for hospice and palliative care where I work administratively and I oversee nurses and social workers and chaplains and certified nursing assistants, but I don’t actually go see patients. I’m kind of part of the resources. That’s half my practice.

Doc G:                     The other half of my practice is I have a pretty large population of nursing home patients. The nursing home patients take a lot of energy. I can bill for them, obviously, but I get a lot of phone calls. It’s very common for me to get phone calls at two or three in the morning on a regular basis. I have made the decision that over the next six months, I will be getting rid of my nursing home portion of my practice and do hospice and palliative care only. Now, hospice and palliative care is more of my joy, and I would do that even if I never had to make a cent, so I think I’ll stick with that. In a sense, this is a half retirement because I’m getting rid of half of my employment life.

WCI:                         Basically, part-time work, but it’s the part you like.

Doc G:                     Exactly. I’ve been trying to fashion my life as much as I can to take advantage of those things I enjoy. Being on call constantly and some of the aggravations of dealing with incredibly sick patients who have needs 24/7, that can be tiring. The great thing about the hospice gig is that a lot of what I do is over the phone. I’m on call Monday through Friday, eight to five, and then I have a few days of meetings, Tuesday, Wednesday, Thursday. Otherwise, the rest of my time is open to do whatever I please.

WCI:                         I see pushback periodically against the concept of earlier retirement for doctors. Do you think it’s ethical for a doctor to retire early?

Doc G:                     I think it’s ethical. We give our hearts and souls into this profession. I can unequivocally say that going through medical school and residency is the hardest thing I ever did. Watching people die in front of you and feeling helpless is incredibly difficult. Being a physician has been one of the most rewarding experiences in my life, but I’ve paid for it. I’ve paid for it. I’m a different person than what I was when I started this journey. I think you can’t force someone to try to do this kind of work. It’s just too hard. It’s too emotional and our patients need us too much.

Doc G:                     What I mean by that is you can’t go halfway. If you’re going to do this job, you’ve got to care. You’ve got to give of yourself. I think anyone who feels like they’ve given enough or their time has come, I think it’s okay to leave it. I think it’s an individual choice. I think if society’s needs are great enough that we need more doctors, then we as a society have to make this job better. We have to make it more palatable. We have to make either the hours better or the respect better or we need Tort reform. We really need to work on the system because otherwise, people are going to leave when it becomes too difficult.

WCI:                         Now, it’s interesting that in this community there’s a lot of talk about cutting back, going part-time, retiring early, financial independence, etc. Among medicine in general, very few doctors go halftime or retire early. Why do you think that is? Why don’t more docs do it? I mean, given their substantial income, even with their high student loan burdens, and particularly in the past when the burdens weren’t so high, it still seems a very doable thing that I think many Americans would do given the option. It’s a relatively small percentage of docs who do this. Why do you think that is?

Doc G:                     Well, I think there are a few reasons. One, we have to realize that docs have high wages, but if you look at America in general and you understand the mechanics of FI, you realize that a large portion of the United States could probably become financially independent if they truly wanted to. It’s not a difficult thing. JL Collins wrote a book, The Simple Path to Wealth. It might be hard. You might have to work a lot. It may take a lot of time, but there’s this simple pathway to become financially independent for most of America and yet most don’t do it. The reason why, and this gets a little back, more into the head space of the philosophy of FI is most of us can’t wrap our heads around it.

Doc G:                     I don’t think physicians are much different. Most people go into medical school, they don’t envision a time when they will be so financially independent that they’ll never have to work again. Most Americans don’t when they start their work life. Physicians are no better than the average at managing their finances. We all have friends who are physicians who make tons of money and yet are still scrounging to meet their weekly bills.

Doc G:                     I had a partner once who was making $400,000 a year and he had to borrow money from our office manager to pay his nanny. Just because we make high wages doesn’t mean we understand philosophically what financial independence means, nor have the motivations to get there. Just like everyone else, I think doctors, we’re fallible. We have different interests. We have different motivations. Only a small percentage I really think want to be financially independent and have decided to walk this path.

WCI:                         Let me ask you another question since you’ve had an experience that I think a lot of our listeners have not. You are actually having a significant decrease in your income over what it has been in the past. You’re kind of past your peak earnings years. Can you tell us what that’s like and whether that brings you any anxiety or any worry about that fact and how you adjusted yourself and your life and your philosophy to that?

Doc G:                     Yeah. It’s actually very anxiety provoking. We all like to talk about the hedonic treadmill. Everyone knows what the hedonic treadmill is, at least most people in our community get the idea that once you start spending money, it makes you feel good, but then when you stop spending money, that feeling good goes away so you accelerate your spending. It’s all this big treadmill; you kind of spend lots of money but you never get anywhere.

Doc G:                     Well, I think making money and achievement are the same way. I mean, I think we have a moneymaking treadmill and an achievement treadmill. I think us high earners, there’s a certain high that comes with making lots of money. At some point, you realize that you don’t actually need any of that money that you’re making. You’re just on that treadmill. In order to get that high, you have to go faster and faster.

Doc G:                     For me, and this gets back again to the philosophy of financial independence, I’ve done lots of deep thinking about this and it doesn’t always sit easy with me. You become a victim of the what-ifs. What if the market drops out? What if I become a victim of the sequence of returns risk? What if we have a world war? I mean, you can go to all sorts of levels of what-ifs.

Doc G:                     The problem with most treadmills is they just don’t make you happy. That’s where I’m at. I realized that I’ve gleaned all the happiness I can get out of life and making money. I’m never going to get more happy by making higher than almost seven figures in a year. There’s nowhere for me to go with that. I can either keep doing the same thing, which I don’t think ultimately will make me a contented person, or I can try to change. This blog that I write, this life I’ve been living, this downsizing and half-retirement, it’s all an attempt philosophically for me to try to change what I’m doing in order to maintain or grow contentedness.

WCI:                         We’re starting to run out of time here, but I wanted to give you a chance to give any last messages you have for our readers, or our listeners rather. You’ve got the ear of 15,000 doctors and other high income professionals. What do they need to know?

Doc G:                     I think there are a few basic messages, and we sprinkled them throughout this interview. I think that no one will manage your money as well as you do, so pay attention to it from the beginning. I think that anyone, especially a high income earner, can make it to financial independence, but if you don’t understand your own head space, if you don’t think a little bit more about the philosophy, you’ll never get there. Most people don’t get to financial independence. You’ve got to be somewhat thoughtful about the way you’re going to go at things.

Doc G:                     I think money and financial independence sometimes are somewhat irrelevant, especially for high income earners. I think it’s really, really important to focus on your purpose and identity and the connections you make. I think if you do those three things right and then are a little bit frugal, you invest, you pay a little bit of attention, you’ll find yourself not only financially independent, which is important, but hopefully content and happy, which I think is even more important.

WCI:                         Thank you so much Doc G for being on the White Coat Investor podcast today. For those who are interested in learning more about his philosophy and reading his writings, you can find them at diversefi.com, that’s D-I-V-E-R-S-E-F-I.com where you can read all kinds of great articles he’s written about his philosophy of financial independence and other tips for you. Thanks so much for being on the podcast.

Doc G:                     Oh, thanks. It was a pure pleasure.

WCI:                         This episode was sponsored by Adam Grossman of Mayport Wealth Management. Adam is a Boston based advisor and works with physicians across the country. Unlike most other advisors, Adam offers straightforward flat fees for both standalone financial planning and investment management. Whatever stage you’re at in your career, Adam can help you get organized with a personalized financial plan and can help you implement it with a low-cost index fund portfolio. Adam is a CFA charter holder and received his MBA from MIT, but more importantly, you’ll benefit from Adam’s own personal experience with many of the same financial obstacles and opportunities that face physicians. To learn more, visit Adam’s website, mayport.com/whitecoat to download a free eBook especially for physicians.

WCI:                         Head up, shoulders back. You can do this. We can help. Be sure to check out all the resources available to you at whitecoatinvestor.com, and you can learn more about the stuff discussed in this podcast in the show notes on the site published today.

Disclaimer:         My dad, your host, Dr. Dahle, is a practicing emergency physician, blogger, author and podcaster. He is not a licensed accountant, attorney or financial advisor, so this podcast is for your entertainment and information only. This should not be considered official personalized financial advice.