This is part 3 of 4 of Stupid Doctor Tricks. Check out part 1 here and part 2 here. These were compiled from a long thread on Sermo, a physician-only forum. It’s a great place to chat and even make a little money. If you would like to join, go there from this link and we both get $10. Don’t worry, it doesn’t cost you anything, unlike if you make the errors on this page.
Practice Management Issues
1) Going into practice with a narcissist
2) Starting a primary care practice on my own
3) Merger that sounded too good to be true (it was) – cost was $150K to a pediatrician
4) Going into solo practice (General surgeon)
5) Paying more than the going rate for an employee
6) Hiring someone with more training than I needed (RN vs LPN etc)
7) Devoting myself to seeing patients and trusting the office staff to do the clerical work. They either didn’t perform well or stole from me
8) Seeing patients who need help but do not believe that they need to pay their bills (good luck with this emergency docs)
9) Starting a practice in a neighborhood going downhill
10) Joining practices out of residency where the senior partners were excellent physicians but couldn’t manage a lemonade stand
11) Not watching over my billing company
12) Not managing the assets receivable when I closed my practice
13) Lost over $250,000 when Medical Manager billing system when belly up, bought out by Web MD, and did not take care of smaller practices….billing went into cyberspace for 6 months….we were able to paper-bill for most of it, lost my practice, gained a new understanding of the business of medicine
14) Bringing in partners…I would do it alone the next time
15) Getting a laser for my office. Cost a fortune-still paying it off, fortune in advertising, increased malpractice about 15%. Most months it is in the red.
16) Staying in group practice when I should have gone solo years earlier
17) Starting a single practice. Between the employee problems and expense probably was never financially worth it
18) Joining a practice management group
19) Staying in one of those 90s “Group Without Walls” deals that cost me a years income for two years participation
20) Allowing settlement of a malpractice claim that should have been defended. Made getting affordable PLI very difficult for several years
This was one of the most enlightening parts of writing these posts. It’s relatively easy to read a few good personal finance and investing books to avoid most of the problems listed previously. But practice management is something that doctors generally just learn as they go, making all the same mistakes over and over again. If you’re going to run your own practice, you must realize that you need to spend a certain part of your working time, and education time, on running a profitable practice.
Contract Issues
1) Joined the wrong practice
2) Accepting a position in a group of dishonest, deceitful physicians that most likely carry a DSM IV diagnosis
3) Not having my contract reviewed by an appropriate attorney
4) Not reviewing employment contract
5) Signing a non-compete agreement with 100 mile barrier
6) Not getting a partnership promise in writing
7) I trusted doctors and started my practice without income guarantee based on promises by PCPs in the area (an endocrinologist)
8) Signing a contract with United Healthcare
9) Trusting that employed physicians will show up for work and do their job on a salary
10) Building a new office with 4 partners and not making sure everyone was individually liable for their part of the upfit and loans. After one split, two divorced, and we closed the practice, I got us all out for $100K of “stupid tax” each
Read your contracts and have them reviewed by an appropriate attorney. Don’t make the mistake of thinking they are set in stone. They aren’t. Make sure all verbal promises are in the contract.
Real Estate Issues
1) Buying two houses at the market high with plans to renovate them, flipping one and living in the other.
2) Buying a house right out of residency
3) Owning two houses at once
4) Buying and selling houses at the wrong time
5) Bought first house with first job (rather than renting)
6) Not taking the first offer on a house
7) Falling in love with a house cost me $200K
8) Bought high, sold low on a house
9) Used builder’s appliances instead of getting my own
10) Underestimating repair costs on rental properties
11) Not doing due diligence on real estate purchases
12) Buying into a hot real estate market
13) Built a house in residency
14) Buying a house too late
15) Buying a house too soon
16) Buying the biggest house I could afford
17) Buying too much house at the peak of the bubble
18) Refinancing house in 2008- just as market took nose dive
19) Not listening to my wife when we could have bought 2 acres of land on Nantucket in the late 90’s for $250.000
20) Remortgaging my house at the age of 59 to pay for renovations that cost more than I ever dreamed of
I was surprised how many errors were listed that were related to real estate. There are even more in part 4. Some are simply a matter of having to live through the real estate crash as a homeowner. But many are a matter of buying a home at the wrong time in your personal or professional life. I have found quite a bit of ignorance among physicians on topics related to real estate. Since your home is the biggest purchase you’ll ever make, it pays to spend some time learning how to get a good deal on the home and the mortgage to pay for it. If you get into real estate investing, realize that you’re playing in an inefficient market against some real professionals. If you’re not sure who the sucker at the table is….it’s you.
Go on to part 4 now, or leave a comment demonstrating your own financial mistakes (or those of other docs you know.)
Out of school, I agreed to work for my collections versus salary for a general surgery MD friend. Assisted on weekend call, got roped into doing rounds and taking calls occasionally (these are paid to his surgeon’s fee, not my assist fee). The biller was the employee of the friend I was working with, not me. I went an entire year of not being able to get an itemized list of collections. Being unhappy about the way the biller was NOT following up on my collections or billing for that matter (didn’t bill for 4 months!), I confronted the her . She gladly reminded me that I was not her boss (although she was keeping 6% of my money when it came in). So I started doing my own billing… a huge nightmare. Two years later, I still have $50k billed out, about $500 paid. “Friend’s” response: ya, I lost a lot of time and money my first couple years, the insurances just don’t pay. Morals of the story, share the risk with your employer (salary plus % of collections, let him keep overages as incentive to hustle the biller), get a contract, and don’t try to do your own billing… unless you’re into giving out free healthcare for the sake of “experience.” I prefer being paid while gaining experience.
Thanks for sharing. Funny how many ways there are to screw you over.
Thank goodness, I didn’t recognize too many of these.
Yes, the housing market crash. That was definitely the biggest setback we have faced.