My most recent column in ACEP NOW is entitled You, Incorporated (print version,page 18). (Online Version) I wrote this post to help those who are “stuck” as employees, probably for their entire career, to think of themselves as a business, with multiple sources of revenue and expenses. The entrepreneurial mindset of being an owner is valuable, even for an employee.
Q. It seems that fewer emergency physicians own their own groups. What can I do to increase my income and financial security?
A. The percentage of emergency physicians who are partners in small democratic groups decreases each year, and it’s easy to understand why. Not having to worry about “business stuff” is attractive to many doctors. The growing debt burden for new residency graduates has increased the need for higher initial salaries—perhaps at the cost of lower long-term income. That means that coming up with a financial, or “sweat equity,” buy-in for a heavily indebted graduate could also be difficult, especially with the prospect of a small democratic group becoming part of a contract management group (CMG) before the investment could be recouped. In addition, there are now so few small democratic groups that many doctors interested in that model no longer have the option in their desired geographic areas and are faced with the likelihood of being an employee for their entire career.
This puts numerous emergency physicians in the same position that many employees in corporate America have been in for some time. Loyalty to “the company” isn’t rewarded in the same way it might have been decades ago. Employees are unlikely to stay in the same location, working for the same employer for their entire career, and then retire with a pension and health care provided by the company.
Your job as the CEO of You Inc. is to get as much as you can in exchange for your work and value.
If a small democratic group isn’t in your future, you still stand the best chance to be successful if you think of yourself as an owner: the owner of “You Incorporated.” Just like any business owner, you have revenue and expenses. From time to time, you’ll negotiate contracts that will increase revenue. And as the chief financial officer of You Inc., you’re in charge of reducing expenditures. Taking this attitude should change the way you approach your personal finances.
USE FLEXIBILITY TO YOUR ADVANTAGE
Partially driven by the rapid increase in both investor- and hospital-owned freestanding emergency departments, the number of emergency departments and ED patient visits in the country is increasing at a rate much higher than the increase in emergency physicians coming out of residency. Even before this trend, there were many emergency departments in the country that weren’t yet staffed by residency-trained, board-certified emergency physicians. Demand is much higher than supply, and this can work to your advantage.
You may not have the control over your nursing staffing level like you would if you owned your own freestanding emergency department. You may not have the control over physician staffing levels, shift lengths, and the vacation calendar like you might have in a small democratic group. You may not have access to the additional profits that come with a successful business. But you do have something that in some ways can be just as valuable: an in-demand skill set and the potential for an extreme amount of flexibility. Your job as the CEO of You Inc. is to get as much as you can in exchange for your work and value. The more flexible you can be, the higher the rate for which you can exchange your time.
There are many situations where hospitals, CMGs, and other employers have difficulty staffing the emergency department. It may be a relatively undesirable town to live in or a difficulty in covering night, weekend, or holiday shifts. (You might be amazed to learn the going hourly rate for covering Christmas Eve in a difficult-to-staff location.) Maybe the emergency department has poor levels of support staff or call coverage. Or perhaps the CMG just acquired the contract and is still scrambling to find doctors interested in working there in the long term.
Whether you relocate your family or simply commute to fill these shifts, they’re all opportunities to increase the revenue of You Inc. and gain benefits you might not have as part of a small democratic group. As a “gunslinger” for a CMG or locum tenens company, you can set up your personal finances such that you spend much less than you earn. This will allow you to take sabbaticals lasting weeks or even months, which a partner in a small democratic group could never do. For many docs, this extreme flexibility can more than make up for the inconveniences of not knowing what emergency department you may be working in six months from now.
ADD REVENUE STREAMS
You Inc. should also keep its eyes open for additional revenue streams. By virtue of the fact that most ED shifts don’t occur during banking hours, emergency physicians have discovered the value of having multiple weekday mornings off each week. While this time is often used for resting, recovering, and recreating, it can also be profitably used to develop other revenue streams.
This is the time to feed your entrepreneurial streak. You can be an EMS medical director, do medical legal work, consult for insurance companies, or start a business unrelated to medicine. Perhaps you’ve wanted to become a writer, speaker, or politician. Emergency medicine lends itself to these side pursuits far better than many specialties that are locked into standard clinic or operating room hours. These additional income streams reduce the risk of disability, job loss, contract loss, and other financial catastrophes. After a while, and especially if you keep living expenses down, they may even free you from the need to practice medicine for money at all.
Some revenue streams are more passive than others. An investment in low-cost index mutual funds, for example, requires almost zero additional effort after the initial setup. Publishing a book represents a lot of work up front for writing, editing, publishing, and marketing but eventually reverts to almost completely passive income. Some pursuits, such as real estate investing, are a mix of passive and active income. Many tasks can be outsourced as needed to make them as passive or active as you desire.
Speaking to groups of physicians or consulting for profit lies on the other end of the spectrum, as these are almost entirely active pursuits where you trade your time for money. By diversifying your income, you become less reliant on your employer and are in a much better negotiating position.
You may find it increasingly difficult to own your own practice these days, but that shouldn’t stop you from thinking like a business owner. As the owner of You Inc., you can take positive steps to boost profits, income, and flexibility as well as decrease burnout throughout your career.
Do you think of yourself as a business? How has that helped you? What benefits have you seen from an entrepreneurial mindset? Comment below!