(Want to meet me in person and attend my live lectures? Then please join me at the White Coat Investor’s Financial Literacy and Wellness Conference, February 5-8, 2024, in Orlando, Florida. I will be giving two lectures at this amazing conference where I have been a speaker multiple times in the past. If you have some of my books, bring them with you to get them autographed at my book signing event or catch me in the hall. There will also be books available to purchase on site. A few of you can even have dinner with me! Hope to see you there. If you register by Nov 16th, you will also get the swag bag!)
Medscape reports each year on how physicians are doing financially. Some of the findings are predictable, others are surprising. Their report helps us determine how we compare to others who are doing the same job we do. I looked through the 2023 Physician Compensation Report and following are some comments on a few areas I found especially interesting.
1: Income is getting to be quite high
The average income for all physicians is now $352k per year. We are among the highest paid professions in America. According to the US Census Bureau, the 2022 median household income was $76,330. That means if physicians have non-working spouses and are the sole bread winner of their household (like my situation was), they provide over 4.5 times the US median household income to their family.
Since we have very well-paying jobs, we should be glad to be working in this financially profitable field. I would hate to go through the training process for a job as taxing as being a physician only to earn the median income.
Five specialties earn an average of more than $500k per year. I personally know physicians who earn more than a million dollars a year. My specialty is currently earning more than double what I averaged per year during my career in medicine, which ended in 2017. In fact, every physician coaching client I have worked with earns more per year than I ever did.
But is it enough? Or is it too much? I don’t know. Everyone always thinks they should earn more than they do.
2: Many don’t feel they are fairly paid
About half of the physicians in the highest paid specialties feel they are not fairly paid. Across the board, looking at all the specialties, one to two thirds of physicians do not feel they get paid what they should.
An interesting point to ponder is that inter-specialty variation in pay is much higher than what we see across the specialties. This means that it is possible that a physician can earn significantly more income by making a few changes in their own practice, than they could by changing to a higher paid specialty.
If you feel you should be making more, there are ways to increase the profitability of a medical practice. If you are an employee, there is money to be made during your next contract negotiation. Don’t just accept what you are offered. Ask for what you are worth. There are many ancillary services that can become part of a physician’s office, especially if you are the boss, that can boost income.
3: There is a huge pay variation between states
You would think the more expensive states to live in would be the ones that pay the most. Unfortunately, that is not the case. That creates a great opportunity to earn more money simply by changing the state we work in.
Choosing to live in a higher paying state that also has a lower cost of living could be a great way to earn a higher income for doing the same work.
But I don’t think you should use that criteria to pick where you live. Let factors like the weather, available leisure activities, and proximity to extended family be the more important factors. If it was only about the money, I should move from Oregon to Nevada for my retirement and avoid paying 9% income tax. But, if I did that I would lose proximity to my parents, kids, and grandkids, which for me is not worth the 9% savings.
Choose where you live based on what you want to be doing when you are not at work. The money will work out.
4: Side gigs?
Many physicians feel they need additional income above their physician pay so they take on a side gig to meet their needs (wants). In fact, 38% of physicians have a side gig. With a career that has such a high rate of burnout, you would think we would be avoiding side gigs in favor of more time off to recharge.
There are entire businesses built around teaching physicians about side gigs. I even wrote a bestselling book that covers this subject, The Doctors Guide to Smart Career Alternatives and Retirement, which is aimed at physicians who want to leave the practice of medicine. Come to think of it, my book on side gigs is a side gig.
Seems some of those who work side gigs do so because they don’t feel they earn enough money. Others want to develop an additional income source so they can quit medicine, or at least work on their own terms. And still others are looking for a passive income stream that will fund their retirement.
5: Do we work too many hours for our money?
The average worker in the US works 38.7 hours a week. But the average physician works 55 hours a week. This includes all the extra busywork we do.
So, is the extra 16 hours a week justified in that we earn significantly more than the average worker? I have many clients who feel they work too many hours. Yet when we talk about it, they often work fewer hours than they think. We tend to overestimate the time it takes to complete our work.
On the other hand, being on call from home and not needing to work is something that is hard to quantify. We might not have to do anything, work wise, but we are prevented from doing a lot of things we would like to do because we need to be available if needed. Most of us believe call sucks.
I never felt I worked too many hours. But I took a lot more time off than most physicians do to balance it out.
6: Would we do it again?
We do tend to like our jobs enough that 73% of us would do it all again if given the chance. I fall into that category. I loved my job. It had its bad moments, but so do all jobs.
I hear a lot of talk about the vast number of physicians who don’t like what they do and would not do it again. I suspect I get a skewed population talking to me on this subject. Also, most of us who like what we do are not spreading the word. We tend to gripe out loud much more than we give praise. Just look at any news show and count the number of negative stories compared to the number of uplifting stories.
7: Do we earn more if we are employed?
I hear many docs say they want to be employed because they feel they would earn more, or would need to borrow less, or they just don’t want the hassle of running a business.
I was surprised to see that, on average, self-employed physicians earn $30,000 a year more than their employed counterpart. Since 74% of physicians are employed, it seems we are collectively leaving a lot of money on the table. Our employers are getting that extra $30,000 we could be earning. With about 1M physicians in the US that comes to $22B we are collectively losing by being employed.
Time for the pendulum to start swinging back to the advantageous situation of doctors owning their own practice.
The bottom line is we work hard, and we get paid well for our efforts. Most of us would do it again. What are your thoughts on our compensation? If you want to read the recent Medscape Physician Compensation Report you can follow the link.