How to Deal with Medical School Debt

Resident physicians are well aware of the statistics regarding medical school debt. Repaying student loans is frustrating and can become overwhelming. Dozens of unfamiliar terms litter paperwork and mailers. Maintaining awareness about loans is important, but difficult for those with full schedules. Those already bogged down with the strain of exorbitant loans have several options. There are also preemptive measures that can prevent confusion.

When it comes to simplifying loan repayment and preventing hassles, the overarching theme is organization. Medical school financial aid exit interview information should stay with you and be accessible. Keep up with mail, which may have information regarding deadlines. A long-term calendar will allow you to track deadlines instead of relying on reminders. The Association of American Medical Colleges (AAMC) also offers other strategies for managing medical school loans.

These tips can help thwart problems, but offer little solace to those already mired in debt. Medical Economics magazine’s article about eliminating medical school debt covers options such as military or public service career opportunities, consolidation, and forbearance. Deferment and forbearance can delay loan repayment until you have greater income, but it is wise to at least pay interest that may accrue during these periods so that you avoid capitalization. Additionally, if you have multiple loans, be sure to keep track of various periods of grace, forbearance, and deferment, since they can all be loan specific.

Besides easing a debtor’s burden by reducing the overall cost of repayment, consolidating multiple loans also makes repayment more convenient; however, when and how to consolidate can be tricky. There are also differences between consolidating private and federal loans.

There is no easy way out of significant student loan debt, but you do have choices. Being disciplined, organized, and exploring consolidation or other options can prevent stress and get you out of the red.

What Causes Disabilities?

Unfortunately, suffering a disability is not as unlikely as most people think. According to the National Safety Council’s 2001 Field Guide, the odds of suffering a disabling accident in a given year are 1 in 21. The importance and benefits of disability insurance were analyzed in a previous blog. What causes these disabilities?

Disabilities can be physical or mental and stem from accidents, injuries, or disease, among other things. They can be partially or totally disabling, short-term or life-long, and range from mild to severe. Dividing the causes of disability in 2003 into a pie chart produces a diverse and relatively balanced picture that might surprise most people.

Hartford Financial Services Group released a report entitled “Unintended Exposure: The Surprising ‘Big Gamble’ Employees Take Every Day,” which polled 600 working people between the ages of 18 and 65. The study found that most assumed the majority of disabilities were due to accident or injury, when in reality, accidents and injuries make up only 13 percent of short-term disabilities and 10 percent of long-term disabilities.

Perhaps what these figures best portray is the unpredictability of disability. There is no “primary cause” of disability. It is difficult, and in many instances impossible, to determine which individuals are predisposed to becoming disabled.

When healthy, it is easy to dismiss disabilities, but that does not decrease the risks they pose. Disability insurance protects you from the financial dangers of a disability, regardless of its cause.

Signing a Physician Employment Contract

Reviewing and evaluating a physician employment contract can be confusing and tedious even for a physician who has previously been through the process. For a medical resident looking to sign a first contract, there are multiple issues and hazards to be aware of.

Many articles and websites offer advice about physician employment contracts. The American Medical Association has an extremely detailed and informative publication specifically for young physicians. The New England Journal of Medicine has a recent two-part series that discusses the anatomy of a contract and avoiding contract pitfalls. Additionally, Physician’s News Digest has an article that outlines various contract topics, the Minnesota Medical Association offers an FAQ and sample contract, and a physician employment contract checklist is available courtesy of Algos Research. Because it would take a considerable amount of time to mine through this vast amount of information, I will briefly highlight just a few of the most common themes in these articles.

• Restrictive Covenant/Non-Compete Clause – This agreement limits a departing physician from practicing within a certain radius of the employer for a specified time. What constitutes a fair non-compete clause will vary depending on specialty. The legality and enforceability of non-compete clauses also differs by state. Be sure that you are knowledgeable about this section of your contract and do not disregard it!

• Termination – This section typically mentions whether a physician can be terminated “with cause” or “without cause.” With cause allows an employer to terminate a physician for reasons specified in the contract. Without cause means either party can initiate early termination without justification, although there is usually a period of notice that must be given. Beware of vague and ambiguous wording in this section that could give an employer the right to terminate a physician for frivolous reasons.

• Compensation – The combination of various formulae, benefits, salary, and bonuses can make the overall value of a contract confusing. The contract should stipulate a concrete calculation of your compensation, show annual pay increases, and possibly have a partnership option. Do not underestimate the value of the benefits package, which can include medical, life, and disability insurance, vacation and CME pay, and retirement and stock options, among other things.

The aforementioned articles go into much greater detail about each of these issues as well as many others. Before signing your first contract, you might want to speak with an attorney or a physician who has experience signing contracts. Do your homework and do not rush into anything you are unsure of.

Basic Investing: Your Advantage as a Resident Physician

One of the maxims of investing and saving is that the sooner you start, the better your eventual returns will be. This holds true regardless of your occupation. As a resident physician, however, your entire career is ahead of you and you will likely be a high income individual. The combination of those advantages and dedication to investing wisely can turn saving for the future into a relatively simple process.

The stock market is just one way of investing, but focusing on it can provide a great example. Looking at the overall performance of stocks in about the past 200 years, the compounded annual rate of return is about 10.2 percent. Obviously there are short-term ups and downs, but by investing early in your career, you can take advantage of the long-term benefits that the stock market yields. An annual return rate of 10.2 percent will double an initial investment in about seven years. It doesn’t take a math wiz to deduce that consistently investing over an extended period of time should produce impressive returns.

Some of the most difficult choices are where and how to invest. There are hundreds of investing theories and strategies and just as many firms and companies that offer their advice and services. Charles Schwab, Merrill Lynch, JP Morgan, Fidelity, and Vanguard are just a sampling of the hundreds of reputable companies that you can invest with. If you want to invest on your own, online brokerages such as E*TRADE or TD Ameritrade are also viable options.

I mentioned in a previous post that when purchasing disability insurance, working with a company that specializes in offering that product specifically for physicians is ideal. The same is true when searching for a financial advisor. It may not be a necessity to find a financial advisor that specializes in advising physicians, but working with a niche expert has its benefits.

Investing is still a complex process, but as a resident physician you have the time and resources to be successful. To make the most out of your savings, do your homework or find an advisor you trust and start investing today.

Job Searching Tips for a New Physician

When looking for a job after residency, one given is that you will have plenty of options. There are many different career paths, regardless of your specialty. Some options include joining an existing group or practice or a career in research or academics. Starting your own practice was explored in a previous blog. Whether the position you are looking for is permanent or temporary – in a hospital, lab, or classroom – there are several means of conducting a job search that produces the career you are looking for.

Two of the best resources for a medicine-related job search are the career sections of popular medical journals. JAMA Career Net provides job seekers with searches by specialty and location, offers job alerts, and allows physicians to post a CV. Their online job database is updated weekly on Fridays and includes jobs in the United States and internationally. The NEJM Career Center also has advanced search options and email alerts. Additionally, it offers a downloadable PDF file of hundreds of job openings posted in the most recent issue of the journal.

Staffing firms are another way to find a temporary or permanent placement. For example, Aureus Medical Group is one healthcare staffer that can present you with options and help you make an informed choice, without sacrificing your time job hunting. Physician recruiters can also search for your ideal job at no cost to you. There are many staffing firms and physician recruiters to choose from. The website of the National Association of Physician Recruiters lists the contact information for over 300 physician recruiting organizations.

An alternative to permanent full-time practice that has emerged in recent years is locum tenens (Latin for “one holding a place”). Locum tenens can provide new physicians with the flexibility of trying different types of practices instead of committing to a long-term contract without fully knowing what to expect. Locum tenens is gaining popularity and is expected to generate $1.7 billion in revenue in 2007. The National Association of Locum Tenens Organizations (NALTO) provides a contact list of all of their member firms. All NALTO firms must adhere to strict guidelines.

With an impending physician shortage, medical job openings will be consistently available. Use the aforementioned resources along with information offered by your residency director to find the job that is right for you.

Reasons a Medical Resident Should Have Disability Insurance

Fiscally, resident physicians and interns must find a way to bridge the gap between the debt of medical school and the income of a board certified physician. Residents are fully invested in their education financially, but are particularly vulnerable since they are not yet seeing a return relative to the size of that investment. With average salaries that pale in comparison to a physician’s median salary, resident physicians are treading water until their full income potential is realized.

Insuring the ability to earn that future income is crucial, especially considering the medical school debt that most medical residents are saddled with. An injury or illness to a medical resident could have debilitating long-term financial effects. A disability insurance policy protects future income and eliminates the risk of being unable to repay student loans.

According to the 1994 Statistical Abstract of the United States, in the course of a year, 1 in 10 people between the ages of 25 and 64 will suffer a disability. When comparing that ratio to the odds of being victim of a house fire (1 in 122); injured in an automobile accident (1 in 160); or even of death (1 in 117), the value and protection offered by disability insurance is clear.

Disability insurance rates are based on age and health status, so it is advantageous to purchase a policy while you are younger and likely healthier. A policy purchased by a resident has the flexibility to meet the changing needs of the insured after residency and offers significant financial advantages.

Disability insurance is available through many avenues, but you might want to consider discussing it with a company that specializes in disability insurance for residents and physicians.

A disability could render you helpless by taking away the one thing that you need to safeguard all other assets: your income. Disability insurance protects the hard work and substantial investment of time and money that you have made in your career.

Starting Your Own Medical Practice

Starting your own practice takes ambition, courage, dedication, and perhaps most importantly, foresight and planning. While a physician that has recently completed residency training is equipped to care for patients, starting a medical practice presents many unique challenges. Some of the most daunting tasks—insurance and tax issues, contracting, and licensing—are financial or legal in nature. However, building a patient base, hiring staff, and even choosing the best office layout can present logistical hurdles that must also be cleared. Taking advantage of some of the resources that are available can take a lot of the headaches and guesswork out of the process.

Medical Economics magazine has an excellent seven-part series that outlines the steps to take in the 12 months prior to launching your own practice. Some of the many helpful tips in this free and comprehensive guide include how to research the demographics of a prospective practice location, advice on choosing the right fringe benefits plan for employees, and even naming suggestions. At the end of each series is a checklist to help keep track of what is otherwise an overwhelming lineup of responsibilities.

The American Academy of Family Physicians (AAFP) also offers a guide to starting a medical practice. On Your Own: Starting a Medical Practice from the Ground Up is a resource manual that combines general business information with suggestions that are specific to a medical practice.

Another place to glean advice regarding your medical practice is the business archives of the American Medical News, which contains articles on practice-management. Just browsing through the massive amount of articles will yield information that is relevant to you and your practice.

Successfully managing a business and simultaneously providing excellent patient care is a challenge. Be sure to utilize available resources so that you are informed and knowledgeable about how to best create, develop, and manage your practice.