Income diversification is important for everyone, especially doctors. Misconceptions persist that doctors are highly paid and have no need to seek investment opportunities. Of course, some physicians continue to be well compensated as compared to most of their counterparts in other professions, but a unique concern is risk. Most physicians are paid based on the services they render. Unable to render services = unable to generate income. When was the last time you took a vacation and didn’t have that nagging “gotta return to my office before my bills fall behind” feeling?
Although the need for income diversification is glaring, a majority of physicians still rely solely on their practice for their income. A survey carried conducted cited lack of time as the primary reason doctors do not diversity. There are several organizations that specialize in helping physicians diversify their income – both outside and inside medicine. I will share my own experience later in this article.
Why physicians need to diversify
There are numerous factors that can lead to the end of a doctor's ability to provide services, and hence income, including:
1. Injury: whether a car accident, skiing incident, or loosing the battle against black ice on the side walk in front of your office – physicians are just as frail as every other human around us. Procedure-based physicians are especially vulnerable.
2. Malpractice complaints: Most doctors are sued at least once if their career – some specialties are more litigious than others. After a certain number of lawsuits, a doctor might find himself un-insurable leaving him unable to practice.
3. Misconduct accusations: The practice of medicine can be very sensitive. Seemingly innocuous behaviors can be misconstrued as harassment or worse – especially in this post-Harvey Weinstein era. Physicians are finding themselves amongst the politicians and celebrities stepping down from their jobs due to accusations.
4. Being arrested: I read a rather disturbing article that the average person commits three (3) felonies a day – yes, a day! Fortunately, the vast majority are unintentional and go unnoticed. Being at the wrong place at the wrong time could get anybody in major legal trouble. In most states, being convicted for a felony is automatic grounds for a suspended medical license.
Advantages of diversifying your income
There are tremendous advantages to having multiple streams of income, this includes; guaranteeing a higher take-home, lowering insurance costs, reduced stress and burn-out, and allowing more spare time to spend with spouse, friends or families (and hobbies – FORE!)
Practical ways to diversify income
Below are some of the practical ways to diversify income;
1. Moonlighting:
Having a second job an ancillary income that can boost your take home pay. Also, in the event of the loss of your main job, the part-time job can tide you over until you find another job. Examples of moonlighting include shifts at an urgent care or hospital, locums work, and telemedicine consults.
2. Public speaking:
You are certainly an expert in your given field, and pharmaceutical companies have an endless supply of medications that relate to your area of expertise. These companies need reputable physicians to advocate for their medications. You can become the voice of these corporations and get paid handsomely for doing so.
3. Consultancy:
Management consultancy is one of the most lucrative endeavor physicians can get involved with to improve their earnings. The earning potential is even higher if it is done in big cities. As a management consultant, you will be an outside observer for companies, helping them to devise self-improvement strategies in major areas, such as product development, marketing, expansion, and forecasting.
As a physician, you can be a management consultant for these companies on a part-time basis or as a doctor on retainer. Some companies allow this work to be done remotely, which is an added bonus.
4. Medical writing:
Medical writing is another potentially lucrative endeavor that can help doctors earn extra income. This is especially apt for doctors who have a flair for writing, or are proficient with statistics or can utilize specialist jargons. There is a long list of doctors who have gone on to become world-renowned physician writers - Ben Carson, Henry Marsh, and Atul Gawande to name a few. As a medical writer, there are no shortages of institutions or agencies that are in need of your expertise. You can write for publishing houses, journals, academic institutions, medical communication agencies, and magazines.
Medical writing is quite appropriate for retired medical doctors, they can work as consultants during the day and do some medical writing at night.
Courses and conferences are also available for doctors considering medical writing for an alternative source of income.
5. Clinic Trials
Most doctors shy away from conducting clinic trials out of their offices due to the hassle of paperwork and documentation. In the last several years, numerous companies have cropped up to reduce this paperwork-induce headache and can make conducting clinical trials much more feasible. And, it pays very well.
6. Real Estate investment:
Real estate is a tried-and-true source of additional income. Properties rarely depreciates in value (even factoring recessions) and can provide a steady source of income. There are more options to get in on the real estate action than ever before. Buying, remodeling, and flipping is still a thing. There are also servicing companies that do almost all the work for you. There has also cropped up several Real Estate Investment Trust (REIT) companies such as FundRise.
7. Entrepreneurship:
There is a perception that that doctors make lousy business people - they are better at treating patients than running businesses. Although there are plenty of tales of physician financial fiascos, this does should not discourage doctors from catching the entrepreneur bug. By virtue of their training doctors are meant to be terrific entrepreneurs.
Over time, doctors build their clinic judgment capacity, which is a product of learning from mistakes and experience. This is similar to what is obtainable in entrepreneurship. The best business people are those who have been able to learn from their mistakes. Also, entrepreneurship is about research, experimenting, dealing with uncertainty and recognizing pattern. This is very similar to medicine.
Doctors can build businesses outside of their medical practice - digital business is a good example. Digital businesses are particularly apt for young doctors or those who may have a tight schedule, as this type of business does not require a constant presence. Affiliate marketing is one of the many forms of digital marketing. It involves selling products of another company online and getting a commission for every sale. With a website a doctor can promote a product, it could be related to the practice or secular, and can get paid handsomely for it.
Franchises are also another form of businesses that doctors can get involved with. Just like for affiliate marketing, a doctor can purchase a franchise license for a business that is related to the medical practice, e.g. a lab franchise, or one that is completed unrelated, e.g. a fast-food chain. A Tim Hortons opened up down the street from where I live and I was told it was owned by a physician. Every time I pass it, I envision myself doing something similar.
My Journey
I completed residency and jumped right into private practice. I bucked the trend of hospital employment and went the way of being self-employed. Things were great for the first couple years. But then cutbacks were announced and other economic forces led to a 30-40% drop in income. This served as a wake-up call to look into diversifying my income. No longer can a doctor spend 30 years in his own practice, sell it, and retire – those days seem to be over.
I saw telemedicine as an coming trend and decided to get licensed across 35 states. I now do consulting with several startup companies and have a few of my own project brewing. I also wanted to get into franchising and wanted to open multiple locations to have a strong and steady source of external income.
I could not do it all alone. I was fortunate to find the Michigan Physician Society (http://www.michiganphysicianssociety.com/). They have been instrumental in helping me with business planning, financing, operations, marketing and much more.
Conclusion
In conclusion, the world has changed as compared to what it was before. There are greater uncertainties in the workplace than ever before. The medical profession is not exempted from this paradigm shift. Therefore, it is more important than ever to that doctors stop putting their eggs in one basket, and start to take action to diversify income sources.
Also, the average cost of living has grown exponentially compared to what was obtainable a few years back. People want to live better lives than before, and this is becoming increasingly more expensive. Developing multiple streams of income allow for doctors to live the type of life that is becoming of a highly trained professional.
Organizations such as Michigan Physicians Society (http://www.michiganphysicianssociety.com/) can offer quality advice on how physicians can diversify from medical practice into varying businesses, or even to grow and sell their current practice.
About the Author
Dr. Zalzala is a physician, entrepreneur, and innovator. He graduated Wayne State University School of Medicine and is Board Certified in Family Medicine. In addition to his own private practice, he is licensed in 35 states and the province of Ontario and has extensive experience in field of disease prevention and telemedicine. He is a consultant for numerous healthcare ventures and is the Founder of My Allergy Genius (www.myallergygenius.com) and Root Causes Clinic (www.rootcausesclinic.com). He currently serves as an advisor for the Michigan Physicians Society.