The OMA and the Ontario Government, against all odds, have come to an agreement. A preliminary one. On how to approach a real agreement. This isn't a physician services agreement, which is what would be needed to provide for a real update of physician funding schemes, but it's a start. Effectively, this sets the stage for negotiations and provides a framework to come to an agreement through a binding arbitration system.
In rejecting the previous tentative physician services agreement, I had two main concerns. First, that the presence of a defined, limited physician services budget with clawbacks on physicians as a whole put too much responsibility on individuals physicians for results beyond their power to affect. Worse, it set up an economic situation that would further encourage physicians to bill and practice in ways that advantaged them at the expense of patients, taxpayers, and their own colleagues. Second, it did not provide any protections for physicians against decision-making of the Ontario government, which is vitally important as physicians have minimal protections from current labour laws and no practical ability to strike in the event of a protracted labour dispute.
This agreement, the Binding Arbitration Framework, effectively has the Ontario government yielding the second point entirely. If this framework is agreed to, we have binding arbitration now and, by the looks of it, moving forward to future negotiations. It appears to be a reasonable solid arrangement, without much in the way of loopholes. The worst criticism I've read is that the government maintains policy-making rights, including which services should be funded which... of course they do. I doubt we could remove that in an agreement regardless of how it was written, thanks to the current Canadian constitution and the Canada Health Act. This was always going to be a loophole, but it'd be extremely inconvenient - politically and legally - for the government to take advantage of this under the proposed framework.
More interestingly, the framework touches on the first point of concern I had as well. It doesn't remove a set physician services budget, which I still find worrisome, but neuters its effectiveness considerably. First, it makes the budget subject to binding arbitration. Second, it explicitly dictates factors that an arbiter should consider, most importantly demographic changes. It does include consideration for the economic situation in Ontario, which is troublesome from an administration that has used any hint of economic weakness to justify public service cuts, but could end up being beneficial as well, as economic strength should work in our favour. Third, and most importantly, breaches in the cap on the physician services budget do not automatically result in punitive action against physicians. Rather, breaches will be subject to arbitration, where it can be determined to what extent, if any, physicians are responsible. Additionally, any punitive actions are subject to negotiation and arbitration, meaning more targeted cuts are possible, in contrast to the current approach of across-the-board cuts. I'd rather see the physician services budget cap removed entirely, but this is a reasonably well-tailored way to maintain its existence while blunting the more objectionable aspects to such a cap.
Some other objections to this agreement have been raised, however. First is that it generally precludes negotiation on the unilateral changes enacted since 2014. Yet, I haven't seen any indication this would be on the table - even the most favourable labour decisions wouldn't include significant back-payments and the OMA has little bargaining power for this time (due in no small part to its own actions). There's what's ideal and there's what's realistic; getting any meaningful compensation for the last 3 years during (failed) negotiations seems like a pipe dream more than anything. Second, the agreement limits ability to engage in strikes or job actions that directly affect patient care... which we couldn't (and shouldn't) do anyway. Job actions that negatively affect patient care in a meaningful way, including strikes, contravene recommended ethical guidelines, including those listed by the CPSO, our regulatory body. Furthermore, physician strikes don't work. The history of them in Canada is full of physicians losing badly. While recognizing a significant desire among Ontario physicians to engage in job actions, if this agreement prevents that, it'll only be saving us from ourselves.
I think I've painted a fairly clear picture of where I stand on this framework. It's not perfect, far from it. Yet, it gives Ontario physicians clear, long-term wins that looked unlikely even a few months ago. The compromises for those wins, while not insignificant, are tolerable. Critically, these benefits come before money is even on the table - I honestly figured that to gain some of these concessions moving forward, physicians would have to endure more financial pain in the short-term. To have them arranged in advance of the negotiations for the current physician services agreement would be a welcome surprise. I rejected the previous tPSA, loudly and proudly. I just voted in favour of this framework.
Showing posts with label money. Show all posts
Showing posts with label money. Show all posts
Tuesday, 13 June 2017
Saturday, 29 April 2017
Finances in Medicine - Big Life Expenses
As I move from student life to resident life, non-career life goals start to loom a little bit larger. At my age, many of my friends and colleagues are looking towards a few big expenses - getting a car, getting married, having kids, buying a house. None of these come cheap.
Car
This one's simple - most residencies require access to a vehicle, and in most cases, it's going to have to be your own vehicle. Buy something that fits your needs through residency that's reasonably low-maintenance (there's no time to be babying a fixer-upper). It shouldn't be a luxury vehicle. It'll likely be paid for through debt entirely and that's alright. It's a necessary business expense.
House
Ahh, the eternal debate - buy a house in residency or rent a place. In all honesty, there's no simple answer here, it'll depend on numerous factors. To the extent that there is any general advice, it's that the standard for Family Medicine residents is to rent, while the standard for those in 5-year specialties is to buy, but there are many exceptions to those guidelines.
The main reason to buy a house is to build equity with the money you're putting towards your living costs, thereby recouping some of that money rather than losing it as an expense outright. Buying a house becomes a forced investment - and a fairly good one at that - as the money paid towards a mortgage partially goes towards the house that you own, a house which is worth a lot of money and which will generally increase in price over time.
The main reason to rent is to avoid the costs and risks of homeownership. Spending money on rent is money that you'll never get back, but buying a house comes with its own expenses that will not be recouped. Maintenance, repairs, property taxes, interest (on the mortgage and, for residents, often on the down payment as well), closing costs, condo fees (if applicable) - all this adds up and is something renters don't need to deal with. Time is also a factor, as renting means that any housing issues that come up are the landlord's responsibility to deal with. Renting is also less risky, as houses can decline in value (but usually don't), and is more flexible if a move becomes necessary, as it often is for graduating residents.
All things considered, buying a house is usually a better financial decision in the long run. However, in the short-to-medium term, it comes with some distinct disadvantages. For those who have a little bit more medium term stability and a tolerance for some financial risk, it can be worthwhile. For those who face a bit more volatility in their upcoming housing needs or who are risk-averse, renting might be the better option and likely a bit cheaper in the short term. Regardless of the path chosen, all physicians will be able to afford a very nice property, likely a "forever home", only a few years after finishing residency - if not sooner.
Wedding
While everyone in residency needs transportation and housing, not everyone needs or wants to get married. Many do though, and the end of medical school is a prime time for it to happen. A good portion of my classmates just got married or have their wedding planned in the near future. Weddings, however, are expensive. Really expensive. Anything with a reception is likely to run at least $15k. More typical weddings are more in the $20-30k range. It's not hard to go above that upper end figure either. Oftentimes, these costs get offset by gifts from guests, either directly through money or through other gifts. Depending on the culture and attitudes of the guests, the entire cost of the wedding might be covered, but it's not something to count on either. For those uninterested in the traditional reception, a ceremony-only event is an option - whether it's the basic City Hall ceremony or a ceremony with more bells and whistles. The main cost of a wedding is the reception, and a very elegant ceremony can be funded for a fraction of the price of that reception.
Weddings are often financed by a combination of gifts, parental support, and debt. Fortunately, as a one-off event, most graduating medical students can afford that bit of extra debt without much difficulty. Still, when budgeting for the future, the expense of getting married should be in those calculations, because it is not a small one.
Children
Car
This one's simple - most residencies require access to a vehicle, and in most cases, it's going to have to be your own vehicle. Buy something that fits your needs through residency that's reasonably low-maintenance (there's no time to be babying a fixer-upper). It shouldn't be a luxury vehicle. It'll likely be paid for through debt entirely and that's alright. It's a necessary business expense.
House
Ahh, the eternal debate - buy a house in residency or rent a place. In all honesty, there's no simple answer here, it'll depend on numerous factors. To the extent that there is any general advice, it's that the standard for Family Medicine residents is to rent, while the standard for those in 5-year specialties is to buy, but there are many exceptions to those guidelines.
The main reason to buy a house is to build equity with the money you're putting towards your living costs, thereby recouping some of that money rather than losing it as an expense outright. Buying a house becomes a forced investment - and a fairly good one at that - as the money paid towards a mortgage partially goes towards the house that you own, a house which is worth a lot of money and which will generally increase in price over time.
The main reason to rent is to avoid the costs and risks of homeownership. Spending money on rent is money that you'll never get back, but buying a house comes with its own expenses that will not be recouped. Maintenance, repairs, property taxes, interest (on the mortgage and, for residents, often on the down payment as well), closing costs, condo fees (if applicable) - all this adds up and is something renters don't need to deal with. Time is also a factor, as renting means that any housing issues that come up are the landlord's responsibility to deal with. Renting is also less risky, as houses can decline in value (but usually don't), and is more flexible if a move becomes necessary, as it often is for graduating residents.
All things considered, buying a house is usually a better financial decision in the long run. However, in the short-to-medium term, it comes with some distinct disadvantages. For those who have a little bit more medium term stability and a tolerance for some financial risk, it can be worthwhile. For those who face a bit more volatility in their upcoming housing needs or who are risk-averse, renting might be the better option and likely a bit cheaper in the short term. Regardless of the path chosen, all physicians will be able to afford a very nice property, likely a "forever home", only a few years after finishing residency - if not sooner.
Wedding
While everyone in residency needs transportation and housing, not everyone needs or wants to get married. Many do though, and the end of medical school is a prime time for it to happen. A good portion of my classmates just got married or have their wedding planned in the near future. Weddings, however, are expensive. Really expensive. Anything with a reception is likely to run at least $15k. More typical weddings are more in the $20-30k range. It's not hard to go above that upper end figure either. Oftentimes, these costs get offset by gifts from guests, either directly through money or through other gifts. Depending on the culture and attitudes of the guests, the entire cost of the wedding might be covered, but it's not something to count on either. For those uninterested in the traditional reception, a ceremony-only event is an option - whether it's the basic City Hall ceremony or a ceremony with more bells and whistles. The main cost of a wedding is the reception, and a very elegant ceremony can be funded for a fraction of the price of that reception.
Weddings are often financed by a combination of gifts, parental support, and debt. Fortunately, as a one-off event, most graduating medical students can afford that bit of extra debt without much difficulty. Still, when budgeting for the future, the expense of getting married should be in those calculations, because it is not a small one.
Children
As with weddings, many people are opting not to have children, so this may be a non-issue for a growing number of physicians. For those that want kids, children require some serious financial planning. The cost of raising a child to adulthood averages over $250k in Canada, with expenses being higher in the early years. For physicians with generally high standards of living and above-average expectations for their children's care, that figure is likely an underestimate. That's a significant and continuous cost to bear.
Perhaps most challenging for those in medicine, children can't always be put off until later, while houses and weddings can be delayed indefinitely. The biological clock is an unavoidable fact of life for a career path that requires training into many physicians' early 30's or beyond. Women in medicine unquestionably bear the brunt of this reality more so than men, though men are not exempt from timelines either when it comes to having children. Timing therefore becomes a rather important decision. The longer physicians wait to have children, the more financially secure they'll be, but the older they'll be before trying to conceive or adopt.
A small number choose to have children in medical school. Time-wise, this can be a good option. Outside of clerkship, schedules are much lighter and more flexible than they are in residency. Medical schools often do allow time off for children, though this typical means being kept back a year and may mean an extra year of tuition payments. Medical students are, naturally, quite young as well. Money is an issue though, as medical students are piling on debt, not bringing in an income. Within reason, debt-financing child expenses can be done. However, other expenses will have to be kept under tight control unless a high-earning partner is in the picture, and careful financial management is a must.
Waiting until becoming an attending physician is a more common time frame to start having children. By this point demands on physician time have (usually) settled down and are much more flexible. There should be plenty of financial resources available by this point as well. The downsides are age and the hassle of practice management. Age is fairly self-explanatory when it comes to waiting until after residency, but practice management is an often-neglected factor. Unlike in medical school and residency, attending physicians are now fully responsible for their own careers. Taking time off to have a child means, in many cases, having to find someone to cover your practice. This can be particularly worrisome immediately post-residency, when a physician is still working to establish themselves and may not be able to easily take time off just yet. These immediate post-residency career demands can push the timeline to have children back even further than intended. Still, for those who are on the younger side, in shorter residency programs, or happy with being on the older side to start trying, waiting until after residency can be a rather sensible choice.
At the end of the day, residency remains a very popular time to start having children. Time is in exceedingly short supply, but taking maternity or paternity leave is relatively straight-forward. Residents aren't exactly overflowing with money, but they've got enough coming in to support a household. They're older than medical students, but younger than attendings, most being in their late-20's or early-30's, which is a fairly favourable time to start having kids. Residency remains the standard "recommended" time to have children for these reasons.
Nevertheless, circumstances will be different for every individual physician, and there are certainly merits to starting to have children either before or after residency. The timing of having children is a balancing act of competing priorities, and any decision will involve some trade-offs. Proper financial planning and lifestyle management remain the greatest assets when considering children.
Perhaps most challenging for those in medicine, children can't always be put off until later, while houses and weddings can be delayed indefinitely. The biological clock is an unavoidable fact of life for a career path that requires training into many physicians' early 30's or beyond. Women in medicine unquestionably bear the brunt of this reality more so than men, though men are not exempt from timelines either when it comes to having children. Timing therefore becomes a rather important decision. The longer physicians wait to have children, the more financially secure they'll be, but the older they'll be before trying to conceive or adopt.
A small number choose to have children in medical school. Time-wise, this can be a good option. Outside of clerkship, schedules are much lighter and more flexible than they are in residency. Medical schools often do allow time off for children, though this typical means being kept back a year and may mean an extra year of tuition payments. Medical students are, naturally, quite young as well. Money is an issue though, as medical students are piling on debt, not bringing in an income. Within reason, debt-financing child expenses can be done. However, other expenses will have to be kept under tight control unless a high-earning partner is in the picture, and careful financial management is a must.
Waiting until becoming an attending physician is a more common time frame to start having children. By this point demands on physician time have (usually) settled down and are much more flexible. There should be plenty of financial resources available by this point as well. The downsides are age and the hassle of practice management. Age is fairly self-explanatory when it comes to waiting until after residency, but practice management is an often-neglected factor. Unlike in medical school and residency, attending physicians are now fully responsible for their own careers. Taking time off to have a child means, in many cases, having to find someone to cover your practice. This can be particularly worrisome immediately post-residency, when a physician is still working to establish themselves and may not be able to easily take time off just yet. These immediate post-residency career demands can push the timeline to have children back even further than intended. Still, for those who are on the younger side, in shorter residency programs, or happy with being on the older side to start trying, waiting until after residency can be a rather sensible choice.
At the end of the day, residency remains a very popular time to start having children. Time is in exceedingly short supply, but taking maternity or paternity leave is relatively straight-forward. Residents aren't exactly overflowing with money, but they've got enough coming in to support a household. They're older than medical students, but younger than attendings, most being in their late-20's or early-30's, which is a fairly favourable time to start having kids. Residency remains the standard "recommended" time to have children for these reasons.
Nevertheless, circumstances will be different for every individual physician, and there are certainly merits to starting to have children either before or after residency. The timing of having children is a balancing act of competing priorities, and any decision will involve some trade-offs. Proper financial planning and lifestyle management remain the greatest assets when considering children.
Saturday, 22 April 2017
Finances in Medicine - Insurance
Having money, or the potential to make money, comes with the unfortunate flip-side of having the potential to lose money. A lot of money. That's where insurance comes in. There are a plethora of insurance types and options within those types, which become tricky to sort out. They can also be very expensive. In the last couple months, this is where I've been spending a lot of mental energy, trying to sort out the optimal insurance balance.
Disability Insurance
Disability insurance is required for 99% of people. The only people who shouldn't buy disability insurance are those who could afford to retire right this second and be completely financially secure. At this stage, this pretty much just means people who are independently wealthy. For those near the end of their careers, who are continuing to work out of interest more than financial need, and have their retirement amply well-financed, disability insurance might also be worthwhile to stop purchasing, since those individuals can simply retire in the event of a disability.
Physicians have high current or future incomes, but those incomes require us to be able to work. If we can't work, we lose that income and, in many cases, are stuck with a lot of debt or an unaffordable lifestyle. Disability insurance means that if you can't work, you can still live comfortably while you recover or transition out of the workforce entirely. You should have as much of it as possible, as soon as possible, so that your income stays as close to your working income if you become disabled. Insurers are smart though, and realize that if workers can get paid as much or more than they currently do if they become disabled, it provides a strong incentive to become disabled, so no insurer will give you disability insurance that covers your full income. The immediate thought then is to get multiple lines of disability insurance, but insurers are one step ahead there too - they'll only pay out a maximum amount collectively, meaning that if you have $X amount of coverage with one insurer and $Y amount of coverage with another insurer, you won't get $X+Y in payouts, you'll get whichever of $X or $Y is higher. That usually means it makes sense to have only a single disability insurance provider.
The first disability insurance most of us will be offered is through our provincial medical associations. In Ontario, the OMA offers rather cheap disability insurance to medical students without a medical, which is worthwhile to take. There are some private options, but they're unlikely to be advantageous in terms of cost, so sticking with the association insurance through medical school is fine for most people. Once in residency, the landscape changes slightly. Association insurance continues to be quite cheap and is generally worth maintaining through residency. However, in most provinces, residency comes with an automatic, employer-provided disability insurance that lasts through residency. It's not terribly great insurance, relatively speaking, and it goes away as soon as residency is done, but it's mandatory. One big advantage with these mandatory, employer-provided disability insurance plans is that in Ontario at least, their benefits are not mutually exclusive with the association coverage. Residency basically breaks the rule that says disability should not be profitable above current salary, though the benefits are still far less than what a fully-qualified physician should make.
Once residency finishes, association plans become expensive, opening up the door for privately provided disability insurance. These private plans aren't cheaper per se, but they come with one major advantage - guarantees. Association plans are owned by the association. Their fees could change, their benefits could change, and you as a client cannot stop it individually. Associations do work on behalf of their members and therefore do not have much cause to agree to a worse deal. If anything, provincial medical associations tend to improve the terms of their deals over time, so this problem is more theoretical than real. Yet, private plans are owned by you, individually, and cannot change for any reason whatsoever. Fees won't change, benefits won't change, nothing can change. The downside of private plans is that they typically require a medical, which could result in higher rates, and will require a year or two of payments before any pre-existing conditions are covered. This simply means that a period of crossover with the association plans is necessary to ensure continuous disability coverage. At this point association vs private insurance is a matter of preference and comfort, mostly between the guaranteed association coverage that does not necessarily require a medical, or private insurance that does not require faith in the provincial medical association to behave appropriately.
Life Insurance
At some point, you will die. That'll suck. If you die before you retire, you may leave behind some people who were relying on you to earn money. This can be a spouse, stuck with your student debt or a mortgage, children who were counting on you to provide for their future, or other dependents like elderly parents who need some financial help in their day-to-day lives. If you have any of these people in your life, you need life insurance. If you don't, you probably don't need life insurance.
Once again, in Ontario, the OMA provides life insurance for students, this time for free, and it's perfectly adequate for medical school for pretty much anyone who does not have children or other dependents. Life insurance is otherwise pretty independent of stage of training. You need some, it doesn't particularly matter who provides it, as long as it covers whatever costs you'd need to cover in the event of your death. It should be term life insurance, which is generally cheap and expires after a set period of time, at which point you can buy insurance for another term (if you need it). It'll generally be more expensive when you renew because you're older and more likely to die at that point, but that's pretty much unavoidable.
There are other forms of life insurance which can technically last forever, meaning they'll pay out eventually, but they're expensive and generally not worthwhile. They cost you more when you're alive than they'll pay to your estate when you die - you might as well just save that money and invest it. Insurance is meant to lose you money, on average, to guard against an unlikely-but-disastrous outcome. Dying young, which is unlikely, is exactly what insurance is meant for. Dying ever, which is 100% going to happen, is not what insurance is meant for.
Home and Auto Insurance
Do you have a home? A car? Buy insurance for them. They're expensive and you need them.
Other Insurance
There's insurance for just about anything. It comes in all shapes, sizes, costs, and terms. You don't need most of it. You might need some of it, depending on circumstances. In general, you should have insurance for anything expensive you own that you couldn't afford to replace if it got destroyed. That includes yourself. Disability and life insurance cover the "you" part pretty well, but supplementary health insurance might be worthwhile too. Home and auto insurance cover your major personal assets, but you may have other personal property to protect, as well as professional assets such as office space. These individual needs should be discussed with a professional and considered with the following question in mind - can I easily afford to lose the thing I am insuring? If you can, insurance probably isn't necessary. If you can't, it probably is.
One important "other" insurance to mention is insurance on debt. This can be insurance on a line of credit, on a credit card, or on a mortgage. Avoid this insurance like the plague. This type of insurance protects the bank in the event you default on your loan. It's for the bank's benefit, not your's. The guard for yourself against defaulting on these loans is the disability and life insurance you should already have. That's there for you, it goes to you, and it should cover your debts.
Yikes this post got long. Insurance is important, but my apologies for rambling! I will follow-up with some hopefully-shorter thoughts on planning major life expenses to wrap up this impromptu series on finances.
Disability Insurance
Disability insurance is required for 99% of people. The only people who shouldn't buy disability insurance are those who could afford to retire right this second and be completely financially secure. At this stage, this pretty much just means people who are independently wealthy. For those near the end of their careers, who are continuing to work out of interest more than financial need, and have their retirement amply well-financed, disability insurance might also be worthwhile to stop purchasing, since those individuals can simply retire in the event of a disability.
Physicians have high current or future incomes, but those incomes require us to be able to work. If we can't work, we lose that income and, in many cases, are stuck with a lot of debt or an unaffordable lifestyle. Disability insurance means that if you can't work, you can still live comfortably while you recover or transition out of the workforce entirely. You should have as much of it as possible, as soon as possible, so that your income stays as close to your working income if you become disabled. Insurers are smart though, and realize that if workers can get paid as much or more than they currently do if they become disabled, it provides a strong incentive to become disabled, so no insurer will give you disability insurance that covers your full income. The immediate thought then is to get multiple lines of disability insurance, but insurers are one step ahead there too - they'll only pay out a maximum amount collectively, meaning that if you have $X amount of coverage with one insurer and $Y amount of coverage with another insurer, you won't get $X+Y in payouts, you'll get whichever of $X or $Y is higher. That usually means it makes sense to have only a single disability insurance provider.
The first disability insurance most of us will be offered is through our provincial medical associations. In Ontario, the OMA offers rather cheap disability insurance to medical students without a medical, which is worthwhile to take. There are some private options, but they're unlikely to be advantageous in terms of cost, so sticking with the association insurance through medical school is fine for most people. Once in residency, the landscape changes slightly. Association insurance continues to be quite cheap and is generally worth maintaining through residency. However, in most provinces, residency comes with an automatic, employer-provided disability insurance that lasts through residency. It's not terribly great insurance, relatively speaking, and it goes away as soon as residency is done, but it's mandatory. One big advantage with these mandatory, employer-provided disability insurance plans is that in Ontario at least, their benefits are not mutually exclusive with the association coverage. Residency basically breaks the rule that says disability should not be profitable above current salary, though the benefits are still far less than what a fully-qualified physician should make.
Once residency finishes, association plans become expensive, opening up the door for privately provided disability insurance. These private plans aren't cheaper per se, but they come with one major advantage - guarantees. Association plans are owned by the association. Their fees could change, their benefits could change, and you as a client cannot stop it individually. Associations do work on behalf of their members and therefore do not have much cause to agree to a worse deal. If anything, provincial medical associations tend to improve the terms of their deals over time, so this problem is more theoretical than real. Yet, private plans are owned by you, individually, and cannot change for any reason whatsoever. Fees won't change, benefits won't change, nothing can change. The downside of private plans is that they typically require a medical, which could result in higher rates, and will require a year or two of payments before any pre-existing conditions are covered. This simply means that a period of crossover with the association plans is necessary to ensure continuous disability coverage. At this point association vs private insurance is a matter of preference and comfort, mostly between the guaranteed association coverage that does not necessarily require a medical, or private insurance that does not require faith in the provincial medical association to behave appropriately.
Life Insurance
At some point, you will die. That'll suck. If you die before you retire, you may leave behind some people who were relying on you to earn money. This can be a spouse, stuck with your student debt or a mortgage, children who were counting on you to provide for their future, or other dependents like elderly parents who need some financial help in their day-to-day lives. If you have any of these people in your life, you need life insurance. If you don't, you probably don't need life insurance.
Once again, in Ontario, the OMA provides life insurance for students, this time for free, and it's perfectly adequate for medical school for pretty much anyone who does not have children or other dependents. Life insurance is otherwise pretty independent of stage of training. You need some, it doesn't particularly matter who provides it, as long as it covers whatever costs you'd need to cover in the event of your death. It should be term life insurance, which is generally cheap and expires after a set period of time, at which point you can buy insurance for another term (if you need it). It'll generally be more expensive when you renew because you're older and more likely to die at that point, but that's pretty much unavoidable.
There are other forms of life insurance which can technically last forever, meaning they'll pay out eventually, but they're expensive and generally not worthwhile. They cost you more when you're alive than they'll pay to your estate when you die - you might as well just save that money and invest it. Insurance is meant to lose you money, on average, to guard against an unlikely-but-disastrous outcome. Dying young, which is unlikely, is exactly what insurance is meant for. Dying ever, which is 100% going to happen, is not what insurance is meant for.
Home and Auto Insurance
Do you have a home? A car? Buy insurance for them. They're expensive and you need them.
Other Insurance
There's insurance for just about anything. It comes in all shapes, sizes, costs, and terms. You don't need most of it. You might need some of it, depending on circumstances. In general, you should have insurance for anything expensive you own that you couldn't afford to replace if it got destroyed. That includes yourself. Disability and life insurance cover the "you" part pretty well, but supplementary health insurance might be worthwhile too. Home and auto insurance cover your major personal assets, but you may have other personal property to protect, as well as professional assets such as office space. These individual needs should be discussed with a professional and considered with the following question in mind - can I easily afford to lose the thing I am insuring? If you can, insurance probably isn't necessary. If you can't, it probably is.
One important "other" insurance to mention is insurance on debt. This can be insurance on a line of credit, on a credit card, or on a mortgage. Avoid this insurance like the plague. This type of insurance protects the bank in the event you default on your loan. It's for the bank's benefit, not your's. The guard for yourself against defaulting on these loans is the disability and life insurance you should already have. That's there for you, it goes to you, and it should cover your debts.
Yikes this post got long. Insurance is important, but my apologies for rambling! I will follow-up with some hopefully-shorter thoughts on planning major life expenses to wrap up this impromptu series on finances.
Saturday, 15 April 2017
Finances in Medicine
Reaching the end of my final year of medical school, suddenly money has become very important. My student debt levels are reaching their maximum, but I'm about to start earning a real salary for the first time since I left my previous career to start medical school four years ago. With that comes a chance to move on to the next stages in life, as well as an obligation to start contributing financially to society at large, after having largely been a sponge for my life up until now.
Education on medical trainee finances, despite being rather unique and complex, is still largely lacking, and mostly coming from people who have a financial stake it your decisions. Most advisers are reasonably honest and up-front about the rationale behind their recommendations - true shysters get driven out of the industry fairly quickly - but sorting out what's best for you isn't always easy. Here's what I've found out so far.
Debt Management
Naturally, this starts in or even before the first year of medical school, when debt starts to build. Just a quick reminder of the basics, the ideal approach is to maximize scholarships/bursaries/grants first (free money!), then maximize government loans (usually come with no interest while studying, many have grants attached), then rely on private loans in the form of a line of credit (LOC) specific to medical students. Once residency comes and government loans start generating interest, usually at a higher rate than LOCs, it's best to roll the entire sum of the government loans into the LOC, unless you qualify for certain governmental debt-relief programs that require you to leave a balance in those government loans to take advantage of them. There are some individuals who, through bursaries or other outside funding, can get through medical school with just government loans.
Some money can be earned by working in medical school by working. Since government loans and grants get reduced by personal income, however, there are significant diminishing returns on getting a job. Some jobs - such as research positions - can be worthwhile even if they were paid nothing, and so earning money from them is just a small extra benefit. Jobs that are taken just for the money may not be worthwhile, however, as it's not hard to be in a position where a student is working for far less than minimum wage once lost governmental grants are taken into account.
Once in residency and earning a real salary, debt can start to be paid down, though it does not have to be. Depending on personal circumstances, some people will build on their debt, some will keep it stable by paying off any generated interest, others will reduce their debt significantly. For the most part, however, now is when debt-paying habits can start in earnest, even if it is just covering the interest. Automatic transfers are ideal, since it's very easy to upgrade lifestyle to match income if that money is perceived to be available. Developing these habits now is mostly important to carry on into post-residency life, as debt-repayment strategies are pretty much identical to the basic savings strategies which define whether a physician is financially secure or has constant money troubles.
Throughout medical school and into residency, the best thing a trainee can do for their debt is to keep it low by controlling spending. Living a modest lifestyle, even when you can technically afford more, makes future financial decisions significantly easier. Living in a smaller place, eating out less, forgoing nice but unnecessary luxuries, and ultimately, budgeting to keep costs low is how to succeed financially. As with debt repayment, forming the habit that spending is to be deliberate and well below one's means is the most critical aspect. Many physicians have financial troubles and for 99% of them, it's a problem of uncontrolled spending. Learning how to avoid those problems early on, in medical school and residency when it still has a large impact on overall debt load, is an important skill.
There's a lot more financial stuff on my mind these days, but this post started getting a little out of hand, so I'll split it into parts. Best advice I can give to those looking to revamp their finances is to get informed and tailor their approach to their own situation. There's some good advice there, but rarely a one-size-fits-all approach. Money management is not something that can be outsourced, medical students, residents, and physicians need to take an active and informed role in their own finances.
Education on medical trainee finances, despite being rather unique and complex, is still largely lacking, and mostly coming from people who have a financial stake it your decisions. Most advisers are reasonably honest and up-front about the rationale behind their recommendations - true shysters get driven out of the industry fairly quickly - but sorting out what's best for you isn't always easy. Here's what I've found out so far.
Debt Management
Naturally, this starts in or even before the first year of medical school, when debt starts to build. Just a quick reminder of the basics, the ideal approach is to maximize scholarships/bursaries/grants first (free money!), then maximize government loans (usually come with no interest while studying, many have grants attached), then rely on private loans in the form of a line of credit (LOC) specific to medical students. Once residency comes and government loans start generating interest, usually at a higher rate than LOCs, it's best to roll the entire sum of the government loans into the LOC, unless you qualify for certain governmental debt-relief programs that require you to leave a balance in those government loans to take advantage of them. There are some individuals who, through bursaries or other outside funding, can get through medical school with just government loans.
Some money can be earned by working in medical school by working. Since government loans and grants get reduced by personal income, however, there are significant diminishing returns on getting a job. Some jobs - such as research positions - can be worthwhile even if they were paid nothing, and so earning money from them is just a small extra benefit. Jobs that are taken just for the money may not be worthwhile, however, as it's not hard to be in a position where a student is working for far less than minimum wage once lost governmental grants are taken into account.
Once in residency and earning a real salary, debt can start to be paid down, though it does not have to be. Depending on personal circumstances, some people will build on their debt, some will keep it stable by paying off any generated interest, others will reduce their debt significantly. For the most part, however, now is when debt-paying habits can start in earnest, even if it is just covering the interest. Automatic transfers are ideal, since it's very easy to upgrade lifestyle to match income if that money is perceived to be available. Developing these habits now is mostly important to carry on into post-residency life, as debt-repayment strategies are pretty much identical to the basic savings strategies which define whether a physician is financially secure or has constant money troubles.
Throughout medical school and into residency, the best thing a trainee can do for their debt is to keep it low by controlling spending. Living a modest lifestyle, even when you can technically afford more, makes future financial decisions significantly easier. Living in a smaller place, eating out less, forgoing nice but unnecessary luxuries, and ultimately, budgeting to keep costs low is how to succeed financially. As with debt repayment, forming the habit that spending is to be deliberate and well below one's means is the most critical aspect. Many physicians have financial troubles and for 99% of them, it's a problem of uncontrolled spending. Learning how to avoid those problems early on, in medical school and residency when it still has a large impact on overall debt load, is an important skill.
There's a lot more financial stuff on my mind these days, but this post started getting a little out of hand, so I'll split it into parts. Best advice I can give to those looking to revamp their finances is to get informed and tailor their approach to their own situation. There's some good advice there, but rarely a one-size-fits-all approach. Money management is not something that can be outsourced, medical students, residents, and physicians need to take an active and informed role in their own finances.
Thursday, 30 March 2017
Addiction and Physicians - Why Having an MD Doesn't Make You Special
Haven't posted much lately, though not necessarily by intention. Life's been very crazy lately, but in a very good way.
Wanted to touch on a story that's rightfully making the rounds on social media, of a Canadian physician talking about his addiction to Fentanyl. Fentanyl is the new addict drug of choice in much of Canada, particularly in southern Ontario. It's been building for a few years. Every conversation I have with those in addictions or drug enforcement says that this is where we're seeing a big focus. It's a very powerful narcotic, one that's definitely overprescribed, and it has numerous routes of absorption. In many ways, it's the most recent culmination of the wider opioid crisis that's been growing for decades now.
Dr Gebien's tale is worth reading for its account of the devastating effects of opioid addiction, and the hubris of physicians who think they're immune to such common human failings. On the former point, there's enough written by more knowledgeable people than me that I won't say much besides a reiteration that I want my practice to be very opioid-averse. As far as I'm concerned, unless something's going to cure your pain very soon (usually by an operation of some sort), or we expect you to die at some point in the near future, I have trouble seeing the role of opioids. They don't work well long term, they're addictive, and they come with tons of side-effects. They're not really a treatment for pain, they're a way to stall it in the short-term.
On the second point, it can't be emphasized enough - doctors are human and we fall victim to all the things humans fall victim to, including addiction. One particular point to mention about this story is the hazards of self-prescribing. Physicians are not supposed to treat anyone who isn't their patient, including themselves. That means no treating family or friends except in very unique circumstances. That means no treating co-workers. That means no treating fellow physicians unless they're in your office for a valid reason. I can't say how often I've seen a physician write off a prescription to one of their colleagues based on that colleague's word alone. No history. No physical. No investigations. Just "I need this script, can you help me out?", and bam, done. In one instance, a physician asked a colleague for a medication for their child, effectively treating their own kid with the help of a fellow physician who never even laid eyes on that child! Don't do this. Yes, it sucks to have to go to your GP to get a simple script. Yes, you know exactly what needs to be done. You know who else it sucks for to have to do that? EVERYONE! Being a physician should not get you a fast track to basic medical care, nor should it allow you to skip the basic components of treatment, such as a proper evaluation. Please, colleagues, supervisors, and anyone coming afterwards, just don't do this, and don't help others do this. It's unethical and can lead to some very dark outcomes.
There's a few other elements to this story that deserve a quick mention, since they probably contributed to his situation and are much more common traps for physicians to fall into then addiction. First is proper money management. He was making $300k a year and needed parental assistance to cover two rehab-related bills of $10k and $80k, in addition to needing to put $35k on a line-of-credit. Everyone, regardless of profession, should have an Emergency fund of at least 6 months of living expenses, ideally 1 year's worth. In his case, it doesn't sound like he had anywhere close to that. I don't doubt that a fair bit of money was going to feed or hide is addiction. Yet, there are other clear missteps. Buying a large house, luxury cars, and a boat weren't necessary and probably weren't affordable. Even if your means are great, you still need to live within them.
Secondly, this story highlights the need for a robust support system. Here we see only one side of the story, so it's hard to draw conclusions, but I don't get the sense of a reliable base of support from Dr Gebien's wife or parents. Their relationships seem dysfunctional and his mother, who looked to be dealing with her own problems of opioid use, was an enabler in his addiction. Building connections with reliable people before, during, and after medical training is important. Equally important is picking the right partner - they're the one family member you get to choose.
Overall, Dr Gebien's story serves as an excellent case study in the hazards of being a physician, and the failings too many of us assume we'll avoid just by having an MD after our names. He doesn't come across well in telling his own story, and there are numerous areas to find fault in beyond just his addiction. Yet, that makes his story all the more valuable to share. Being a doctor doesn't make anyone special, better, or more capable at handling the challenges of life. When physicians start to think that it does, they start engaging in behaviours that are destructive to their own lives or, as Dr Gebien's story briefly mentions, the lives of loved ones and colleagues. Staying grounded, staying humble, and remaining self-critical of our own behaviours is critical for physicians.
Wanted to touch on a story that's rightfully making the rounds on social media, of a Canadian physician talking about his addiction to Fentanyl. Fentanyl is the new addict drug of choice in much of Canada, particularly in southern Ontario. It's been building for a few years. Every conversation I have with those in addictions or drug enforcement says that this is where we're seeing a big focus. It's a very powerful narcotic, one that's definitely overprescribed, and it has numerous routes of absorption. In many ways, it's the most recent culmination of the wider opioid crisis that's been growing for decades now.
Dr Gebien's tale is worth reading for its account of the devastating effects of opioid addiction, and the hubris of physicians who think they're immune to such common human failings. On the former point, there's enough written by more knowledgeable people than me that I won't say much besides a reiteration that I want my practice to be very opioid-averse. As far as I'm concerned, unless something's going to cure your pain very soon (usually by an operation of some sort), or we expect you to die at some point in the near future, I have trouble seeing the role of opioids. They don't work well long term, they're addictive, and they come with tons of side-effects. They're not really a treatment for pain, they're a way to stall it in the short-term.
On the second point, it can't be emphasized enough - doctors are human and we fall victim to all the things humans fall victim to, including addiction. One particular point to mention about this story is the hazards of self-prescribing. Physicians are not supposed to treat anyone who isn't their patient, including themselves. That means no treating family or friends except in very unique circumstances. That means no treating co-workers. That means no treating fellow physicians unless they're in your office for a valid reason. I can't say how often I've seen a physician write off a prescription to one of their colleagues based on that colleague's word alone. No history. No physical. No investigations. Just "I need this script, can you help me out?", and bam, done. In one instance, a physician asked a colleague for a medication for their child, effectively treating their own kid with the help of a fellow physician who never even laid eyes on that child! Don't do this. Yes, it sucks to have to go to your GP to get a simple script. Yes, you know exactly what needs to be done. You know who else it sucks for to have to do that? EVERYONE! Being a physician should not get you a fast track to basic medical care, nor should it allow you to skip the basic components of treatment, such as a proper evaluation. Please, colleagues, supervisors, and anyone coming afterwards, just don't do this, and don't help others do this. It's unethical and can lead to some very dark outcomes.
There's a few other elements to this story that deserve a quick mention, since they probably contributed to his situation and are much more common traps for physicians to fall into then addiction. First is proper money management. He was making $300k a year and needed parental assistance to cover two rehab-related bills of $10k and $80k, in addition to needing to put $35k on a line-of-credit. Everyone, regardless of profession, should have an Emergency fund of at least 6 months of living expenses, ideally 1 year's worth. In his case, it doesn't sound like he had anywhere close to that. I don't doubt that a fair bit of money was going to feed or hide is addiction. Yet, there are other clear missteps. Buying a large house, luxury cars, and a boat weren't necessary and probably weren't affordable. Even if your means are great, you still need to live within them.
Secondly, this story highlights the need for a robust support system. Here we see only one side of the story, so it's hard to draw conclusions, but I don't get the sense of a reliable base of support from Dr Gebien's wife or parents. Their relationships seem dysfunctional and his mother, who looked to be dealing with her own problems of opioid use, was an enabler in his addiction. Building connections with reliable people before, during, and after medical training is important. Equally important is picking the right partner - they're the one family member you get to choose.
Overall, Dr Gebien's story serves as an excellent case study in the hazards of being a physician, and the failings too many of us assume we'll avoid just by having an MD after our names. He doesn't come across well in telling his own story, and there are numerous areas to find fault in beyond just his addiction. Yet, that makes his story all the more valuable to share. Being a doctor doesn't make anyone special, better, or more capable at handling the challenges of life. When physicians start to think that it does, they start engaging in behaviours that are destructive to their own lives or, as Dr Gebien's story briefly mentions, the lives of loved ones and colleagues. Staying grounded, staying humble, and remaining self-critical of our own behaviours is critical for physicians.
Saturday, 12 November 2016
Considering a Career in Medicine - Money
We focus a lot on how students can prove they're good enough for medicine. These posts are for students wondering if medicine is good enough for them.
Short Version: Once established, a physician in Canada can expect to make a solid six figure income, with significant variation based on specialty, location, and practice type. However, it takes quite a bit of time and debt to become established. As such, delays in financing typical life goals are common. Money management skills are necessary to financial security, particularly when considering retirement, as physicians face different financial considerations than most individuals. Physicians often find themselves in trouble when they fail to control their spending habits and adequately save for the future. The high income in medicine is often a result of long hours worked, not just high hourly wage. Lastly, any career path should be considered with alternatives in mind, as students may have other, equally lucrative options.
Long Version: A desire for money is often thought of as an unsatisfactory reason to get into medicine, but money matters and income is an important consideration when planning a career. In Canada, physicians' income is high relative to most other countries, with the notable exception of our neighbours in the United States. There is significant variation in incomes for physicians. Specialty is the greatest factor, with lower-earning specialties like Psychiatry, Family Medicine, and Pediatrics earning closer to $200,000 on average, while high-earning specialties like Radiology or many surgical specialties earning in the range of $400,000 or higher. These figures are after accounting for overhead, but before taxes. Within each specialty there is a range of incomes as well depending on location, type of practice, and commonly performed services. It is not uncommon for practitioners to earn more - sometimes significantly more - than the averages quoted above.
Put simply, physicians have very good incomes, reliably putting them in or near the top 1% of earners in Canada. This high floor on earnings does come with a relative ceiling on income, however. Whereas similarly high-earning professions like law or business see elite performers earn several times what the average person in their field makes, physicians do not see that degree of stratification. The public healthcare system rewards quantity and with limited numbers of hours in the day, there's only so much physicians can do to see more patients and thereby increase their income. As a result, it is quite rare for a physician, even one in a high-earning specialty, to net over $1 million per year. Physicians are high earners, but students should not be expecting obscene levels of wealth.
Timing is also important when it comes to income and overall wealth generation, as the financial benefits of being a physician are not realized until after completing a long period of training, typically while accruing a fair amount of debt. A 40 year old physician tends to have more financial freedom than their peers in other careers. A 30 year old physician usually doesn't. This can complicate the achievement of non-career life goals that tend to occur in a person's late 20's or early 30's, such as buying a house, getting married, or having children, all of which carry a significant expense. All of these milestones are achievable as a medical trainee or recent graduate, but compromises are typically necessary. Some events will be delayed. Others will be lessened in scope - a smaller house, or a more modest wedding ceremony. Still more may be achieved only through added debt. Early career aspirations may need to take a back seat to income-generation. Over their career, physicians earn plenty of money to justify the initial time and debt invested, but the payoff is later in life, not earlier.
Once established, physicians' finances get easier in theory, but in practice, many continue to struggle. Physicians are notoriously poor money-managers and it can get them into serious financial difficulty. A mid-career physician has an enviable income, but can often set themselves up to have equally high expenses. After years of hard work and sacrifice, many physicians fall into the trap of spending too much and saving too little. This is particularly important as the vast majority of doctors do not have an employer-provided pension, meaning significant personal savings are required for a comfortable retirement. Jobs in medicine do not tend to have benefits either, residency being the notable exception, so physicians must also manage that expense out of their income. Failure to properly prioritize expenses through careful budgeting can leave physicians with significant money-related stress, despite having ample resources.
It should be kept in mind that the high earnings in medicine tend to come with long hours. Overall income can seem a lot less impressive when put in terms of an equivalent hourly wage, particularly once taking account all the unpaid aspects to a career in medicine. I hope to expand on this more in future posts.
Ultimately, when considering a career from a monetary perspective, a comparison must be made to alternative pathways, which can vary wildly person-to-person. If a student leaves undergrad with strong career prospects outside of medicine, they'll likely get far less of an overall gain from going to medical school than someone graduating their undergrad with zero immediate job prospects. In rare cases, going into medicine can be a financial negative. All students considering medicine should be actively developing alternatives to becoming a physician and should make the decision whether or not to enter medical school in light of those alternatives. Medical students tend to be intelligent, hard-working, communicative individuals who could be successful in a number of careers aside from medicine - it shouldn't be assumed that becoming a physician is the optimal choice from a monetary point of view, though it is often the lowest-risk pathway to ensure a six-figure income.
To sum up, there are some strong financial incentives to consider medicine. A physician can expect to be well-off to outright wealthy, but there are some caveats and physicians do need to budget their expenses to maintain financial security. Proper planning, with realistic expectations, is critical.
Timing is also important when it comes to income and overall wealth generation, as the financial benefits of being a physician are not realized until after completing a long period of training, typically while accruing a fair amount of debt. A 40 year old physician tends to have more financial freedom than their peers in other careers. A 30 year old physician usually doesn't. This can complicate the achievement of non-career life goals that tend to occur in a person's late 20's or early 30's, such as buying a house, getting married, or having children, all of which carry a significant expense. All of these milestones are achievable as a medical trainee or recent graduate, but compromises are typically necessary. Some events will be delayed. Others will be lessened in scope - a smaller house, or a more modest wedding ceremony. Still more may be achieved only through added debt. Early career aspirations may need to take a back seat to income-generation. Over their career, physicians earn plenty of money to justify the initial time and debt invested, but the payoff is later in life, not earlier.
Once established, physicians' finances get easier in theory, but in practice, many continue to struggle. Physicians are notoriously poor money-managers and it can get them into serious financial difficulty. A mid-career physician has an enviable income, but can often set themselves up to have equally high expenses. After years of hard work and sacrifice, many physicians fall into the trap of spending too much and saving too little. This is particularly important as the vast majority of doctors do not have an employer-provided pension, meaning significant personal savings are required for a comfortable retirement. Jobs in medicine do not tend to have benefits either, residency being the notable exception, so physicians must also manage that expense out of their income. Failure to properly prioritize expenses through careful budgeting can leave physicians with significant money-related stress, despite having ample resources.
It should be kept in mind that the high earnings in medicine tend to come with long hours. Overall income can seem a lot less impressive when put in terms of an equivalent hourly wage, particularly once taking account all the unpaid aspects to a career in medicine. I hope to expand on this more in future posts.
Ultimately, when considering a career from a monetary perspective, a comparison must be made to alternative pathways, which can vary wildly person-to-person. If a student leaves undergrad with strong career prospects outside of medicine, they'll likely get far less of an overall gain from going to medical school than someone graduating their undergrad with zero immediate job prospects. In rare cases, going into medicine can be a financial negative. All students considering medicine should be actively developing alternatives to becoming a physician and should make the decision whether or not to enter medical school in light of those alternatives. Medical students tend to be intelligent, hard-working, communicative individuals who could be successful in a number of careers aside from medicine - it shouldn't be assumed that becoming a physician is the optimal choice from a monetary point of view, though it is often the lowest-risk pathway to ensure a six-figure income.
To sum up, there are some strong financial incentives to consider medicine. A physician can expect to be well-off to outright wealthy, but there are some caveats and physicians do need to budget their expenses to maintain financial security. Proper planning, with realistic expectations, is critical.
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