Karen Gatzke

Do you ever feel like your medical school loans will be dogging you forever? It's a burden virtually all physicians must bear -- but there are ways to decrease the pain. 

"The joke is to keep the crash carts nearby during the financial exit counseling when [student borrowers] see how much their loans have accrued," says Patricia Scherschel, a loan consolidation product expert at Sallie Mae. Unlike relatively manageable car or home equity loans, "When they get into repayment, they owe substantially more than what they borrowed," she says. 

According to the American Medical Association (AMA), the average medical student graduates with about $93,000 in student loans. This isn't pocket change, particularly when many young doctors are also buying a house and raising a family, and the average starting salary for a family physician is $144,000, according to Merritt, Hawkins & Associates 2001 data.

Unless you are independently wealthy, it's hard to avoid going into med school debt -- but with the many lenders and loan programs available, it's likely you can find one that will leave you with more money in your pocket and a load off your mind. Start by researching your options based on the amount of money borrowed, the original loan agreement, your personal and family situations, and financial goals. 

One increasingly popular option is loan consolidation, with benefits that include low fixed interest rates, flexible repayment options, and fewer monthly payments to track. With the economy on shaky ground, consolidation is worth considering. The trick is committing the time to do it. 

"You do get the impression that physicians don't have the time to look at the more practical aspects of life," says Scherschel. They're so busy focused on being a physician that they can sometimes act like they can't sweat the small stuff -- but this isn't small stuff, Scherschel contends. "Some programs can shave years off your loan, which can equal substantial dollars."

Start by reviewing your loans, and then make a round of phone calls to lenders to determine consolidation opportunities or other options. Consider these questions when speaking with lenders:

What will happen to the status of my student loans if they're in deferment (a period of time when borrowers can postpone repayments) or forbearance (a temporary adjustment to the repayment schedule) when I apply for a consolidation loan? 

What will the monthly payment be and what will be the total repayment amount of the consolidation loan? 

Is there a penalty to pay off a loan early?

Which of my loans can I consolidate? (By law, federal loans and private loans cannot be combined.)

Will I pay fees or hidden costs when I consolidate?

Does your company offer a lower interest rate if I make a certain number of continuous payments or if I make electronic payments?

Jennifer Shu, MD, a pediatrician at Sharp Reese-Stealy Medical Group in San Diego, found that consolidation fit well with her financial juggling act. Shu's goal was to have lower monthly payments as the realities of life set in. "My husband and I are saving for retirement, to buy a house, for our 2-year-old's college education, and to replace our 11-year-old car," she says. "You have to balance what's going on with the rest of your financial situation."

Shu took several loans and bundled them into one for a longer term -- decreasing her original $850 a month payment to about $200 with a lower interest rate. Making regular payments since the mid 1990s and establishing her new loan has allowed her to pare down her original $60,000 loan to about $25,000. "If I am able to pay it off ahead of time," she says, "my total payment will probably be less than the original amount owed by several thousand dollars, depending on how far in advance I can do that. But the main impact was that there was less stress for me to come up with a large chunk of cash each month." 

Greg Hood, MD, an internist at Drs. Borders & Associates, PSC, in Lexington, Ky., found advantages by consolidating while also aggressively paying the principal and first attacking the loans with the highest interest rates. He and his wife, also a physician, had original loans totaling $160,000, which add up to $415,000 with interest. By combining their 14 loans into seven, they saved approximately $30,000 through consolidation. They've whittled down their total debt to $160,000 and the seven loans will be reduced to four by the end of the year.

"When doctors earned more, and consistently received big bonuses, it was easier to pay off the loans. Now they have to turn to other options," says Greg Gates, president of Gates Moore & Company, which provides financial and practice management information to physicians. "If cash flow is an issue, they're going to want to have longer term loans because they want a low monthly payment. It's all in what you need at the time." 

Gates suggests these financial benchmarks when mapping out your financial strategy and spending habits: "You don't want the home mortgage with property taxes and insurance exceeding 28 percent of the total income, and you don't want all of the debt with a house, cars, etc., to exceed 36 percent of the total income," he says.

Shu agrees that there are many options available to physicians these days. "There's no shortage of ways to make [repaying debt] even more manageable," she says. She suggests researching Web sites that have information on loan programs such as Collegiate Funding Services at 

, which is endorsed by the AMA. Also, the Association of American Medical Colleges offers information and resources on consolidation and debt management at 

Hood and his wife also looked at the expenses associated with their southern California home and the cost of living there. If you're willing to move, it can be a great way to save and pay off debt, says Hood, who moved to Lexington in 2001 with his family. Although the couple took a 50 percent pay cut the first two years, their expenses also decreased by two-thirds. Next year they will have surpassed the salaries they were making in California. "We will, on an absolute dollar basis, be making more here than there," says Hood.


If you are a physician who is willing to move, another consideration is one of the federal or state-run programs that will help pay down medical school debt if you agree to work in an underserved area for a specified number of years. The National Health Service Corps through the U.S. Department of Health and Human Services is one example of this type of program. Physicians can check it out at 

Just be sure you like the place enough to live there for several years, says Gates. "The question sometimes becomes, 'How will my spouse feel about this, and can we find an underserved area we'd like to live and work in?' Keep in mind, if it's an underserved area, there are reasons why doctors are not practicing there," says Gates. 
Another option for paying down student debt is to negotiate loan repayment with a new employer. "Remember that those payments are still included in the income for the physician, so it's taxable income," says Gates. "Physicians just need to know this isn't a freebie. They need to be prepared to have the cash flow at tax time to pay the taxes on the money, whether it's broken into annual payments or paid off in a lump sum. But, of course, it's always better to only pay the taxes than to pay the full amount of the loan."
Gates says, however, this loan repayment through employers is not common. "Practices are really getting squeezed right now. Unless it's a large and thriving practice, they probably don't have the money to do this." 

Whatever your situation, take time to look into the options you have available. "It's not that any of this financial information is difficult to master," says Scherschel. "If physicians can get through medical school and residency, they can easily get through this. The key to this is taking the time to make good decisions, and some of them are hard because you may have to give up some things, but then you give yourself a greater range of financial options later." n 

Karen Gatzke, senior associate editor for 
Physicians Practice, can be reached at 


This article originally appeared in the May 2003 issue of 

Articles

Loan consolidation -- and other options -- may help you better manage debt

Ease Your Debt Burden

Need an eye-opener about how the best-laid HIPAA plans can go astray? Linda Wiener has one for you. 

Wiener, practice administrator for ParkWest Women's Health in Rochester, N.Y., thought she and her staff were moving right along toward HIPAA compliance. They had investigated items like printing costs for new forms and determined a few security-related computer expenses. She felt positive they could make adjustments and meet the extended Transaction Standards deadline for well under $10,000. Now it looks like costs will reach tens of thousands of dollars for her practice - and timelines are tight. Under HIPAA regulations, all claims transmitted electronically from a physician office to a third-party payer must be in an ASC X12 format by October 16, 2003, for practices that filed for the one-year extension. Wiener thought filing claims in the new, standardized way would be seamless. The practice simply needed a software upgrade. They had a good, 15-year relationship with their software vendor; plus, under their agreement, ParkWest pays a premium for software support, which includes all necessary upgrades. But Weiner fears HIPAA greed is gumming up the works.

Weiner says repeated calls to the vendor were frustrating. "We finally were told that they were not going to convert us for free, or even upgrade the software at all." In fact, the vendor would not be rewriting the internal software because of associated expenses. Instead, they plan to use a processing company (which they happen to own) to handle claims. "So the vendor is requiring us to use this company when we used to send our claims directly to our third-party payers," Weiner complains. "They're forcing us to use a middleman and are making money off HIPAA."

How much money, exactly? Initially, the vendor said processing claims would cost $89 per provider, per month for the seven-physician, three-NP practice. "They agreed to give us a discount and are planning to charge us $69 per provider, per month - not to mention we'll have to pay 51 cents per transaction from electronic to paper claims, when necessary, and other associated costs," says Wiener.

Wiener began looking into other companies that weren't charging to upgrade software and found that she couldn't justify the change to another vendor - at least for now. It was also a risky move in terms of meeting the HIPAA deadline. "We have 60,000 to 70,000 patients in our system. A conversion would be a lot of work, we might have to shut down our office for a few days, and we'd have the costs for new equipment and new hardware," she says.

It's hard to say how many other vendors are reaping greater rewards than they should as a result of HIPAA, but as you continue your journey toward compliance, Wiener suggests the following:

Develop a checklist and start marking off items. You've got to prepare for any changes and charges that may occur.

Get a date in writing from your vendor that states when your software will be HIPAA compliant. Plan to be live by August to allow enough time to test and implement the system before October.

Figure out what other computer expenses and additional, related costs are involved.

Determine what processes will occur within your billing staff and allow time for training.

Wiener says she'll continue to try to tackle all of these, along with the daily tasks of a practice administrator. She'll also be researching software companies to handle future business.

This article originally appeared in the March 2003 issue of

Need an eye-opener about how the best-laid HIPAA plans can go astray?

The HIPAA Rip-Off

For just over $200, office manager Tracy Hacker surprised her staff, boosted morale, and gave employees another reason to continue working for Allergy and Asthma Associates in Birmingham, Ala.

"I called a special meeting and they thought someone was in trouble. Then I took them outside where there was a limousine waiting and told them what the meeting really was," laughs Hacker. "We had a great time. We rode around and watched a movie in the limo while we ate lunch. I really wanted to give them a break and let them know they're a classy staff." The cost? For a two-hour limo ride, including tip, $115; plus $90 for seven box lunches. 

The lifeblood of your practice is not only patient satisfaction, but also staff satisfaction. Perks like limo rides are just one way physicians are showing staff they're appreciated. Part of the challenge, in addition to stretching dollars, is knowing the answers to these questions:

• What is it about your practice that makes employees want to work hard every day - and do it with a positive attitude?

• How do you retain those employees at your practice in the years to come?

Employee retention efforts merit consideration in these days of budget-consciousness. "Practices are in an economic position in which they have to look very carefully at costs," says David Gans, director, practice management resources, Medical Group Management Association (MGMA). "Physicians are being paid less for what they do, but everything else costs more."

Experts say the tried-and-true combination of a good salary, health benefits, and retirement plan are not enough to keep employees anymore. So ask your staff to suggest the perks and benefits that will satisfy them, and then determine an affordable way to provide the reasonable ones, with help from your human resources or office manager. If you plan wisely, you'll end up with top-notch, loyal workers and avoid frequent (and costly) hiring and training of new staff. 

Robyn Levy, an Atlanta allergist, says recognizing employees' contributions doesn't have to be expensive. "We all think they must want a lot of money, but what they want is to be appreciated," she says. One of the keys to Levy's success as a solo practitioner is thanking her staff of 15 every day. "It takes no money for me to say, 'Thanks for your hard work,' or 'I couldn't have done it without you today,' but I do really mean it," she says, also adding that when a patient compliments the staff, she's sure to pass it on.

Other perks from Levy to her staff include: birthdays off with pay, an inexpensive gift and a handwritten note for their date-of-hire anniversary, and a facial or massage to celebrate the practice's opening date.

Another key to keeping employees energized is giving quarterly reviews rather than annual ones, says Levy. Specific job descriptions are reviewed and she offers new and interesting tasks whenever possible. "There was a [clinical] employee interested in doing skin tests, so she went and got some training and now she can do that. It makes her happy and it makes us happy," she says. 

Allowing staff to hold their own meetings helps maintain employee satisfaction, too. "They like it when I don't attend - it gives them a sense of autonomy," Levy says, noting that she receives minutes from the meetings. 

So how does all this attention to staff benefit the physician? "They don't leave me, they don't call in sick a lot, and sometimes they will even work when they're sick," she says. "Plus, they take good care of me and make life easier when I'm going in many directions." 

Sometimes, staff benefits can also directly add dollars to the practice - and to employees' pockets. For instance, Levy's administrative assistant concentrates on collecting past-due accounts; in return, the assistant receives 10 percent of what she collects. "She can make about $1,000 more a year," Levy says.

So if thanking people, buying small gifts, and providing regular employee feedback isn't expensive or time-consuming, why aren't more physicians "investing" in their staff?


"A lot of physicians don't stop during their busy days. Without meaning to be rude, they can be egocentric because the work revolves around them. But they need to stop and say things like, 'I really appreciate your filing all those charts. You did a great job.' It takes two seconds to say it," says Levy.

Nancy Merry, executive director of Medical Employment Directory of Springfield Inc., a healthcare recruiting firm, based in Springfield, Mo., adds, "As the medical community realizes quality staff is becoming more scarce, their efforts are starting to be acknowledged. If physicians don't acknowledge them, they are going to lose people and those practices are going to be floundering."

While the limo and massage concepts may be affordable for smaller staffs, how can you keep a larger group happy? Start by listening better.

For instance, employees at the Hedges Clinic, in Frankfort, Ill., no longer receive the long-standing office Christmas gift of dinner and a show. No, there wasn't a budget cutback - administrator Frank Schibli simply paid attention to his staff's wishes. The 45 employees at the clinic requested an office lunch and a gift certificate rather than the night out. Now, employees are a little happier with their holiday gift and the practice saves about $1,000 a year.

One new item that's sure to make an impression with staff are the two round-trip plane tickets Schibli plans to award to a selected employee this year. The cost to the practice was virtually nothing. The tickets are the result of accumulated frequent flier miles from the practice's credit card, earned as a result of normal business transactions. 

Another example of a low-cost, high-impact employee perk is advertising your practice on the radio, for example, and including the name of the Employee of the Month at the end of the spot, says Merry. This is a common way to recognize a hard worker and doesn't cost additional money if your practice is already buying radio airtime. 

Schibli notes that whatever you decide to offer staff, it's important to include everyone. His employee perks are given to nonclinical employees too - a group often overlooked. Remember, your front-desk employees are the main contact with your office - the people your patients call and see first. Schibli occasionally sends flowers to those employees to recognize their contributions. And when pharmaceutical representatives offer to buy lunch for physicians and nurses, Schibli allows it, as long as the administrative staff is included. 

An even larger practice than Schibli's - Quincy Medical Group - makes sure to acknowledge everyone, which is not an easy task with its 700 employees and 88 physicians. The physicians and executive management spend about $20,000 on an employee appreciation week, buy occasional lunches, sponsor nights at sporting events, write personal thank-you notes, and give employees small gifts like Quincy Medical Group T-shirts. "These may sound expensive, but given the size of the practice, it's all relative," says Diane Weber, associate administrator and chief financial officer of the practice, which is based in Quincy, Ill.

Weber notes the difference between practices that appreciate employees and those that do not: "If you work in an organization [that doesn't recognize employees], when you need people to go the extra mile, they aren't necessarily willing to do so," says Weber, a 23-year veteran of the practice, which has had minimal turnover for years. "If staff have to kick it up a notch and squeeze in an extra patient, what is their incentive?"

The practice also offers a generous retirement plan. "Employees are vested after one year. Even in a cost-savings mode, the doctors never want to touch it," says Weber. And the practice offers a much-appreciated short-term disability plan that employees can use for themselves or to care for their families. "It doesn't cost us much because the need for it doesn't happen often," she says. 

"We believe these are some of the reasons our retention rate is as high as it is. It costs a lot of money to have turnover," says Weber. "Happy employees are your best referral source - these employees promote the physicians' office. So we think doing these things is money well spent." 

This article originally appeared in the July/August 2002 issue of 

For just over $200, this office manager boosted morale and gave employees another reason to continue working for Allergy and Asthma Associates.

A Satisfied Staff Pays Off

When thinking about physician recruitment, most physicians picture a fresh-faced young man or woman joining their practice. Indeed, the vast majority of new medical school graduates pounding the pavement are 24 to 29 years old, according to the Association of American Medical Colleges. 

But a small portion of the graduating class -- usually around 8 percent -- consists of older potential recruits, over age 33. Yes, it's true that this age group will have more family responsibilities and an abbreviated work life, but this breed of physicians can offer certain advantages to practices.

For example, "the older doc is more settled, so the retention is better," says Nelson Tilden, a medical consultant, trainer, and founder of New York-based Medical Search Institute. "So many young physicians have a lot of debt and will go to a practice that will pay, but they won't necessarily stay there." 

A 2000 Merritt, Hawkins & Associates study reported that 37 percent of physicians over age 50 planned to retire within one to three years. Since one-third of the nation's 740,000 physicians are 50 or older, it may be wise to consider hiring non-traditional recruits.

An older person also has life experiences in managing money, resolving conflicts, building relationships, balancing a family life with demanding careers and schedules, and possesses other useful acquired skills.

"When I was young, I had this naive courage which got me through a lot of things. That jump-first-and-look-later attitude can be very helpful in medical school. Now that I'm older, I just don't have that," says 41-year-old Mike Grasso, who started medical school last fall. "But that's OK, because I know I bring other things to the table. I'm more mature; I'm more confident in my abilities. I understand my limitations, and I'm better at managing my time," says Grasso, who lives with his wife and four children in Laurel, Md. 

Deborah Bowers, a 38-year-old new physician, agrees. "You come to the practice with other life skills. You come with a broader sense of yourself," says the former nurse who joined a practice in northern Virginia last year.

Equally important, this crew is willing to work within the current constraints of medicine. While today's older physicians who graduated from medical school in their 20s come to the table with different expectations --  rebelling against managed care and facing shrinking salaries and spiraling malpractice rates --  more mature graduates recognize these problems with less frustration.

"I believe that I and most of my classmates will simply work with this system because this is the one we're learning in," says Mary Renard, a 46-year-old medical student and mother of three. 

"For physicians who've been practicing for more than 10 or 15 years, I think the feeling is that they've 'changed all the rules' when it comes to things like managed care, paperwork, malpractice rates. I think those of us entering into practice now would be well-advised to note that things keep changing," says Renard, who will graduate from George Washington University School of Medicine in 2004.

Plus, this older group has a work ethic more compatible with that of others their age. Whereas a 30-year-old might expect to work short weeks and still make a dot-com salary, a 40-year-old already knows nothing in life is free. 

In fact, far from expecting too much, people who choose to become physicians later in life are often leaving even more lucrative careers, sacrificing salary for personal satisfaction. 

Thirty-five-year-old Eric Loeliger is one of these people. While living in Tokyo in 1997, Loeliger learned he was not accepted into medical school. So, he quit his $85,000-a-year sales job, and he and his wife returned to the States "to fill in the holes" on his application. He lacked healthcare experience; he had to prove he really wanted to become a physician. His solution? He started volunteering at a hospital and also grabbed a part-time gig in the lab at $12 an hour.


His life as it was in Tokyo -- including plenty of travel and at least twice-weekly $200 dinners with his wife --  has all but ceased. "Now, we haven't spent $200 total in the last few weeks," Loeliger laughs. He sold their nice house and now rents. He replaced his comfortable company car with a 1993 Escort. 

But would he go back to the riches and perks? Not a chance. 

"As soon as I made the mental switch to another career it was like I was on cruise control. I couldn't stop doing it. There was nothing else I wanted to do," he says. 

As Loeliger prepares to graduate this spring and start an emergency medicine residency, he reflects on what he "gave up" and says it's simply a matter of changing priorities. Comments about his age from students, usually 10 years younger than Loeliger, used to frustrate him until he began to take a different view. "They used to ask, 'why would you give up your life now and do this?' But then I thought, 'I've lived a great life; I traveled and did a lot of things I wanted to do, but they haven't be able to do that yet.'"

Renard, too, knows all about melding med school with real life after her 20-year break from school. "I did general chemistry problems while driving to my eldest son's college. I brought organic chemistry notes to study while I waited for my son's football team to take the field. I hauled an MCAT review book with me on a trip with my daughter's skating team," she says. 

Bringing on new, yet more mature, physicians also has benefits for patient relations. Ask yourself: Who do our middle-aged and elderly patients want caring for them? 

"I can identify with those patients --  I have some of the same maladies, like asthma and arthritis, so I can relate," says 54-year-old Bruce Stafford, DO, now in his second year of residency at Oklahoma University Medical Center, department of family medicine. "I'm not a 28-year-old doctor who can't relate to joint pain."

Tilden agrees. "Patients respect age and experience a lot in medicine." 

Apparently that belief holds true for Renard, as well. "I think I'll be well-accepted by patients. I have already found, in seeing patients as a medical student, that they feel very comfortable with me," she says. "Part of that is that I am comfortable with them, and part is that patients --  especially those who are themselves middle-aged or older --  seem to be able to relate well to me."

And it's important to remember that the physician you hire must sometimes discuss difficult issues with patients, which can be a whole new experience for 20- and early 30-somethings.

"Because I used to be an ICU nurse, I had dealt with death and dying issues before," says Bowers. "Some of the residents in my class couldn't talk to patients and their families about death because they themselves couldn't deal with the fact that someone was going to die. There's no class in medical school called 'Let's Talk,'" she says.

Renard agrees and says she's up for the challenge of discussing sensitive topics. She looks forward to being an "advisor" in her physician role. "I relish the idea. I know I will be good at talking to people about tough stuff. My life experiences will help."

If you've hired or are thinking about hiring a more mature, new physician, don't forget that they need the same support system as other new physicians. 


"I'll be over 50 when I am looking for a job in private practice," says Renard, "but don't assume I know more. I will be just as thirsty for knowledge as a 26-year-old."

Bowers points out that she found it important to work in a place where she respected other physicians' clinical skills and the way they practiced. "I picked a practice where I knew they would make an investment in fostering me. It's important that the more experienced physicians are available to the newer ones."

In turn, some of these physicians propose they'll come full circle by becoming role models for the next batch of new physicians.

"I'd like to be a mentor to younger people. I've been through trials and tribulations similar to theirs so I can relate," says Stafford, who was an engineer for 25 years.

Grasso, a former computer scientist, has gone so far as to develop his own Web site (

) dedicated to non-traditional medical students who want more information on medical schools, stories from students, the MCAT, and more. The site has received 64,000 hits since 1998. "It's the mentor in me to help others who are going through the same difficult decisions I did," he says.

So, when looking for a new physician, don't limit yourself to the youngest and the brightest --  also consider the older and wiser. Brand-new docs pushing 40 or 50 may be exactly what your practice needs. 

This article originally appeared in the May/June 2002 issue of 

Consider hiring non-traditional (read,older) physicians