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3 financial questions early career physicians must answer


Discomfort or trepidations aside, you’ll have to answer these tough, but inevitable, questions.

question mark

There is no doubt about it, becoming a physician is not easy. You spend years training to be able to make life-altering decisions, sometimes at a moment’s notice. Chances are you feel comfortable making these types of calls, but less confident when it comes to making major decisions that, for example, affect your finances.

And who can blame you? Decades of demanding medical education may have prepared you to become a great physician, but offers little in the way of financial guidance. Discomfort or trepidations aside, you’ll have some tough decisions nonetheless.

  • Private or Corporate? One of the first major decisions nearly all physicians encounter is whether or not to join a private practice with the intent to become a partner, or join a corporate practice and take advantage of being a W-2 employee. The major difference here is whether your career path will entail your embracing business ownership or being employed by a larger company. The following considerations may help you weigh your options.

Business Ownership/ Partnership
W-2 Employee
Need to open and maintain own retirement plan, possibly for employees, as well. Possible need for plan manager.
Employer sponsored retirement contributions with possible employer match.
Potential to make higher retirement contributions by adding profit sharing plan or other retirement plan vehicles to traditional 401k. May need to open additional IRAs or perform Roth conversion for optimal savings.
Limits on retirement plan contributions. May need to open additional IRAs or perform Roth conversion for optimal savings.
Must obtain any and all insurance policies to cover a range of personal and professional liabilities.
Some malpractice coverage held by and paid for by the corporation.
Real estate needs for patient care, surgery, etc.
Facilities provided for use.
Increased autonomy.
Limited autonomy.
Uncapped income potential.
Fixed income potential.

Keep in Mind: Within the industry as a whole, larger corporations are buying out and acquiring smaller hospitals and practices at an alarming rate. Many physicians even wonder if opening a private practice is sustainable when a handful of mega-corporations continue to expand, grow, and monopolize the scene. As such, many physicians are trading the autonomy and earning potential of business ownership with the security and longevity of a corporate position. Of course, there is no right answer, only personal preference and fiscal reality, but balancing the two will be the key to keeping your finances on track.

  • How Will I Keep Up with Technology? Technology innovations have left no portion of the healthcare industry untouched. Today, patient records are stored and secured electronically, and machines are becoming more capable of performing procedures that once were done by humans. Tough diagnoses are uncovered in minutes by technologies that didn’t even exist even five or ten years ago. Not only will physicians need additional training to learn how to integrate these technologies into their practice, but may have to rethink how they perform their role as a care provider. The training and the tools will prove costly, especially for those who choose to take the business-owner route. Of course, one option that is growing in popularity, is partnering with an outpatient facility so that you don’t have to purchase, maintain, and insure costly equipment on your own.

  • How Will I Account for Shrinking Margins? The trend continues toward shrinking margins between declining physician reimbursement from insurance providers and increasing medical-related expenses such as staff, equipment, and real estate. Unfortunately, the trend shows no signs of reversing with CPI inflation rates on healthcare related expenses surpassing nearly all other sectors year over year. And as some physicians and large corporations move to value-based compensation models, the discrepancy between income and expenses could potentially increase, putting significant pressure on a physician’s ability to earn a higher income. How will you maintain your desired standard of living when expenses wax and compensation wanes? This may sound like an impossible task, but with the proper planning and guidance, one that can be managed to optimize your financial picture.

Of course, none of the answers to the above questions will come easily and should always be considered in the context of your overall financial plan.

About the Author
Julianne F. Andrews, MBA, CFP®, AIF® began her career in financial planning in 1988 and co-founded Atlanta Financial Associates in 1992, merging into Mercer Advisors in 2020. She specializes in working with physicians and executives in the healthcare industry. Her passion for working with physicians comes from being a pediatrician’s spouse for more than three decades. Julie has been featured on Forbes’ list of America’s Top Women Wealth Advisors since 2017 as well as Forbes’ Best-in-State Wealth Advisors since 2018. Julie can be reached at
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