Physician Compensation and Subspecialties

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ks289
Posts: 655
Joined: Sun Mar 11, 2012 12:42 pm

Re: Physician Compensation and Subspecialties

Post by ks289 »

staythecourse wrote:
sambb wrote:You shoudlnt look at compensation. Instead, it is compensation by hours worked. I know two MDs. One works 12-14 hour days, 6 days a week, 365 days a year, and rarely takes vacation. he makes 2x as much as another MD in the same field, who works half as hard. So ultimately, they make the same.
Interesting this in itself should be its own thread. It is AMAZING if you look at the numbers of how much being at the top bracket affects your pay. Basically, what I tell folks the last 3 months or so folks are working for 1/2 the reimbursement as they did from Jan-Jun. Taxes (fed+ state) in many places are 50% or more.

Also, the amazing thing is pull out a calculator for those who sent to daycare and/ or have a nanny how much GROSS income at the top bracket is needed to pay them. For example: If a nanny cost 40k you are basically taking 70+k of your salary just to pay the nanny. If one has multiple kids at different stages (day care, private school, nanny, or any combination) the GROSS salary to pay for all of it easy exceed 100k+. That is insane.

Reading what WCI wrote several years ago really got me thinking that for high income workers it makes more sense to work part time and for more years then trying to go all out and retire early. To save every extra dollar in the last 3-6 months of the year is exceedingly more difficult as you have to overcome the progressive tax system. Had my wife and I thinking and we have started making changes to work schedules to spend more time with kids (which is what we really like anyway).

Good luck.
Good thread. The OP appears to have deleted all of their posts though!

I am in one of the IM procedural subspecialty fields mentioned. Presently, there still exist opportunities to earn more (mainly by doing more procedures but also through ownership of ASCs or ancillaries). The landscape in healthcare in 5 years after applying for and completing a 3 year fellowship may be not as attractive though. I agree with the other posters who recommend optimizing your income in your existing field, settling in a lower cost of living location, and/or pursuing a different field for not purely financial reasons.

Regarding the progressive tax structure, I agree it has a greater impact on dollars earned as you climb the brackets.
However, what can be even more important for practice owners is the impact of fixed costs/overhead. In my group, I will pay pretty much the same full overhead whether I work 9 months or 12 months. We do have an allowance for doing 50% time with another person (and each paying 50% of a share of overhead).

Fictional numbers:
If I have $200,000/year in fixed costs
and generate $800,000 in revenues working 12 months - my take home is $600,000 (roughly $288/hr)
and generate $600,000 in revenues working 9 months - my take home is $400,000 (roughly $256/hr)

Working those last 3 months are actually the most lucrative by far BEFORE taxes. (roughly $385/hr)
txranger
Posts: 103
Joined: Sun Jun 11, 2017 9:14 am

Re: Physician Compensation and Subspecialties

Post by txranger »

Tnx for the reply, was very informative.

Problem is, can't work 12 mo/yr.

I d like to take 3 mo/yr off.

Those r great numbers/hr, that's what really matters, as unless yo own yo biz, you r changing time for $. All it is.

Obv after-tax income is also what matters in the end of the day.... and cost of living.... so u really need to look at CoL and tax-adjusted pay although the gross #s also give an idea
staythecourse
Posts: 6993
Joined: Mon Jan 03, 2011 9:40 am

Re: Physician Compensation and Subspecialties

Post by staythecourse »

ks289 wrote:
staythecourse wrote:
sambb wrote:You shoudlnt look at compensation. Instead, it is compensation by hours worked. I know two MDs. One works 12-14 hour days, 6 days a week, 365 days a year, and rarely takes vacation. he makes 2x as much as another MD in the same field, who works half as hard. So ultimately, they make the same.
Interesting this in itself should be its own thread. It is AMAZING if you look at the numbers of how much being at the top bracket affects your pay. Basically, what I tell folks the last 3 months or so folks are working for 1/2 the reimbursement as they did from Jan-Jun. Taxes (fed+ state) in many places are 50% or more.

Also, the amazing thing is pull out a calculator for those who sent to daycare and/ or have a nanny how much GROSS income at the top bracket is needed to pay them. For example: If a nanny cost 40k you are basically taking 70+k of your salary just to pay the nanny. If one has multiple kids at different stages (day care, private school, nanny, or any combination) the GROSS salary to pay for all of it easy exceed 100k+. That is insane.

Reading what WCI wrote several years ago really got me thinking that for high income workers it makes more sense to work part time and for more years then trying to go all out and retire early. To save every extra dollar in the last 3-6 months of the year is exceedingly more difficult as you have to overcome the progressive tax system. Had my wife and I thinking and we have started making changes to work schedules to spend more time with kids (which is what we really like anyway).

Good luck.
Good thread. The OP appears to have deleted all of their posts though!

I am in one of the IM procedural subspecialty fields mentioned. Presently, there still exist opportunities to earn more (mainly by doing more procedures but also through ownership of ASCs or ancillaries). The landscape in healthcare in 5 years after applying for and completing a 3 year fellowship may be not as attractive though. I agree with the other posters who recommend optimizing your income in your existing field, settling in a lower cost of living location, and/or pursuing a different field for not purely financial reasons.

Regarding the progressive tax structure, I agree it has a greater impact on dollars earned as you climb the brackets.
However, what can be even more important for practice owners is the impact of fixed costs/overhead. In my group, I will pay pretty much the same full overhead whether I work 9 months or 12 months. We do have an allowance for doing 50% time with another person (and each paying 50% of a share of overhead).

Fictional numbers:
If I have $200,000/year in fixed costs
and generate $800,000 in revenues working 12 months - my take home is $600,000 (roughly $288/hr)
and generate $600,000 in revenues working 9 months - my take home is $400,000 (roughly $256/hr)

Working those last 3 months are actually the most lucrative by far BEFORE taxes. (roughly $385/hr)
Great points regarding overhead.

Question is redo your numbers and calculate in POST tax/ hour and you will find it will be much different in the 12 month category (as those dollars get taxed the highest). Also, take into account if by doing so can you eliminate some childcare needs which are paid post tax (so throw the cost of taxes back into that number).

You will be surprised it is not as impressive of a difference as you would think. Now think about if you can find another doc. who wants to join and split the 1.0FTE to 0.5/0.5 or some variation.

In the end, of course, more work equals more take home pay, but you will be surprised if you run your numbers that it is not as impressive as you would think. Also, now imagine if by working less you are happier and work LONGER if you were considering ER.

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle
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