BHG Financial: Beyond the White Coat: Financial Tools for Modern Physicians

Physicians train for years to treat patients, yet they’ll need to be self-educated when it comes to managing their finances. Luckily, there are financial tools, from loans to software, that can help support a modern physician. Here are five tools for physicians to explore whether they remain practitioners or make the leap to business owners.

Physician business loans

For doctors who have chosen to become business owners, loans for physicians can help cover the cost of starting or expanding a practice. These loans are flexible tools that use proprietary underwriting for physicians. They can offer hundreds of thousands of dollars to take advantage of business opportunities or support a business in consolidating existing debt.

Debt management strategies

Many physicians graduate with a mountain of student loan debt that is a combination of private and federal loans. Strategically managing and paying off debt can save thousands of dollars or more over time.

Common debt management strategies include consolidation and prioritization. While federal student loans can’t be consolidated, private loans can. A debt consolidation loan could help physicians lock in a lower interest rate loan that could save money or result in a lower monthly payment.

Prioritization tactics include paying down the lowest amount of debt first to increase motivation, also known as the debt snowball, or tackling the highest-interest debt first, called the debt avalanche. These strategies can help focus repayment efforts and make it easier to stick to a certain approach.

Retirement savings plans

A physician who works as part of a hospital network may have access to an employer-sponsored retirement plan, like a 401(k) or 403(b). As part of that plan, doctors can contribute a percentage of their paycheck that’s deducted automatically, and they may even receive a matching contribution from their employer. However, the approach to retirement savings is different for physicians who manage their own practices.

Self-employed retirement plans will need to be managed by the physician, at least in the early days of a practice, until a larger team is established. Plan options worth exploring include individual or solo 401(k)s, SEP IRAs, and SIMPLE IRAs. Each of these plans has limitations on how much a physician can contribute, both as the employee and the employer. A tax attorney can advise on how plan contributions may affect overall tax obligations.

Insurance

There’s a significant need for various types of insurance as a physician, whether it’s malpractice insurance to protect against lawsuits from patients or life insurance to provide for loved ones in the worst-case scenario. It makes sense to explore the types of insurance available and choose the ones that can help alleviate risk without breaking the bank. Consider the following types:

• Malpractice insurance
• Liability insurance
• Health insurance
• Life insurance
• Disability insurance
• Umbrella Insurance
• Business interruption insurance
• Cyber liability insurance

Insurance can be costly, especially for certain specialties, but weighing the benefits against the risks is important. A financial professional may be the best resource to help.

Financial planning services

Physicians check several boxes that make them good candidates for working with a financial advisor. They have extremely high earning potential, often don’t have time to dive into understanding finances, face an unusually large debt burden, and may benefit from certain tax strategies as business owners. The right financial professional could be well worth the cost of their services if they can assess the various areas of a physician’s finances and make recommendations to optimize the big picture.

The bottom line

Physicians have an enormous amount of responsibility on their plates, and adding financial management can tip the scales from manageable to overwhelming. There are several resources doctors can use to navigate financial management, including business loans to support building or maintaining a practice and insurance to protect against the inherent risks of doing business. Regardless of the financial tool, it’s paramount for physicians to remember that financial professionals are an excellent resource to use to support all aspects of personal and professional money management.

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Name: Sonakshi Murze

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