ISSUE 3: Protect Your Assets

YOUR MONEY

Ten Financial Pearls for New Attendings

Adjusting to your new financial situation requires discipline.

JAYANTH SRIDHAR, MD; and CHIRAG SHAH, MD, MPH

At A Glance:

  • Understanding your personal finance goals and creating a plan to reach them are important steps for new attendings.
  • Fluency in coding for services may make you more efficient and allow you more time for patient care.
  • Some elements of financial planning are easier than others. Knowing your state’s income tax burden or learning what type of retirement plan to invest in may be time-consuming, but the payoff is worth the effort.

Being a new attending comes with opportunities and challenges, many of which have little to do with the finer details of phase 3 clinical trial results or the mechanics of an efficient vitrectomy. As a new attending, you will enjoy an increase in salary. With this financial boon comes the responsibility to plan for the future. Here, we offer 10 financial pearls, some personal and some professional, for newly minted retina attendings.

PERSONAL FINANCES

Pearl No. 1: Determine Your Family Philosophy Regarding Financial Goals

Given your pending increase in salary, it is important to discuss and agree upon your family’s financial philosophy with your spouse or partner. Do you want to accumulate wealth and achieve financial independence? Do you want to have a rich lifestyle and live to the limit of your means? When do you want to retire, and how well do you want to live in retirement? Do you want to save for your legacy, ensuring that your kids and grandkids have a nest egg for education and other expenses? Or does your legacy perhaps involve a charity? Ultimately, your life will follow a path with all of these goals in a balance dictated by your family’s philosophy. There is no universally right balance, only a balance that is right for you and your family.

Pearl No. 2: Get It Out of Your System

After years of deferred financial gratification in medical school, residency, and fellowship, it can be refreshing to reward yourself with a nice one-time splurge (within reason). This can be an experience such as a nice summer trip before starting your job or a tangible item such as a new car. Allowing yourself to dream big this one time can help you get the luxury bug out of your system before you again begin living well below your means.

Pearl No. 3: Live Like a Trainee

After you are mentally refreshed by your one big purchase, it is time to buckle down again and live like a resident or fellow. That means managing your living expenses, sticking to a budget, and trying to live well below the means afforded you by your new attending salary. Besides the benefit of establishing good financial habits for the future, living like a trainee produces a big revenue surplus. Remember, medicine is changing. Ophthalmology is seeing decreasing reimbursements and trends toward private equity acquisitions. Even a few years of living like a fellow will go a long way toward accumulating wealth and decreasing financial stress in the future

Pearl No. 4: Know Your Personal Financial Plan

Take a hard look at your finances and decide your financial priorities. Do you still have student loans or credit card debt to pay off? Have you set up an emergency fund? What sort of retirement plan options are most efficient to pursue? Are you saving for a major real estate purchase in upcoming years?

Your individual circumstances will dictate the exact details. In general, one should focus on paying off all debt, planning for retirement, and saving. It is a good idea to enroll in an employer retirement plan such as a 401(k) plan (especially one that allows you to obtain free revenue via a company match) or to build tax-efficient savings in the form of an individual retirement account (IRA). A 529 plan allows account holders to save for their children’s higher education in a tax-efficient manner, taking some of the burden of future education costs off you, your spouse, or your children.

After long-term savings have been addressed, one should start saving in the form of an individual taxable investment account. Consider keeping it simple by investing in a total stock market index fund. Also consider dollar cost averaging (investing a small amount on a regular basis rather than a lump sum once a year) to maximize your long-term returns.

Warren Buffet once said, “Do not save what is left after spending, but spend what is left after saving.” Pay yourself first by investing, and then live off of what you have budgeted for discretionary spending. Again, living below your means the first few years of your attending career can give you the financial flexibility to readily tackle your long-term goals one by one.

The website White Coat Investor (whitecoatinvestor.com) is a free resource of articles and podcasts addressing the subject of physician investments.

Pearl No. 5: Enough Is Absolute, Not Relative

Your partner, former co-fellow, or college roommate may make more money than you, but remember the concept of enough. If you have as much as is necessary, you have enough. Do not compare your income to the income of others. This will only bring you stress and unhappiness.

Pearl No. 6: Know Your Tax Burden

Your attending salary is likely the first time you’ve earned anything substantial. With great power comes great responsibility—that is, responsibility to pay income taxes.

Do not forget to account for your tax bracket when creating your budget. If you moved to a different state, do not get caught off-guard by your new state’s income tax structure. Also, remember that your first calendar year in practice will usually carry a lower tax burden than subsequent years because the first 6 to 7 months were spent in fellowship on your trainee salary. Depending on your exact figures, this may allow you to use more creativity, such as investing in a Roth IRA instead of a traditional IRA. In 2018, the income limit for contributing to a Roth IRA starts phasing out at $120,000, and one becomes ineligible with income of more than $135,000.

PRACTICE FINANCES

Pearl No. 7: Understand Your Practice’s Finances

Just as you would not walk into the OR without knowing about your patient’s previous eye surgeries, you should not start your job without understanding the basics of your practice’s finances. Typically, your initial take-home pay as an associate is determined by a base salary that may be supplemented by an incentive bonus that is a function of some calculation of generated revenue versus overhead expenses. Do not be afraid to ask questions of senior doctors and practice managers to understand how your individual calculation will work.

Whether you operate at an ambulatory surgery center or a hospital, you should understand and know the costs of the equipment you prefer and plan to use. Your disposables and reusables will include vitrectomy packs and instruments such as forceps, soft-tipped cannulas, and endolaser probes. Fellowship can insulate you from the real-world price tags of modern retinal surgery. When you learn the true costs of your equipment, you may modify your surgical preferences. You may find equivalent but more cost-efficient instruments and maneuvers that allow you to complete certain surgeries. Being financially responsible within your practice will save you from uncomfortable conversations with your partners and practice managers at the end of your first fiscal year.

Pearl No. 8: Know Basic In-Office Coding

Before your first day in the clinic, familiarize yourself with the world of coding. Online coding articles, such as those published in Retina Today or on the American Academy of Ophthalmology website, are a good place to start. Talk to the senior doctors at your new practice to get a sense of how coding works in the context of your new electronic medical record system. In-office coding with ICD-10 can be complicated, and knowing the basics will simplify your clinic day and allow you to focus more on building a good reputation via excellent patient care.

Pearl No. 9: Know Your CPT Codes

Some of the most common Current Procedural Terminology codes for retina surgeons and example indications are listed in Table 1. Consider keeping two lists saved on your mobile device: one with commonly used codes for quick reference and one with a comprehensive overview for unusual cases. Doing so will save your mental energy on OR days for patient care.

Pearl No. 10: Know Your Modifiers

The most commonly used modifiers and example situations are listed in Table 2. Modifiers allow you to receive appropriate payment for procedures done in the context of another overarching situation, such as during the postoperative period of a major procedure. Using modifiers appropriately will prevent payment rejections and the headaches generated by the ensuing paperwork.

GO FORTH AND PROSPER

Being a newly minted retina attending is exceptionally rewarding, both professionally and financially. We hope that these simple pearls will help the next generation of retina surgeons achieve success so they can focus on what matters most: patient care.