Physician Going Solo & Quitting Their Job

A few doctors around me are in the midst of career change. Most have been career physicians, working 1 or more jobs, getting paid as employees. They want to exit the cycle of working, waiting for a paycheck, paying taxes, waiting for vacation authorization, working, waiting for a paycheck…

The economy is as hot as it’s ever been. Our nation isn’t fighting any active wars. The stock market is hot and everyone should be seeing their retirement accounts grow. Home values are the highest I can recall and getting loans is as easy as filling out an online application. Jobs are plentiful and inflation is still being curbed.

In this post, I want to talk about all the factors involved when going solo, how to prepare for it and what mistakes to avoid. I’m also going to challenge the potential solo-goer with some questions to ponder.

What’s The Reason For Going Solo?

You may have gotten mentally exhausted with the constant focus on metrics. Perhaps the once desirable doctor-patient relationship has degraded down to a 5-minute regurgitation of lab values followed by adjusting some dosages on medications which the patient is probably taking only 50% of the time.

Maybe you are unhappy because you don’t feel recognized for being higher-performing compared to your colleagues. It’s not that you want to gloat but you are doing twice the number of cases, seeing twice the number of patients and complain twice as less – yet your paycheck is the same.

If you are burnt out then going solo might make a lot of sense if you pursue a niche aspect of your specialty. Working with younger patients can be exciting because they haven’t yet learned to ask for a Z-pack or look for a doctor to fix their lifestyle diseases. Working with the active elderly is amazing because they are a joy to be around, have fantastic stories to tell and generally don’t desire a whole lot of clinical intervention.

If you’re going after the big bucks then you have your work cut out for you. You likely realize that it’s going to be a process to get from putting up your shingles to pocketing that $500k a year. And not only has it been done but it’s still being done – solo physician practices may have declined ever since the wave of hospital based practices, but many physicians are embracing this time to start their own practices.

My cohort of Primary Care doctors have started and are running successful Primary Care practices. Some have more than 1 practice and see a few patients each week at each of their sites.

Is There More Risk Or Less Risk When Going Solo?

We are taught to think that getting a job is the safer thing to do. In fact, this axiom comes from many generations ago when employers first started “guaranteeing” an income to their employees. They weren’t paid based on productivity, they were simply paid for showing up – quite revolutionary at the time. It wasn’t long before employees figured out the loophole and their productivity dropped below the promised wage.

Naturally, those who were quite comfortable with working less, formed unions right around the same time when some scrupulous employers started taking advantage of the ‘going rate’ for employee reimbursement.

Fast forward to 2017 where no employer has anything vested in you, except time and money. They have trained you to perform at the level they want you to perform at, give or take a couple of standard deviations. If you die, get fired or leave they will simply replace you. Even if you have a personal tragic event that makes the company look bad, they will ask you kindly yet sternly to resign.

When you’re a high functioning employee with a highly specialized skill, such as a healthcare provider, your only customer suddenly became your employer. And quite often, employers ask you to not work for competitors for their own benefits. You are, in fact, exposing your career to high risk.

When you go solo, assuming you have a good understanding of how to drum up business and have studied the successes of a few entrepreneurs before you within your field, you suddenly will have hundreds and likely thousands of customers. You decreased your risk and diversified your income opportunities.

If Kaiser Permanente disagrees with the stuff I write on my blog or the medical marijuana prescribing I do on the side, they could ask me to leave. They could even fire me which would make future employment tricky. A pissed off boss, a bad patient outcome, a DUI or a few other moral indiscretions and KP may prefer for me to take my MD somewhere else.

Will Your Income Be Higher Or Lower?

Just like going into medicine, most of us did it for the work, not the income. At most we did it because we knew it was going to be a stable source of income but besides a few among us, money wasn’t the driving force.

Assuming you are doing it only for the money, which I doubt, then the good news is that your worth will be created in proportion to your productivity. Either you can focus on high volume, or high quality, or highly focus on matching a need, or… you can combine all the above and make an obscene amount of money as a doctor going into solo practice.

I would look at it in a bit more of an abstract manner. If you are doing something you enjoy doing, the income becomes less relevant, but it will be far easier earning that income which might mean that you’d be willing to work a little harder without it feeling like, well, a job.

I suspect that most doctors who venture out on their own will need to figure out where they will deliver the most profit to the business. Either they will be amazing bosses and hire the perfect staff or they will be brilliant marketers and gain a lot of customer. In time, most of us would figure that out, especially if the motivation to do well is in place.

I once was interviewed side by side by a paper where the reporter was comparing my job satisfaction at KP to that of an outpatient cardiologist business owner. Both of us really enjoyed what we were doing and couldn’t imagine doing it any other way. He made less than I made (according to him) but he was far happier working solo than for a hospital. And I made more than he did and I was much more content not having to be responsible for a clinic.

An ex-colleague of mine owned 3 clinics which he ran with a few PA’s. Each clinic was earning him $150-200k of net profits a year. He was a brilliant businessman and one hell of a hard worker.

Another friend owns 2 offices and she is doing quite well in San Francisco. So it is possible. It’s being done. And even if they weren’t making hundreds of thousands, at least, hopefully, they would be enjoying their work.

How Will Your Work Load Change?

It seems that preparing for a heavier upfront time and money investment would be wise. More strict supervision, more time spent on-site and handling a lot of the day-to-day yourself, is a good way to get going in the right direction.

When my brother-in-law opened his own urgent care as an ED doctor, he was there from the very beginning without an MA. He bootstrapped everything and started his business with less than $30k. I was quite impressed when he asked me to fill in a couple of days for him less than a year after he started. His operation was smooth, he hired an MA eventually and outsourced his billing and EHR in order to avoid major upfront expenses. He’s successfully running it to this day.

We’ve all heard that having your own business means a lot more work. I personally will agree with that statement. Running my auto mechanic shop a few years after residency required me to wear a lot of hats. However, I wasn’t doing all those roles 100%. I wasn’t a manager 100% of the time, I wasn’t a marketer 100% of the time.

I had a lot of money but not a lot of time. If I was wiser then, I would have hired a lawyer to handle all the incorporation paperwork and business licensing. I would have had them write a solid partner/employee contract to avoid future headaches, instead of cheaping out on Legalzoom.

I would have hired a marketer and a professional web designer in order to reach the proper customer base. That would have avoided having customers walk in who had the wrong expectation, wasting my time, their time, and my mechanic’s time. I find that one of the most incredible opportunities physicians have is that we can afford to hire incredible talent to accomplish what we ourselves cannot.

What About Those Employee Benefits?

Leaving an employee role as a physician is one of the hardest things to do when looking back at the benefits we’ll leave behind. I have written a bit about employee benefits for physicians. You could sit down and figure out the ‘cost’ of what your benefits are actually worth – that may not be necessary in this case, just know that whatever your employer offers is likely excessive, inefficient and could be had for a lot less money.

Perhaps the most desired of all the benefits of employment are the retirement benefits. I could be wrong, but it’s certainly what most of my colleagues focus on. The 401k, the pension and the possible retirement health benefits.

The 401k is fairly easy to reproduce through an Individual 401k, often with better terms than what your employer offers and with the ability to stash more into it than you old job’s 401k.

As for traditional pensions, the pessimist in me doesn’t think that they will be around for long. Many traditional pensions might get converted to Cash Balance Plans which aren’t pensions but function as such.

The above chart was stolen from the Kravitz Firm. You can build your own cash balance plan if that’s what you fancy or you can make your own custom pension plan using a SPIA.

Debt Obligations

A mortgage and student loan debt are the 2 largest financial commitments that physicians have. When going out on your own, the biggest risk is with a variable rate mortgage which could adjust higher. You can review your mortgage documents to see what the maximum rate is that it adjust to, most adjustable rates have a maximum.

Student loan debt can be put into deferral or forbearance which some physicians might qualify for if they aren’t earning an adequate income from their young business to make the full payment. Forbearance can be utilized for a home mortgage as well.

For The Non-Physicians

2 of my friends, a nurse and a doctor, recently asked me on a conference call as to how they could benefit from each other’s credentials and skills. The RN is a well-known aesthetician who has her loyal laser/Botox clients. The MD is a reader of this site who wants to both profit from a medical spa as well as help his friend go out on her own.

In the phone conversation we came up with a great business model and identified some areas of further research. It’s up to them to do the legwork and get the right contract drawn up that makes sense to both of them.

One of my friends is an NP in her early 60’s – this woman will work until she’s 90, she is a beast and she is a fantastic clinician. Her and I have talked about her retirement plans – it includes me opening a clinic and her running it. Essentially, we’d figure a way around the laws requiring a physician to be the owner of the clinic.

I would encourage my Affiliate Clinician colleagues, NP’s and PA’s, to not let the laws in their State be a hindrance. Follow the law down to the T but use every fucking loophole to your advantage. If an MD or DO license is all you need to go solo then start networking and make it happen. Don’t let the horror stories out there stop you – plan for the worst and expect things to go well.