Most doctors will practice an average of 35 years. The number of years practicing, multiplied by the income he or she earns over that period, equals Lifetime Income. A doctor’s Lifetime Income will be significantly affected by career decisions that may include buying a practice, joining a practice as an associate, or for those real risk-takers, starting a new practice from scratch. However, are all of these career choices equally wise? Which has the greatest impact on the doctor’s Lifetime Income Potential?
Let’s say a doctor purchases an established practice and averages net earnings (after expenses) of $250,000 per year. If he remains in practice for 35 years, he could realize a Lifetime Income Potential of $8,750,000 (that is using today’s dollars, and this is after all expenses)!
Now let’s say another doctor decides to go into an associateship and earns $70,000 his first year and $90,000 his second year. He makes a total of $160,000 during those two years instead of the $500,000 he could have made by purchasing an existing practice. The point is, this associateship cost him a drop in Lifetime Earnings of $340,000. The years he spent in the associateship are gone, and the loss of income cannot be made up…it’s lost forever! It is not that associateships cannot work, it’s just that many of these doctors never get started on the right track, and it ends up negatively affecting their Lifetime Income Potential.
This same rule applies to any new graduate who decides to go into a one or two-year general practice residency. This income the doctor earns is about $35,000 per year, so there is a Lifetime Income Potential loss of $215,000 for each year they are in the GPR. It takes a long time to make up that kind of money.
Moreover, then there is the doctor who wants to gamble his future on trying to start a new practice from scratch in today’s incredibly competitive market. He spends anywhere from $300,000 to $500,000 to get the new practice up and running, and he does not have his first patient yet. If he succeeds in surviving those first three to five years on the minimal income (or losses), his Lifetime Income Potential will still be lower than that of the doctor who bought the established practice – lower by as much as one or two million dollars in that practice lifetime!
So, as you can see, purchasing an established practice is the best method of maximizing your Lifetime Income Potential. A few years ago, we worked with a new doctor who purchased such a practice, and he earned more than $250,000 the first year. He then bought and merged another practice and was soon netting more than $450,000 a year (after all expenses and debt service). In three years, he has hired two associates to work for him. His Lifetime Income Potential will exceed $15,000,000. Not bad for a beginner who thought about his Lifetime Income Potential.
You too can maximize your chances for success; all it takes is a little business sense and access to the right information. Just remember, it’s your future, and yes, there are millions of dollars at risk. Call AFTCO today.