Is This Article Accurate?

[echos456]

http://www.thestar.com/opinion/commentary/2014/12/15/be_careful_what_you_wish_for_on_doctors_billings.html

 

I came across this article on the Toronto Star yesterday. Needless to say it scared me, the doctor states "In my case, as a family doctor, my take-home pay is slightly more than that of your typical school teacher . . . but without the perks, the pension and the summers off. Oh, and by the way, no Freedom 55 either."

 

Can anyone pursuing a residency in family medicine or that is currently practicing as a GP give a realistic estimate of what earnings are like prior to overhead and after overhead. My concern is that the medicine is becoming somewhat of a catch 22 in Canada, with specialists not being able to find jobs and family doctors not earning as much to justify all the hard work. Also I realize that family physicians make more in rural areas, so if anyone can shed light on that, as well it would be great.

 

My goal is not to come off as money hungry; however I am planning on pursuing medical school without financial support and I want reassurance that I will not be struggling to be making principal payments upon finishing school/residency. 

 

[JohnGrisham]

Take home pay in the low 50s as a gp? No way. Not even going to read the article to know that is wrong. Unless they mean after paying loans etc, then maybe for a few years. No way jose. Unless your working part time

[JohnGrisham]

Read the article, what garbage. Unless I'm missing some key detail or ohip is completely different than BC billing for gps

[makingfetchhappen]

This article is garbage.

 

[echos456]

Does anyone have hard numbers? There is so much conflicting data via: online (OMA & CMA), grapvine and actual doctors. If a doctor is pulling 200 grand, which I don't think happens if you're a newly minted family physician, so it might be overstated, regardless 30% of your income will go to the respective family health team/practice you're working for to cover overhead costs. So you're left with $140,000, before taxes. Seeing how you don't have a pension, you're technically making anywhere from 70k to 80k. 

[makingfetchhappen]

I would bet my first born child that as a doctor in Ontario, you can easily make 100K a year working part time.

Part time defined as 20 hours a week, 40 weeks a year.

Umm, it is probably not okay. It is probably also the reason that most of our GPs work 2-3 days a week, 40 weeks a year.

[makingfetchhappen]

It is a strange thing for doctors because they do not get raises. Although, in this economy raises are sort of a joke anyways.

However, the original article makes it seem like you won't cut even or that your effort and talent will not be compensated.

Anyone can feel free to correct me if I am wrong, but if OP takes this path, it's worth it I think

[JohnGrisham]

Yah it's nonsense. You are doing something really wrong if you aren't clearing 100k even as a minted GP in a shared group practice. What a delusional article. All the numbers are freely available online. Again this is the assumption that it isn't significantly different than BC where my knowledge is more up to date.

[JohnGrisham]

Does anyone have hard numbers? There is so much conflicting data via: online (OMA & CMA), grapvine and actual doctors. If a doctor is pulling 200 grand, which I don't think happens if you're a newly minted family physician, so it might be overstated, regardless 30% of your income will go to the respective family health team/practice you're working for to cover overhead costs. So you're left with $140,000, before taxes. Seeing how you don't have a pension, you're technically making anywhere from 70k to 80k.

 

Most people don't have a pension either lol.

[rmorelan]

Does anyone have hard numbers? There is so much conflicting data via: online (OMA & CMA), grapvine and actual doctors. If a doctor is pulling 200 grand, which I don't think happens if you're a newly minted family physician, so it might be overstated, regardless 30% of your income will go to the respective family health team/practice you're working for to cover overhead costs. So you're left with $140,000, before taxes. Seeing how you don't have a pension, you're technically making anywhere from 70k to 80k. 

 

most salary statements are pretax, so I would still say you are making 140K in the scenario you mention. All the numbers ever thrown around are pretax (even of course sports players.) It just gets confusing with pre and post tax numbers tossed around and doctors in particular have wildly variable practises and corporate investing strategies. Even taking about income for doctors is challenging as a result. 

 

Even if the income was exactly 140K and you took it all out as taxable income in a single year for some weird reason your after tax income would be about 95K (only income you earn after 90K is hit with the almost highest marginal rates etc. I mean as ubc2012 points out most people don't have significant pensions - and even if you did modern day pension plans are not exactly as high quality as they once were (often not fully indexed, vulnerable to the fortunes of the company etc). Frankly I would want to have control of my own retirement investments rather than have to worry about some of those issues. I am guessing under your senario you are thinking you would be saving about 40K a year for retirement (40K pretax so about 25K after tax, dropping the 95K down to 70K?). Since that 40K would be left in your corporation minus corporate tax that is pretty good retirement savings (which isn't bad! ) - you won't experience really any loss in income on retirement which by most planners would be excessive I guess (they always predict a decline in needs as things like houses are paid off, and of course you aren't saving for retirement anymore you are actually living it )  That assumes you start saving at 30 by my basic math which gives you a few years to pay off the student loans etc before starting. It also assumes you a) never increase you retirement investments beyond about 2500K a month despite you gradually due to inflation earning more over time and assumes you get nothing form the government which is a bit off. No spousal contribution there either which in many cases would occur. All of that would just increase your effective retirement savings.

 

And 30% is quite a high overhead for a group practise - although in some centres that probably is what is actually paid

[rmorelan]

Yah it's nonsense. You are doing something really wrong if you aren't clearing 100k even as a minted GP in a shared group practice. What a delusional article. All the numbers are freely available online. Again this is the assumption that it isn't significantly different than BC where my knowledge is more up to date.

 

Yeah some of the math is just freely lying around - even if you just do the basic math from billings - if all you ever did was family doctor visits and did 5 an hour at the current rates, worked 7 hours of productive billing time a day for 5 days a week, and took 4 weeks vacation (just throwing some assumptions here around - 7 hours of billing because there has to be non productive money wise parts of the day and assuming a overall 9-10 hour day....) you basic billings are about 250K in Ontario.  That can be adjusted of course all over the place but just to start the math off I began there. Assuming a 30% overhead that gives you 175K. All this ignores all other billings, working evenings every so often etc, etc but you have to start somewhere.

[ploughboy]

The most important line in the entire article is the tag at the end:  Dr. Douglas Mark is the Interim President of DoctorsOntario.

 

To get a quick sense of where this group stands on a number of issues, read the article "Medicare's Joan of Arc" on their website: http://www.doctorsontario.ca/?p=251

[makingfetchhappen]

Sorry, if you are worried that you will only make $140K "before taxes" and without a pension, much like the rest of society, you are extremely naiive or extremely greedy.

Edit: I don't intend to be mean. Hopefully you are just young and you do not understand that you would be well ahead of the game in the scenario you describe.

[JohnGrisham]

Sorry, if you are worried that you will only make $140K "before taxes" and without a pension, much like the rest of society, you are extremely naiive or extremely greedy.

 

Edit: I don't intend to be mean. Hopefully you are just young and you do not understand that you would be well ahead of the game in the scenario you describe.

In Canada, to get into the top 10% of income earners, you need to make about 80K/yr.

 

The top 1%, to just barely make it into that bracket its 191k/yr.

 

This is also just 1 person, if you choose to be married and your spouse works also, well that is even more.

 

Yes, you can make the choice of taking money off the top, but that is a privilege you have of being a high earner. Do you think the average Canadian making 40k is doing the same? 

 

As for this

 

"My goal is not to come off as money hungry; however I am planning on pursuing medical school without financial support and I want reassurance that I will not be struggling to be making principal payments upon finishing school/residency.'

You won't be struggling at all, as long as you don't suddenly go buy a sports car or waste money.

 

:

[echos456]

I am not ignorant, I realize that 140K pre-tax is a substantial and I am more than aware of how income breakdown works in Canada, in regards to what income is required to be considered wealthy and upper middle class. Everyone has different financial situations and some people have the responsibility of helping out their parents. I am in the position to potentially enter a career, where I can earn high 5 figures, possibly low 6 figures, without pursuing medical school and incurring on loans and I can help out my parents at an earlier stage. I am interested in medicine and that it is a very stable career and I thoroughly enjoyed the time I had shadowing a family physician. FYI I was just talking to a friend who just finished up at a Canadian medical school and is doing residency currently and they stated 200K is considered high for family physicians and 300K is the max. That's pre-tax and I'm not sure if that's before overhead.     

[echos456]

Rmorlean, in respect to the 70-80K figure that was just an estimate from my end if you worked for a company that had pension matching like Accenture, what a salary from their end including pension would equate to 140k. I familiar with marginal tax rates and how they work and everything I've stated is pre-tax. My area of weakness is pensions and I've had a few doctors tell me that they would prefer to have a pension plan that is similar to that offered by a company because lets face it not everyone is adept at investing. I've actually hear that the biggest losers in the stock market are generally, dentists and doctors and this was from the mouth of a doctor, so once again not sure of it's validity.  

 

I could be interpreting/converting wrong what a salary in a company that offers pension matching is equivalent to if you were just given the lump sump of cash instead. Let's take a company like Accenture for instance, after a year of working they provide Dollar-for-dollar matching up to 6% after about 1 year of employment. I also have heard management consultants can clear over a 150k over there.  

[ralk]

I am not ignorant, I realize that 140K pre-tax is a substantial and I am more than aware of how income breakdown works in Canada, in regards to what income is required to be considered wealthy and upper middle class. Everyone has different financial situations and some people have the responsibility of helping out their parents. I am in the position to potentially enter a career, where I can earn high 5 figures, possibly low 6 figures, without pursuing medical school and incurring on loans and I can help out my parents at an earlier stage. I am interested in medicine and that it is a very stable career and I thoroughly enjoyed the time I had shadowing a family physician. FYI I was just talking to a friend who just finished up at a Canadian medical school and is doing residency currently and they stated 200K is considered high for family physicians and 300K is the max. That's pre-tax and I'm not sure if that's before overhead.     

 

$200k isn't that high for family positions, at least outside of Quebec. Most full time family physicians will be above that level before overhead, and a good number would be close to or somewhat above that after overhead. $300k is definitely on the high side of what family physicians earn, but it's hardly an outlier either. I've met more than a few family physicians making over $500k, though they work in a practice setting/location that isn't sought out by most family physicians.

 

There is a high upfront cost, both in money and time, so it does take a long time for that investment to pay off relative to other potential careers. Over the long run, typical physician compensation outstrips what is typical for most other professions, but that happens more towards the end of the career. Basically, if you want to be well off in your 40's and 50's, being a physician is great. If you want to be well of in your 20's and 30's, pick something else.

 

Rmorlean, in respect to the 70-80K figure that was just an estimate from my end if you worked for a company that had pension matching like Accenture, what a salary from their end including pension would equate to 140k. I familiar with marginal tax rates and how they work and everything I've stated is pre-tax. My area of weakness is pensions and I've had a few doctors tell me that they would prefer to have a pension plan that is similar to that offered by a company because lets face it not everyone is adept at investing. I've actually hear that the biggest losers in the stock market are generally, dentists and doctors and this was from the mouth of a doctor, so once again not sure of it's validity.  

 

I could be interpreting/converting wrong what a salary in a company that offers pension matching is equivalent to if you were just given the lump sump of cash instead. Let's take a company like Accenture for instance, after a year of working they provide Dollar-for-dollar matching up to 6% after about 1 year of employment. I also have heard management consultants can clear over a 150k over there.  

 

A $70k pension contribution on a $70k salary? I want to know who negotiated that deal, because that's insane.

 

Ok, benefits definitely do close the gap between a traditionally salaried professional and physicians. Someone making $80k might have an effective compensation of approaching $140k once you consider all benefits include pension, medical/dental coverage, etc. But that figure won't approach what most physicians make from their raw salary (possible exception: psychiatrists, and that's starting to change). An $150k salary + benefits is a different story, obviously. However, in most fields, it takes time to get to that position, and not everyone makes it there (some by choice, some not by choice). In most professions, it takes time to build to a higher salary. Physicians, on the other hand, can earn almost as much 2 years into practice as they can 20 years into practice.

 

As for whether physicians make poor investment decisions and would rather have a traditional pension, on the whole I don't doubt that. I've seen too many instances of physicians makes downright stupid financial decisions to argue against that. However, just because the average physician has trouble managing their money doesn't mean you would be as well. Plenty of physicians invest wisely and retire with a healthy bank account.

[makingfetchhappen]

I am not ignorant, I realize that 140K pre-tax is a substantial and I am more than aware of how income breakdown works in Canada, in regards to what income is required to be considered wealthy and upper middle class. Everyone has different financial situations and some people have the responsibility of helping out their parents. I am in the position to potentially enter a career, where I can earn high 5 figures, possibly low 6 figures, without pursuing medical school and incurring on loans and I can help out my parents at an earlier stage. I am interested in medicine and that it is a very stable career and I thoroughly enjoyed the time I had shadowing a family physician. FYI I was just talking to a friend who just finished up at a Canadian medical school and is doing residency currently and they stated 200K is considered high for family physicians and 300K is the max. That's pre-tax and I'm not sure if that's before overhead.     

Ugh, foot in my mouth. I sincerely apologize, it didn't even occur to me that you might need to take care of your parents. So it's settled that I am the one who is ignorant .

 

So yes with loans and everything it's a good question, but at $140K I think that you could still service medical school debt, help out your parents and live very comfortably. Without having parents to support, it's enough money to never have to worry about money and to buy lots of fancy toys and vacations, hence my initial knee jerk reaction. I was thinking "what do you want? an island."

 

You're right, everyone needs money and everyone has a different situation. I honestly worried that I would be getting myself into too much trouble debt-wise by pursuing this path at the start. After researching I realized that you can pay down any loans a lot quicker than I would have realized.

 

If you Google "Pathway Evaluation Program and the Canadian Medical Residency Guide" you will get numbers from the CMA.

 

 

[jt23]

10charrrrrrrrr

[ralk]

Thanks for the responses everyone, Ralk can you elaborate on some stupid financial decisions you've seen physicians make? 

 

Oh, the more serious ones have mostly been hearsay - physicians gambling their money away, physicians not saving anything for retirement, making idiotic investments in questionable businesses. Obviously I've heard of physicians losing a good sum of money in a divorce. More commonly it's the simple stuff - physicians buying ridiculously expensive things they don't with money they don't have, like super-expensive cars, lavish vacations, or oversized houses. Point is that doctors make quite a bit of money, but they still need to show some restraint and some basic financial acumen, same as anyone.

[Let'sGo1990]

I don't think the teacher/fam doc comparison is that farfetched.

 

Teachers, for the majority of their careers, will be earning >76 000. After taxes, that is 59k. They get awesome benefits, work 40 hours a week, a pension that pays out at 64% of their 5 best years' average salary (so at least 37 760 assuming they for whatever reason never climb the pay scale over 76 000), 2 months of summer vacation + the holidays/March break off, and get to cash out on unused sick days up to a max. of half a years pay by the end of their careers. And their pension/retirement is also indexed, meaning it'll be adjusted for inflation.

 

Your average family doc bills ~250 000. After overhead, that's 175 000. After taxes, that's ~114 000. If you want to save as much as a teacher for retirement, your left with 72960 (and this isn't indexed). There are no benefits, you work 52ish hours a week on average, receive no pension, get no time off unless you do so at your own expense, don't get paid sick days, and are typically boast 150 000 in debt after residency. And there's also the time commitment/opportunity cost involved with going into medicine.  

 

Not a perfect comparison, and I tried to keep it simple, but account for benefits, pension, hours worked, opportunity cost, etc. and a family doc isn't much further ahead than a teacher. I also understand you can incorporate, so things aren't as bleak as my numbers would have you believe, but I just wanted to give you guys an idea of how the comparison isn't so ridiculous.

[makingfetchhappen]

I don't think the teacher/fam doc comparison is that farfetched.

 

Teachers, for the majority of their careers, will be earning >76 000. After taxes, that is 59k. They get awesome benefits, work 40 hours a week, a pension that pays out at 64% of their 5 best years' average salary (so at least 37 760 assuming they for whatever reason never climb the pay scale over 76 000), 2 months of summer vacation + the holidays/March break off, and get to cash out on unused sick days up to a max. of half a years pay by the end of their careers. And their pension/retirement is also indexed, meaning it'll be adjusted for inflation.

 

Your average family doc bills ~250 000. After overhead, that's 175 000. After taxes, that's ~114 000. If you want to save as much as a teacher for retirement, your left with 72960 (and this isn't indexed). There are no benefits, you work 52ish hours a week on average, receive no pension, get no time off unless you do so at your own expense, don't get paid sick days, and are typically boast 150 000 in debt after residency. And there's also the time commitment/opportunity cost involved with going into medicine.  

 

Not a perfect comparison, and I tried to keep it simple, but account for benefits, pension, hours worked, opportunity cost, etc. and a family doc isn't much further ahead than a teacher. I also understand you can incorporate, so things aren't as bleak as my numbers would have you believe, but I just wanted to give you guys an idea of how the comparison isn't so ridiculous.

An employee who makes $76,000 a year takes home less than $4K a month after deductions. In your scenario, the doctor gets $9,500 a month, that's more than double at the end of the day.

 

Living on $4K a month is a radically different lifestyle than living on $10K a month.

 

 

[aaronjw]

Factor in benefits, vacation time, paid sick days, and an indexable pension and we're talking real dollars above and beyond take-home pay that Dr's do have to pay out of pocket for.

 

 

[Let'sGo1990]

An employee who makes $76,000 a year takes home less than $4K a month after deductions. In your scenario, the doctor gets $9,500 a month, that's more than double at the end of the day.

 

Living on $4K a month is a radically different lifestyle than living on $10K a month.

 

 

It's closer to 5k a month after deductions. The 4.5k difference is chipped away at quite significantly by saving for retirement, paying for your own benefits, and taking time off. And then you factor in the 150 000 debt and opportunity cost. That was the purpose of me listing all of those things off. 

 

You're not living on 10k a month. 

[makingfetchhappen]

You are comparing $76,000 employee before deductions (tax, CPP, EI) to $175,000 independent contractor before deductions (tax). You would seriously rather take $100K less to be an employee? Even with a pension it would not make sense.

Benefits do not cost that much, you can buy your own supplementary health plan. Vacation pay and sick pay doesn't really factor in, we are saying how much it is at the end of the year total when we are talking yearly and no one assumed the doctor is working 365 days a year. Opportunity cost is 2 years usually, teachers need an undergrad too and teacher's college is 2 years in Ontario.

Also, don't nurses make more than teachers? If the comparison is true, why not lobby to have the same scheme as nurses if all of that adds up? Also, doctors and nurses work side by side, do they feel like the pay difference is negligible?