The Investment Scientist

Posts Tagged ‘doctors

ImageI visited Dr. Chu who is a family doctor with a solo practice. He told me EHR is killing him.

He is in his 60s, very comfortable with pen and paper, but now Medicare requires him to record all patients’ records electronically, or he will have to pay a stiff penalty.

So now, in addition to seeing patients for eight hours, he has to spend three hours inputting health records.

I sat down with him and we toyed around with a few potential solutions.

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images-11A physician client of mine called me the other day and asked my advice as to whether she should evict the tenant currently residing in her condo. This is advice I hate to give. Let me explain.

The tenant is a single mom with two young children, whose estranged husband just stopped paying child support because he is officially unemployed, but the tenant believes he is getting paid under the table.

My heart goes out to this tenant, I would never want her and her children to become homeless. But my head tells me that if my client lets her stay for free, she would most likely wind up staying for free forever and my client’s rental property would become a toxic asset.

So what should I advise my client?

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Medicine is a profession fraught with legal risk. According to an AMA survey for the period 2007-2008, for every 100 doctors, there were 95 lawsuits.

The survey also reveals that physicians 55 years and older are eight times more likely to get sued than physicians 40 years and younger.

Not that they make eight times more medical errors, just that they are richer lawsuit bait.

That reminds me of a joke. Why won’t a shark attack a lawyer? Professional courtesy.

Back to the topic at hand, many physicians in solo or small practice simply use a SEP IRA as their retirement plan. It is very simple to set up, and the contribution limit is a generous 25% of earned income or an annual limit of $49,000. What is there not to like about it?

Click to get my white paper Wealth Management Guide for Physicians.

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Financial Salesman

In an online forum, a doctor’s wife shared with me her story that should serve as a cautionary tale for all doctors.

Her husband had a solo medical practice. They had a “financial advisor” who advised them to put their saving into a $5mm cash value life insurance policy. They believed the product not only provided protection in the event of the doctor’s death but also was a great savings vehicle.

Last July, her husband was struck by an uninsured drunk driver. He suffered brain damage. Though he recovered from the coma, he was unable to practice medicine any more.

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Doctor's Tax Saving

Doctor's Tax Saving

[Adapted from my post for Physicians Practice] Generally speaking, physicians make good money while in practice. Many of them are in the top tax brackets. Upon retirement, however, their earned income often drops to zero. If they can defer some of their compensation to the future, they can effectively move money from the top tax brackets to lower tax brackets.

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[Adapted from my post on Physicians Practice]

“Laws are like sausages …” Otto Von Bismarck, First Chancellor of Germany

Physician Wealth

Doctor and Monday

The last Congress, the one that received a “Shellacking” in November election, was actually very good at making “sausages.” As the result, there are many tax law changes that have come into effect. I asked the tax specialist in my wealth management network to give me a list of tax law changes in 2010. As I went through the list, I identify these seven that are relevant to physicians and their practices.

Don’t take this as legal or tax advice; don’t even take this as complete information. To avoid putting you to sleep before you get to item 7, I simplify much legal minutia. Consult your own tax and legal experts before using any of these:

  1. If you have a practice of less than 25 employees, you maybe qualified for health insurance credit.  Read the rest of this entry »

Author

Michael Zhuang is principal of MZ Capital, a fee-only independent advisory firm based in Washington, DC.

Twitter: @mzhuang

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