How to Make Seven Figures in Medicine – Podcast #174 | White Coat Investor

Intro:
This is the White Coat Investor podcast where we help those who wear the white coat get a fair shake on Wall Street. We’ve been helping doctors and other high-income professionals stop doing dumb things with their money since 2011. Here’s your host, Dr. Jim Dahle.
Dr. Jim Dahle:

Welcome to White Coat Investor podcast number 174 – Making seven figures in medicine. 2020 is coming quickly to a close. Thank goodness because we could all use a silver lining. Now, this is the time to start thinking about whether your current tax plan is truly tax efficient and keeping more of your hard-earned money in your pocket.
Dr. Jim Dahle:
At Cerebral Tax Advisors they focus on all year proactive tax planning. And as a spouse of physician, their founder, Alexis Gallati has over 18 years of experience using court tested IRS approved tax strategies to lower your effective tax rate and increase your wealth.
Dr. Jim Dahle:
She began Cerebral to help docs have a clear path to success through tax efficiency while eliminating surprises. Her services are flat rate, and she will show you your return on investment before you invest in cerebral services. With 2020 coming to a close, now is the time to see if you’re missing vital strategies in your tax plan.
Dr. Jim Dahle:
If you’d like to find out more or schedule a free consultation, visit their website at www.cerebraltaxadvisors.com or check out Alexis’s new book, “Advanced Tax Planning for Medical Professionals” available on Amazon. I’m actually planning to review that book on the blog in a few months here. So, watch for that.
Dr. Jim Dahle:
We’re recording this on the 18th of August, expected to run on the 3rd of September. I think I’m going to be having a lot of fun on the 3rd of September. So, I hope you enjoy this if you listen to the day it comes out. I am likely often at Lake Powell wake surfing or something. So, I’m looking forward to that as our next trip coming up.
Dr. Jim Dahle:
All right. Our quote of the day today is Charlie Ellis again, who says “Investing is not entertainment. It’s a responsibility. And investing is not supposed to be fun or interesting”. Nothing like taking the fun out of a podcast. I’ll tell you that right up front.
Dr. Jim Dahle:
By the way, thanks for what you do. I know a lot of you are on your way into work, on your way home from work, working out, trying to relax, hopefully on a day off, maybe getting a break from medicine. That’s not an easy job, and it’s not always a job where you hear very many “thank you’s”. So, thanks for what you do.
Dr. Jim Dahle:
If you were in need of a financial advisor, don’t feel guilty about it. I would estimate that about 80% of docs want or need a financial advisor. And for that reason, I’ve been connecting doctors with the good guys in the industry for nine years now.
Dr. Jim Dahle:
You can find our recommended financial adviser list at whitecoatinvestor.com under the recommended tab. There’s a whole list of people all over the country that charged in all the different ways that you could want to be charged. They’re all fee only advisors. Some are hourly rate. Some charge an annual fee. Some charge an asset under management fee.
Dr. Jim Dahle:
Whatever’s right for your situation and for the services you need pick a good advisor there, that’s not going to rip you off and is going to give you good advice at a great price. But if you need that resource, it’s there for you. These are people that we’ve vetted. And when I say we I’m talking, not just myself and our staff, but the readers and the listeners over the years who have used these advisors.
Dr. Jim Dahle:
We can also use your help with the podcast. We have a podcast survey going right now. It’s whitecoatinvestor.com/podcastsurvey. And we encourage each of you to fill that out and tell us what you like and don’t like about the podcast, help us make it better for you. I appreciate you doing that.
Dr. Jim Dahle:
We’ve got a special guest we’re going to be bringing on here for this episode, which I think you’ll find interesting because we’re going to talking about not just having a seven-figure income, but making seven figures in medicine, which in some ways is harder than doing it outside of medicine. And so, we’ll be talking about that. And let’s get our guest on the line.
Dr. Jim Dahle:
All right, our guest today is Tom. He is a urologist. You may have met him before in a virtual sense. He has published some guest posts on the Physician on FIRE blog, where he was described as a seven-figure urologist. Which is a perfect title considering the subject we’re going to talk about today, which is how to make seven figures in medicine, which is a surprisingly uncommon thing that happens.
Dr. Jim Dahle:
But before we get into that, let’s talk a little bit about your upbringing and how it shaped your views on money. So, thank you, Tom, for coming on the podcast. And let’s hear a little bit about your upbringing.
Tom:
Thanks again for having me. So, upbringing. I’m from the Midwest. I grew up in Northwest Ohio. I had a little bit of a nontraditional upbringing. Mom didn’t work, dad worked on the railroad, so nobody in medicine. Meager salaries and both my parents passed away when I was young. So, dad, when I was at the age of 11 and my mom when I was 14.
Dr. Jim Dahle:
I’m sorry to hear that.
Tom:
Yeah. We all got to come from somewhere. So, at that point in time, I was left with about an $8,000 inheritance and actually, very fortunately I was left with being intelligent. So, I went to a private high school in my town and was able to do that mostly on scholarships. And then it was a Jesuit school, which is a fantastic education. Especially they were very, very good to me during that time when I really needed some guidance. They helped me along and pushed me into a college curriculum and I did well in school too.
Tom:
So, I ended up leaving Northwest Ohio and I went to Vanderbilt for undergrad, majored in neuroscience there. And then I left and I didn’t apply to medical school right away. I had worked a little bit in between. I lived in Columbus, Ohio for a little while, and then, eventually went to medical school in Toledo and chose urology. I get the question all the time, “Why urology?” It’s kind of an interesting field, but I really think that it’s a great profession, I think we do a great job with folks. We have a lot of great practitioners in our field. It’s a little bit about my past.
Tom:
As far as how that shaped my views on money, there was never a whole lot of money around. I never felt poor though, anytime growing up. So, when my dad passed away, I knew my mom, she actually didn’t work. She couldn’t work. And so, I was very concerned at the age of 11 about how are we going to eat and pay our mortgage and do things like that.
Tom:
So, I think that at that point in time, I probably thought a little bit more about finance than a lot of 11- and 12-year old’s. And so, when she did pass away and I actually got a little bit of inheritance, I started investing that money right away. That was early 90s. So, there was kind of a mutual fund boom in the early mid-90s. And so, when I invested that money, it actually was doing 30%, 35% just in, I believe I used the American funds. Like just the robust, basic, mutual funds.
Tom:
But I think from there just having that small amount of money turn into a larger amount of money for me, which now isn’t a large amount of money, but it really sparked my interest in finance. And it made me probably a little bit more fiscal oriented than a lot of doctors.
Tom:
And I actually entered medicine under the idea that I was going to have a small business. I had thought that it was a business, everybody was in private practice and that’s how everything worked. And lo and behold, that’s not how everything works nowhere near at this point in time. So, I guess I was a little bit wrong in choosing that. I love medicine, but that’s really not a big part of a medical practice anymore as the business of it. There are huge businesses with it, but I feel a solo practitioner has gone away.

Dr. Jim Dahle:
Well, we’ll certainly get in more into that during this podcast, since it’s a subject of the podcast. But it sounds like as far as your upbringing, you didn’t come from nothing, but you could see it from there. No one’s going to describe your upbringing as privilege. Do you think that gave you a lot of motivation later in life to be financially successful?
Tom:
Well, I think that early on in life, I realized that I had to be responsible for my success. Like, I was the only one that was going to do well. I think that growing up and where I was and where I lived, not many people did well. I believe that my dad made about $14 an hour when he passed away. My mom didn’t work and I was the fifth child. I was very much a baby. There’s a lot of years between me and my next sibling, but they raised five children on that.
Tom:
And so, moving into something like the private high school that I did, I got introduced to kind of different ways of life and then living there and then moving on to like Vanderbilt, which it’s a very much a wealthy place. I think I just saw other things out there, but I always knew that nothing was given, I’m going to have to do it. And so, I knew I had to do it myself. So, I think that that kind of shaped a little bit of where I came from.
Tom:
As far as being privileged, No, I mean, like I said, $8,000 inheritance, here you go.
Dr. Jim Dahle:
I think most people would rather have their parents than $8,000.

Tom:
Yeah, I agree. I would have too. But no choice in the matter. So, I think that’s a little bit of what shaped, I think just the responsibility for who I’m going to be and where I’m going to be, I think was with me maybe a lot earlier than folks.

Dr. Jim Dahle:
Now tell us about your first contacts with the physician financial blogosphere and how they may have shaped your views on money or were your views already shaped before you ever met any of these folks?

Tom:
I feel like my views on money and finance change all the time. And just like being a doctor, you’re a doctor too, you’re inundated with knowledge all the time. So, I was always just looking for different ways and how do people invest and what do people do and what are alternative investments, different tax strategies and things like that.
Tom:
Because I always use the motto of, “It’s not how much you make, it how much you keep”. And so, I was kind of looking for more tax advantage stuff that really got me into the blogging. And so, I started not the blogging, but just reading about. So, I’ve been on your page, I’ve been through the Physician on FIRE page. I really liked his page. And I started looking around, there’s a ton more that you can look at on there and it’s almost, there’s too much to take it all in. And so, you got to pick a couple of guys you like, and kind of move forward.

Dr. Jim Dahle:
That’s a wonderful problem that people didn’t have a few years ago.

Tom:
Yeah. The FIRE movement in itself, it’s kind of funny, because you mentioned the FIRE movement to folks and people are usually on it. They know it, or they have no idea what you’re talking about. That’s the people that I think focus on their personal finance and building wealth and things like that. So, that was really my first, it was probably about maybe just about three years ago that I got into that.

Dr. Jim Dahle:
All right, let’s quit beating around the bush now and get onto the subject of this show. We brought you on the show because you’re relatively rare among physicians. You make seven figures a year, practicing medicine.
Dr. Jim Dahle:
Now urologists are far from the lowest paid doctors in medicine. In this year’s Medscape Compensation survey, they come in at seventh among the medical specialties beyond ortho plastics, ENT, cardiology, radiology and GI.
Dr. Jim Dahle:
According to that same survey urologist make $417,000 on average. What did you do differently in order to make seven figures instead of $417,000 a year?

Tom:
So, I saw that question and I’ve been thinking about it and I’m like, one of the things that I’ve done. So, let me give you a little bit of background about how I got into my position. So, during my third year of medical school, I did an outside rotation in a rural health, about an hour from where my medical school was, which is actually about 15 miles from where my wife grew up. I was doing an OB rotation, but I told them, I was already urology. I mean, that’s what I’m doing. That’s where I’m going. It’s what I’m going to do.
Tom:
And, they knew that their urologist was aging and I knew my wife was from the area. So, in my third year of medical school, they threw out, cast it out the hooks into me. And I’m like, “Well, no way, I don’t want to live in this little town and do this”. And so, I went through, finished up my third and fourth here and, our match, we have a nontraditional match, outside the general match.
Tom:
And so, after I matched about 12 days later, I had my first child, who’s now 13. And I think that my wife and I kind of looked at each other and a lot of things change after you have a baby. We had already matched. I matched at my med school. So, I wasn’t going anywhere. My wife is a dentist and she was already in practice there. And we have family there to help us with our children.

Tom:
So, at that point in time, I called the small place back up and I said, “What can we do?” And the comment back to me was, “Hey, we have a lot of time before you’re going to start. We can do a lot for you actually, because we have that amount of time”. Because a contract term is longer, they can do more for you at that point in time. And that was what I understood at least.
Tom:
So, I started researching how to do this and I wanted to go into private practice as I already mentioned. So, I had them do a contract where they were going to support me when I was done in private practice for at least two years. Well, one year, and then I could decide if I wanted a second year. And I had to give them either three or four years of service afterwards. And I signed that contract in my second year of residency and they actually paid me a stipend during residency, paid me a signing bonus and took care of about half of my student debt too.
Tom:
And so, when I started, I was getting a median salary of a urologist in the Midwest, which is actually a touch more than the number you quoted. I think it was around $450,000 a year because they vary out through, when you look at like MGMA and those blended rates. And I think Midwest does pretty well.
Tom:
And so, I started from there and then I kind moved on and they needed me to go to another hospital. During my first year of practice, I said, I’ll go to this other hospital that it was 25 miles further down the road. And I said, I’m not going to go for free. They’re like, “Well, we’re paying you for full time”. And I’m like, “Yeah, well, full time is 40 hours. I’m getting 40 hours by Thursday at noon”. And I didn’t do a lot of nights, but I mean, my work started around seven and I finished it around six. And then my nights and weekends are usually pretty free.
Tom:
So, I got them to pay me extra to go to that other one. So then instead of making $450,000 a year, I bumped up to about $550,000 a year, just doing that extra one day a week in the outside hospital while I was building a practice.

Dr. Jim Dahle:
Seems fair. 20% more work, 20% more pay.

Tom:
Well, that’s what I thought. I was like, “I’m not going to go out there for free and you guys want me”. By the end of my first year of practice, I was doing $550,000 a year.

Dr. Jim Dahle:
And this is after having them pay you a stipend during residency and paying off your student loans or at least a big chunk of?

Tom:
Yeah. They pay me about… I think they pay me $25,000 a year during residency. We had a signing bonus. I think that was $50,000. I think it was pretty significant.

Dr. Jim Dahle:
It seems like a lot better deal than I got from the military for some reason.

Tom:
Actually, I saw that you did in the military and I actually crunched the numbers on the Navy. I don’t know which branch you did, but it was a seven-figure decision.

Dr. Jim Dahle:
Yeah. I ran the numbers once. That was a mistake. I shouldn’t have done that.

Tom:
Yeah. I love the military, guys in the military. I think it’s great. But you have to do it because you want the military. It’s not a good financial decision.

Dr. Jim Dahle:
Particularly in the higher paying specialties and the cheaper med schools, like I went to.

Tom:
Yeah. So anyhow, that was it. And I moved forward. I actually stayed in private practice for two years. And from there I had to decide whether or not I was going to stay in private practice or I was going to move into an employed position.
Tom:
And honestly, before that three months before that was up, I never knew what an RVU was. I thought to myself beforehand, I’m like, you can’t spend an RVU. So, I didn’t really want to know what they were or anything like that. It just seemed like it was more worthwhile of what you were getting paid.
Tom:
And so, then I started to examine the different contracts out there. My practice was on a system called Epic, which I’m sure a lot of people use. And in private practice, it’s very hard to do your revenue cycles in I thought very hard to get billing to a consistent level.

Tom:
And then as deductibles go up, I feel that it’s very hard, you used to chase 20 insurance carriers for your money, but now you’re chasing those carriers and 2000 people because they’re $5,000, $6,000, $10,000 deductible. So, individual folks owe you a lot more money than they used to. So that was part of my decision.
Tom:
And then I started to play the RVU game. And actually, my income went way up when I started to play the RVU game and I had another hospital contact me. This one was about 25 minutes South. And they said, “Our guys are retiring, would you be interested in staffing this?” And I thought, “Well, okay”, because by then I was in almost my third year of practice, second and third year.
Tom:
I think that that’s the point when you really become efficient, two to three years in. And so, my productivity was fantastic where I was. Even with that other hospital that I started out with. And so, I added a third. And this one was great because I maintain a private practice with that one. So, I’m employed when I work at the other two hospitals. And then I maintain a private practice when I work at the third hospital.
Tom:
And then where I live, I practice about 25 minutes from where I live. And so, where I live is a fourth hospital and they actually needed weekend coverage. So, I negotiated a one weekend a month, basically a locum’s contract for that. So, it doesn’t add much, but it’s about $50,000 or $60,000 a year for one weekend a month.
Tom:
So, that’s really how I did it. I think that now it just is evolving and I just keep kind of honing everything and everywhere we are. It’s a kind of a hybrid between being employed at two different places. And then being on my own.
Tom:
Even though I don’t do my own billing for that, I actually just charge them hourly rates. I have one other physician who works with me, for me, however you want to put it. And we have that practice and it keeps growing and we’re moving into a new office there. And now I have two advanced practice folks and another physician.
Tom:
So that’s kind of how it evolved into making over seven figures. I do make some money from a surgery center. I own my own building and the hospital rents it for me, for me to practice in, which makes me a bit of money every year. We also, as a urology group, we own a lithotripsy which actually pays pretty well.
Tom:
So those are really my main sources of income that get me over the seven figures. I think from the practice of urology, I’m right at about a million a year.

Dr. Jim Dahle:
I mean, you’re talking about four jobs that you have here. How many hours a week are you working?

Tom:
Yeah. So, in a given week I work, like I said, I go in about 07:00 and I work till like 05:30 or 06:00, Monday through Thursday. I usually try to add about 04:00, 04:30 on Friday. And then I work one weekend a month where I cover the call.

Dr. Jim Dahle:
So, 55 hours in a week that you’re not taking call on the weekends. And more of that week. So, you’re working hard. You’re working at least a job and a half anyway.

Tom:
Yeah. I think you can be the most masterful contractor in the world and go out and negotiate all your rates with everybody. But I still don’t think that unless you’re able to maximize your time at each place, I don’t know how you would be able to really get seven figures in just one practice.

Dr. Jim Dahle:
So, what support do you have in your life that allows you to work that many hours?

Tom:
Well, my wife only works three days a week and her parents are close. But I think that we do a lot of juggling. I mean, it’s just busy. My busy is I put my busy against anybody’s busy. I mean, we have four children ages, 6 to 13 and they’re in sports and they’re running around and I do employ childcare. I actually employ childcare to drive kids to sports practice back when we used to have sports prior to this pandemic. So, I use that.
Tom:
I think that, like I said, my wife is only working three days a week. She’s a dentist and owns her own place. So that helps. So, if there’s anybody who needs to stay home, she usually stays home. I just can’t. It’s hard for me to get back from taking a day off.

Dr. Jim Dahle:
How many weeks of vacation do you take a year?
Tom:
I take two full weeks and then I take usually some intermittent or long weekends. So, I would imagine I’m somewhere as far as business days off, I’m probably somewhere in the 15 to 20 business days off per year, not including holidays. So, it’s not a lot, but it’s not a little either.

Dr. Jim Dahle:
Most of the time when I meet doctors who are making a lot of money, it usually involves owning their practice. And you own a practice, but it sounds like it’s a relatively small percentage of your work that you’re actually the owner. What role do you think ownership plays in having a high physician income?

Tom:
Well, it depends. Business in general is pushing people to make money for you. When you’re making more money than you’re paying them, right? I do make money while I employ my APPs. I don’t make much money off the other physician. I just don’t feel right doing that. So, I think that it’s just, I love that piece of my practices. I like the income, but it just saves me a ton of taxes because it’s where I write off my phone, it’s where I write off my cars. It’s where I write off any that isn’t covered or any kind of a business expense that we incur. So, it really helps out on that end of things.
Tom:
I would say I have some components of ownership though. Like I own my own building and the hospital rent it from me. So, I make about $50,000 a year on that. And that’s not a lot of money, but again, it’s the same as taking that weekend to call. $50,000 a year, $50,000 here, $100,000 here, $75,000 here. So I always think that when I go back to personal finance, I think that multiple streams of income are important.

Dr. Jim Dahle:
Especially when they’re as good as your streams are.

Tom:
Yeah, yeah. I just think that that’s really important if you’re going to build wealth and make a high income. But I don’t feel that I’m… It sounds like I work like a dog and I don’t feel like that at all.

Dr. Jim Dahle:
You’re not feeling burnout creeping in. Huh?

Tom:
No. I mean, I love it. Like right now I’m at my Lake house. When I get done with this, I’ve got a boat. We’re going to head out for a sunset cruise on the boat and I’ll get up tomorrow morning and start at 07:00. It takes me about an hour and 20 minutes. I’ll get there and I’ll do a full day.

Dr. Jim Dahle:
It’s interesting. I saw recently recent surveys have moved critical care medicine and emergency medicine off the top of the burnout list. And for some crazy reason, urologists have been put at the top in some of these surveys. Why do you think that is?

Tom:
Well, they limit our numbers pretty heavily. I think that when I finished my residency, I’ve been out seven years. Don’t quote me, but I think it was around 240 of us that graduated that year in the country. And so, I think that that’s why you’re seeing a large amount of advanced practice folks in urology.
Tom:
I don’t know, I think that burnout is more of a mindset. I’ve tried to read articles on burnout and I get burnt out on that because I feel like it’s this like abstract thing that nobody ever really… They don’t say like, “Well, you should only work eight and a half hours a day and you won’t be burnout”. What I do is I spend a lot of time training my advanced practice folks. And I think that that helps me a ton.

Tom:
I usually would train those folks for six months before I allow them to see their own patients. It cost money and time and effort and all that but I think that it is an upfront investment. I’ve seen other practices where they start in within two weeks and they’re seeing their own patients. I mean, my urology residency was six years.
Tom:
And then you have your primary care clientele sending you folks for specialty care. And they haven’t even been trained. Six months is not that much when it comes to that but it’s a lot more than a lot of people get. And I focus on their CE. We go to American Neurologic. We do things to try to further their education so they become more and more invested in the practice. And I think that that takes some of the heat off of me during the day.

Tom:
And then I built the practice to where I don’t have to do all my results and I don’t do my patient phone calls. I think that they stopped. I get the ones that need to answered by me but they’ve been filtered through a couple of people first.
Tom:
At least for me, I feel like I’ve set my practice up so that a lot of the enjoyable things I still get to do and a lot of the other things I’ve hired and trained folks to do. And so, I think that helps me with my burnout.
Tom:
But as far as urology being a burned-out field, let me take this back to because the other thing that I don’t do that other urologists do is I don’t do big cases anymore. I gave up robotics, so I am all bread and butter stonework, BPH work. And so, I do 15 to 20 cases a week that they’re all hour-long cases. So that frees up my nights and my weekends, because I’ve hardly had any inpatients ever.
Tom:
And so, if I was doing big cases and I was having to come in constantly in the middle of the night or just constant phone calls, I think that that kind of stuff, especially without a residency program to back me up to kind of buffer some of that stuff, that has definitely helped me without considering burnout.

Dr. Jim Dahle:
So, you’ve certainly made some changes in your procedure mix. Have you done anything unique in order to improve your payer mix?

Tom:
When I first started, I was more concerned about the payer mix. At this point in time, the way I am, it’s either hourly or per diem or per RVU. And so, I don’t get into the payer mix at all.
Dr. Jim Dahle:
You don’t care a bit?
Tom:
No, I don’t. I’m volume-based. I see people that we focus on customer service or internal referral pattern is really good. I think that as a doctor, if you don’t focus on that part of your business, that customer service aspect. So, I think sometimes doctors get a little bit arrogant and especially me, I’m an anomaly. I’m the only guy. If you don’t want to see me, you’ve got to drive 40 minutes at least to see somebody, but we don’t treat our folks like that and we don’t act like that.
Tom:
I think that that game focusing on payers is becoming less and less. I think that they’re all kind of coming back to Medicare rates. If you do get a premium it’s not what it used to be. Especially in our part of the country.

Dr. Jim Dahle:
Speaking of your part of the country, there’s a doc sitting here listening to this podcast, driving into work, a urologist in Manhattan or San Francisco or LA that’s making $300,000 a year. What do you say to that doc?

Tom:
Oh, geez. I feel bad for them. What I would say is that I make a lot of money, but I went where there was a great need. I see this happen. I saw it happening in residents who were above and below me, where they want to go to Salt Lake City because their mother-in-law lives there, which is all normal stuff.
Tom:
But they’re pushing their way into a market in Salt Lake City where there’s a lot of people that want to go. Same with like San Francisco and New York. I think the city of New York has more residency programs than any other state in urology. And so, if you go to those areas where there’s a high concentration of folks, then yeah, you’re going to have to kick and claw.

Tom:
I was doing an advisory board meeting on my way up to the Lake in the car. We were talking about referrals from the ER. And I have probably five hospitals where I’m it. When they get a referral from the ER, it’s to me and there’s to nobody else.
Tom:
So, if you are practicing in New York where somebody could be referred to 70 guys, it’s just a tougher game that I’m playing out here. And so, I play the game well and I’m playing an easier game than they are. But they live in San Francisco. You have great restaurants. You have a theater. You know what I mean? You have all of these things that my small towns don’t and so I have to travel to those.
Tom:
I do think about that because you look at the housing prices there. I have expensive houses, both of mine are, but they’re massive, they’re huge, they’re very nice. And they’re still not as expensive as a three-bedroom apartment would be in New York City.

Dr. Jim Dahle:
A half a million dollars even goes a long way in the Midwest.

Tom:
Oh yes. Very, very far. Yeah, very far.

Dr. Jim Dahle:
Do you think they realize how much income they’re giving up to not live in the Midwest?
Tom:
Well, first off, I don’t think it’s just the Midwest. I think the South is well compensated too. I think it is kind of more of if you’re in a non-lifestyle city. All the lifestyle cities I think are tough to get the compensation. I think that they have to know somewhat. I would feel like unless that was the only places they applied to.
Tom:
But also, I would tell you that, my email is I probably get 10-12 job offers a week by email that are very legitimate job offers. And so, you have to see it, right? I don’t know how they couldn’t see it, because I’m sure they’re getting all the same emails and postcards and I get phone calls, recruiters calling like all the time for locum’s work and real work. I think that we’re a star field and it kind of goes back to our burnout.

Tom:
So, they have to see it. And as far as it goes, I think that maybe they would move, but again, probably their wives probably love New York City or their husbands have a job here. And so, you get tied down to a place.
Tom:
And also, it’d be hard for me to move right now. I have four children who are completely ingrained in school and friends and sports. And I think it would be hard for me to pull them out just so I can make a little bit more money. But I guess $300,000 versus what I make is, is not a little bit more money. I mean, that’s a big, big job.

Dr. Jim Dahle:
Yeah. It is pretty life changing. Do you think you’re lucky? Are you particularly talented or is this something that most other urologists could do if they want it to?

Tom:
I think that the roadmap is there. I think that I’ve focused on this. I’ve always been fiscally oriented with how I practice with where I practice. And I think that I hate to say it. I know it’s very cliched, but we don’t get any kind of negotiation skills in what we do, in our training or anything like that. There’s so much to learn when you’re training, to do what we do, to have to learn all that stuff too.
Tom:
So, I think that when you get to the table and you start negotiating, I’ve coached a lot of doctors in different specialties. Like they were my friends in residency or friends of friends or people who have actually contacted me off of my Physician on FIRE blogs. And I walk them through some of their contracting stuff.
Tom:
Some of that stuff that I always felt I see as like basic to me is like kind of new to these guys as they’re thinking about contract. What did you ask for this? And then when you run out of this? Like an employed contract. They’ll give you three stats. They’ll give you median dollars for RVU, median salary. And then they’ll give you median RVU work. Well, they don’t all equate. It’s not like the guy who’s making median RVU and median dollars for RVU is making the median salary. It just doesn’t work out like that.
Tom:
So, you have to know what to go for. You have to know that in this scenario, not for profit hospitals, the game is you got to be below the 75th percentile of dollars per RVU. And then you’ve got to go, go, go. Try to get that, get that, get that. And then everything else doesn’t matter.
Tom:
And then when they stop there, then you got to move on to staff. You’ve got to make sure you have enough staff so that you can run your factory once you get your factory set up. So that’s where I think that I understand contracting well. That’s probably my best thing that has allowed me to do well.

Dr. Jim Dahle:
I’ve often said that intra specialty income differences are much larger than the inter specialty income differences that we see in these salary surveys. Do you agree with that? And if so, why do you think that is?

Tom:
I do. I do see it. We just talked about. You’re in emergency medicine, correct?
Dr. Jim Dahle:
That’s right.
Tom:
So, you guys work mainly by hour?

Dr. Jim Dahle:
It’s highly variable. I mean, sometimes people are paid an hourly rate. Sometimes they’re paid by the shifts. Sometimes they’re paid a salary. In private groups, we divide up the money that’s left after paying all our expenses at the end of the month, by how many shifts we work and that’s what we get paid in my group. So, it’s pretty variable.

Tom:
Yeah. So again, I think a lot of the things I already discussed are the main variables. I think that you have to go to a place where you are needed. I tell that to everybody when I’m going Just because a hospital is trying to hire you, it doesn’t mean it’s a good place to go. There might already be 12 guys in a private practice there. And the hospital is just butted heads with them for the last two years. And they are like, we’re going to just hire our own guy.
Tom:
Well, you’re going to go there. You’ll make your guaranteed salary for two years. And then after that, you’re going to be kicking and screaming to try to make the money. If you can go to a town and actually get the whole lay of the land, if you’re not the only guy, then I think you can understand better.

Tom:
I think it’s really about need as far as that goes. And then there’s some variability in the geography. But again, why does the San Francisco doctor urologists make half of what I make? Well, it’s because there’s 50 other guys that somebody can go to. And so, it does have to do with need.
Tom:
Is he really needed there? Can 49 guys handle what 50 guys could? Yeah, they could. So, they can all make a little bit more money. And I think that that was one of the things that urology has tried to do in general by keeping their numbers down, the same way that Durham does and ENT does, ophthalmology. They make it so that when you get done, there’s very good need for you out there.

Dr. Jim Dahle:
And the nice thing about going someplace where you’re needed is it allows you to do well while you’re doing good. I mean, without you, in that town, people are now driving 45 minutes to find a urologist who’s probably in a town that’s just as busy as yours. So, it’s good for the patients too.

Tom:
Yes, exactly. But I think it all hearkens back to need.

Dr. Jim Dahle:
All right, well, let’s talk about life as someone earning a million dollars a year. In most areas of the country, your financial life is very different. Making a million a year versus making a quarter million dollars a year.
Dr. Jim Dahle:
All of a sudden, you can pay off your debts and reach most of your financial goals in just a few years. And then you’re struggling with the issues facing the wealthy. How much you give, identifying additional spending that will actually make you happier, worrying about estate taxes and asset protection, and try not to ruin your kids.
Dr. Jim Dahle:
I wrote a blog post about what life is like with the seven-figure income two or three years ago, very personal blog post about what that’s like. I wonder what you feel like your life is like. You’re earning more than the vast majority of Americans in a relatively low cost of living area. What’s life like with that kind of an income?

Tom:
Wow. That’s a lot of questions. I’m busy, so it’s not like I’m taking very fancy vacations. This is going to sound kind of corny but one of my favorite things is that I don’t worry about what I spend ever. If I go out to eat, if I go anywhere and I get a chance to do something, I do it. I don’t ever worry about the cost. So that’s something that affords me to do.
Tom:
We don’t necessarily follow a budget. We have a lot of money left over all the time. I think that helps. I think the children thing, I struggle with that because obviously my children are in a situation that is a lot different than I was. I mean, my boys are trying to go to a store and buy stuff with their country club number. So, that’s a parent fail right there.
Tom:
I understand that they’re doing things and I look around sometimes and I worry about like their grasp of reality. So, I try to take them back to where I’m from, take them back to where my wife is from. She had a very meager upbringing too, and make sure that they get to spend some time there, spend time with our family who is not as affluent but good people. You know what I mean? So, they have to realize that money doesn’t equate to good people.
Tom:
And my children are kind of coming around to that. They’re not quite to the age where they really understand a lot of this. They are starting to ask about what things cost and this, that and the other thing. But they’re always in million-dollar houses and big boats and you know what I mean, big vacations. And most of the people we know are in that same scenario.
Tom:
And so, I think it is going to be a struggle. I think it’s going to be more of a struggle as they age. And I always look back to my childhood and think about when I was in a store and I would want something and I would ask my dad or whatever, and he would say, “Oh no, we can’t afford that. We don’t have money for that” or something like that. And I’m like, I get kind of upset I never have that excuse.
Dr. Jim Dahle:
And if you do it’s totally manufactured.
Tom:
Yeah. I tell them, I’m exercising my right to say no. So, I think those are challenges. And I think that what would be great for them and the goal for me with them is to raise them and give them, it’s your kids, right? You would give them everything you didn’t have as a kid and more and everything on top of everything, if you could.
Tom:
But I think that it’s important for us to make sure that they appreciate what we give them when we give them and not just take it for granted, not expect it and know that it isn’t that they have to fight in this world too, for what they get.
Tom:
So, I do struggle with that. I will admit. Definitely, I’ve tried to buy reading material on that and figure that one out too, but I don’t think that’s anything you can read about. I think you just got to keep working with them because I have four and they’re all different personalities and they all value different things and they’re all their own complex, unique individuals.
Tom:
But I will say this because we’re on personal finance that, life with money is better than life without money. No argument there. And we definitely get to do some great things and drive nice cars and have nice vacations and do things that weren’t available to me as I was younger.
Tom:
But I don’t think that we necessarily feel wealthy because we work. I have a lot of small business owner friends. I have a couple of guys who have sold out in their late 30s and they don’t work and they make a lot more money than I do. And that’s wealthy, I think. I think we’re just kind of glorified worker bees. Because if I didn’t go to work, no money would keep rolling in. Well, some of it would with my advanced practice folks, but nothing like it does when I’m there.
Dr. Jim Dahle:
So, what do you drive?
Tom:
I have a Lincoln Navigator.

Dr. Jim Dahle:
Navigator. The kids are in private school?

Tom:
They are in a private Catholic school.

Dr. Jim Dahle:
And what’s tied up out of the dock?

Tom:
Oh, are you a boat guy?
Dr. Jim Dahle:
Yeah, I’m a boat guy.
Tom:
Oh, okay. I got a 35-foot formula. Formulas are made in Indiana. So, there are a great boat, great Lake boat. This is like Erie. So, it’s not like an inland Lake, right?
Dr. Jim Dahle:
You get some waves out there.
Tom:
Yeah, we do. 6-8-foot waves and I could drive that boat to Florida if I wanted to out through the seaway. So, it’s great. We love it. We’re new to boating actually this year. We’ve had the Lake house for about five years. With the Covid and everything I thought we were going to do a lot of social distancing. So, I thought this was the year to take the plunge.

Dr. Jim Dahle:
Yeah. You can definitely socially distance out on the Lake.
Tom:
You can.
Dr. Jim Dahle:
Yeah. So how do you feel about your tax burden? Too much, too little? Have you gotten used to writing those big six-figure quarterly estimated tax payments yet?

Tom:
So, I find myself obsessing about taxes all the time. Early on in practice, I was just moving along and I didn’t do anything. Like we’ll try to buy vehicles. I have a great story about a dinosaur and taxes that I want to say. But anyhow early on, we’d buy vehicles. We’ve invested in some things, we’ve created some paper losses, we’ve done a few things here, buildings, whatnot.

Tom:
And about my second year of practice, just the year went by and I just didn’t focus on that. And then my accountant tells me, I was close to a $100,000. And I’m like, wow. To just stroke those big checks like that, just to the government where you feel like you get little value really kind of set me back and really made me think about it.

Tom:
So, I have a group of a couple of guys that I invest with and we own some restaurants and we’ve tried some other things just to kind of create, just for some tax havens. But I got to tell you this story. It’s great.
Tom:
So, my buddy calls me and says, “Hey, do you want to buy a dinosaur?” And I’m like, “Well, okay. Like a dinosaur, like a real dinosaur?” He goes, “Yeah”. He goes, “So, the play is that we actually sponsored a Dick from a college archeology program”. They went to South Dakota. They already knew there was a full, it was a triceratops, the full triceratops there. We paid about $50,000 between the three of us. And at the end we get the dinosaur. So, we got it. It was a mountain. We found about 70% of it actually, including the skull, which is pretty amazing.
Tom:
So, we actually donated it to a school over in Pennsylvania, but we had a write-off value, an appraised value of $635,000 for it. And so, we had to hold it for a year and then we were able to donate it. And so, then we had to write off. So, I don’t own it anymore. I’ve donated it.

Dr. Jim Dahle:
That might be the most unique investment I’ve ever heard of it.

Tom:
Yes. That’s awesome. I thought you’d appreciate that. I think I said that in the beginning, it’s not what you make, it’s what you keep. And as a big chunk of my money is on a W2, we try to do all the pretax investing we can, get everything that we can in there and out of their sites. But I don’t know. I could talk for another hour about how taxes are. I guess we all got to pay him.
Dr. Jim Dahle:
Beats going to jail anyway.

Tom:
He does. They’ll always find you. So, you might as well just pay them.

Dr. Jim Dahle:
What do you wish people knew about very high earners?

Tom:
This is going to sound bad, but I think that money doesn’t solve everything. My wife and I come home and we have the same struggles that everybody does. Cooking dinner, getting kids to practice, trying not to keel over before nine o’clock when we get our kids in bed. And then we wake up and we do it all again. It’s just at the end of the day, when we tally up what we made that day, it’s a lot more than other people.
Tom:
But I don’t think that it doesn’t provide a worry free, stress free life. I think that it just provides hopefully an earlier retirement and some legacy. And just so that maybe the kids can have a little leg up afterwards. And I think that’s what I would know.
Tom:
I mean, I do have friends who are from a long, long time ago and they don’t make a lot of money and they look at me and they think everything is just sunshine and rainbows and it’s not always. It’s good to make the money, but definitely life always has the same ups and downs and ins and outs as everybody else. I don’t know, do you feel that same way?

Dr. Jim Dahle:
Yeah. Same way for sure. It’s nice not to have the financial worries, but it doesn’t necessarily eliminate all the other worries.

Tom:
I do think that my wife and I have a fantastic relationship. And I think that a part of that is when you do read articles about marriage, it’s a ton of financial stress and we don’t have any financial stress. We don’t talk about money really, accept to kind of update and keep things, keep everybody abreast of what’s going on, but never, ever. So, I think I will say that that probably is just something that we don’t feud about at all.

Dr. Jim Dahle:
Well, we better wrap up here. We’re starting to push an hour, but you now have the ear of 30,000 to 40,000 doctors and other high-income earners. Is there anything we haven’t talked about today that you think they need to hear?

Tom:
No. I think that some of the things that I talked about today that I really wanted to get out to folks were, find an area where you need it, especially if you’re a specialist. Make sure that even if you are the only guy in town that you’re focused on customer service. I think that as a specialist and as a doctor, I think you can have great relationships with your advanced practice folks. Train them well, don’t expect them to know what you know. And just keep your eye on the ball.
Tom:
In medicine, I think that we’re going to see more evolution. There’s going to be more changes and I think that in order for you to be the highest earner that you can, you’re going to have to be pliable and you’re going to have to change.
Tom:
You might have to be private. You might have to be employed. You might have to be in a hybrid model. You might have to really focus on RVU. You might have to focus on hours. You know what I mean?
Tom:
I think that you really got to not be set in your ways, and you’ve got to keep your eye on the ball and focus on what’s around you. And I think that’s the key to really making the most money you can while you’re away from your family, which is the goal.

Dr. Jim Dahle:
Yeah. Well, Tom, thank you so much for coming on the White Coat Investor podcast. Congratulations on your success. And I hope you enjoy your Lake cruise this evening.

Tom:
Thank you. Take care.

Dr. Jim Dahle:
Bye-bye.
Dr. Jim Dahle:
I hope you enjoyed that interview. It’s fun sometimes to lift the cover and look at what’s going on in other people’s financial lives. You feel a little bit like a Gawker, but it is enlightening because you compare and you contrast to your own life and you think about the things that you can do better and think about the decisions that you might not have made, the tradeoffs you might not have made. And maybe that’s why you make less money than Tom does.
Dr. Jim Dahle:
But certainly, I think there’s a lot of lessons there for people to realize, particularly among surgical sub-specialists that there are areas of the country where you can make a lot of money if you need to.
Dr. Jim Dahle:
So those of you that have a ton of student loans and don’t seem to be making much traction financially, geographic arbitrage is very real and you can have a very different life if you’re willing to live somewhere else.

Dr. Jim Dahle:
Thanks for those of you who’ve been leaving us five-star reviews. We appreciate those. This one comes from Dugin, who said “WCI should be required reading and listening to medical school and residency. I listen to every podcast and I’ve learned so much from listening. Jim, thanks for the great work and helping us docs get our finances on track”.
Dr. Jim Dahle:
Thank you for that, Doug. And thank you to those of you who leave us five-star reviews and tell your friends about the podcast.
Dr. Jim Dahle:
If you need a financial advisor, be sure to check out the recommended financial advisor page at whitecoatinvestor.com.
Dr. Jim Dahle:
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Dr. Jim Dahle:
Keep your head up, your shoulders back. You’ve got this and we can help. Stay safe out there. We’ll see you next time on the White Coat Investor podcast.

Disclaimer:
My dad, your host, Dr. Dahle, is a practicing emergency physician, blogger, author, and podcaster. He’s not a licensed accountant, attorney or financial advisor. So, this podcast is for your entertainment and information only and should not be considered official personalized financial advice.