Abandoning Academic Medicine For Private Practice
It’s no secret that physicians in private practice often times make more money than their colleagues in academic medicine. For hospitalist, the difference in pay can be greater than $100,000 a year! However, taking a job in academia is not all about income. There are many benefits that academic medicine gives to doctors that private practice jobs can fall short on. Each person will have to define what is important to him or herself. Since being financially independent and paying down debt are a priority to me, let’s take a look at what the pay difference adds up to.
The Giant Pay Difference In Private Practice
The average salary according to the Medical Group Management Association for primary care academic medicine vs private practice varies by as much as $65,000 per year. For sub-specialty doctors, the differences can be much higher.
When I was applying to jobs I noticed similar differences in pay between academic medicine and private practice.
In my geographic area, academic job offers were around $200k per year while private practice jobs can exceed $300k per year. Location was a big factor in pay since many of the higher paying jobs were in less desirable places to live.
However, not all jobs pay more in private practice. There are some areas of practice where the pay gap between private practice and academic medicine is minimal. There are jobs where it’s almost impossible to find a position outside of academia. For example, specializing in genetics and genetic disorders may be very hard to do without being affiliated with an academic center.
Despite the exceptions, most jobs for doctors are likely to pay more per year in private practice.
The Pay Difference Can Add Up To Millions Of Dollars
Let’s take a look at one example of varying pay for my specialty. As described above, it’s not difficult to obtain a job with a difference of $100,000 a year between private practice and academia. This can seriously add up over the course of a career. I’ve picked this number because I encountered similar pay disparities with job offers upon graduating from training.
We will take two assumptions. First, the academic and private practice physicians continue with their respected jobs throughout their careers. I’ll admit this assumption is a bit of a stretch, especially since doctors switch jobs shockingly often.
The second assumption is that the difference between the pay is $100,000 per year (real pay difference between several of the jobs I received upon graduation at academic centers vs private groups).
Green- 4% rate of return; Red – 6% rate of return; Blue- 8% rate of return
Over the course of a 20 year career assuming a 6% rate of return, the difference in wealth generated by the physician in private practice is $3,899,272.67 more than the academic physician doctor.
That’s enough money to seriously affect your retirement goals and lifestyle.
The Benefits Of Academic Medicine
I’m by no means trying to bash on academic medicine. Teaching is one of the best parts of becoming a doctor. After all, we are all taught to “See one, do one, teach one.” In fact, I thought it was the most rewarding part of being in academic medicine.
Most doctors do not have a primary goal to get rich. Academic centers often are supported by tax dollars and treat a disproportionate percent of the underprivileged and uninsured. Medicine for many is a calling, not a means to get rich. For physicians who dedicate their lives to academic medicine or research, the pay difference is unfortunate. That will be a post for a different day though!
The main reasons many doctors love academic medicine:
- Enjoyment from teaching the next generation of physicians
- Being apart of an enterprise that is making advances in medicine
- Income and job stability
- Constantly learning attending lectures and being around doctors who are experts in their field
- Having overhead paid for. EMR, nursing staff, malpractice, retirement, disability, daily expenditures for clinics all are things provided for by the institution
- Usually located in a large desirable city with a lot of culture and things to do on days off
- Sharing call with residents/fellows and having them take first page overnight. I love my sleep!
- Having minor issues be dealt with my house staff.
- Hours are can be very predictable compared to private practice
- The ability to have coverage while being off work
Follow Your Passion, Not The Money
Have you ever worked at a job you absolutely hated? I sure have, and it made me realize very quickly that there is no amount of money that would make a job worth it. If you join a job only for the money, I guarantee you that you will really earn every penny that is made.
I miss academic medicine, but joining a private group has it’s perks. At my current job, I signed up to be a doctor who can have residents or nurse practitioners round with me for credit with their program. I feel like I’m currently getting the best of both worlds since I love to teach. I get to teach some people still in training while benefiting from the higher pay in my field in a non-academic setting.
Who knows what the future will hold. All I know is that I’ve been happy with my job and got to a positive net worth even quicker than I ever dreamed.
Can you point out which city InvestingDoc was recently in based on the featured picture?
4 thoughts on “Abandoning Academic Medicine For Private Practice”
Yes, this is an important decision that we don’t hear much about. I took a five year “break” from private practice to join academia again. I enjoyed all of the benefit, intellectual stimulation, opportunities to write, present, and travel. I’m sure I earned a lot less in salary but as you suggested a lot of us are not pure “profit maximizers.” I was paid plenty and had time to enjoy it. My take on the difference.
Academic Medicine -Pros
Credibility with patients, insurers, attorneys
Continual CME opportunities
Ability to train the new generation
Intellectual and social reward of teaching
Stay fresh and connected with young clinicians
Feel fortunate, powerful, and rich by comparison
Academic Medicine -Cons
Less money than private practice
Publish or perish
Declining State/federal revenues
Inefficient clinics and OR
Private Practice – Pros
Can be or feel like “the boss”
Ancillary income opportunities
Compensated for risk
Private Practice – Cons
Focus on almighty dollar.
Can feel like running on a treadmill.
Increasing overhead expenses.
Internal disputes over compensation, overhead, call, buyouts etc.
Nice addition to the Pros/Cons of Private practice vs Academic medicine. I miss being around academic medicine but for now life in a private practice group is too good for me to consider changing. You mentioned the potential buy out as a con and I completely agree. It seems like some kind of contract with private practice groups are always up for renewal. There is always a level of unpredictability with the job unless you’re with a very large and stable private group.
I did academics for 4 years. I enjoyed it but after 4 years decided I should try out the private world. So far no major regrets. The call is more of a bear but I feel like I am becoming a more rounded physician. I do suspect that at some point I will make my way back to academics, but it will likely be 10 years from now.
Agree though, do not follow money. The other factors are more important including work-life balance, location, ability to do other things out side of clinical work, teaching, etc.
It’s easy to see that extra $65,000 or $100,000 in private practice as money in the bank, but remember it will be earned at your marginal tax rate. You’ll actually have about another $35,000 or $55,000 or so to invest. Might be a little more or less depending on your local and state tax rate.
It can still add up to millions over time (if you don’t spend it all), but extra dollars in the top tax brackets aren’t worth as much as they seem.