Latest / Off the Chart: A Business of Medicine Podcast / S1 Ep116: Financial independence, with Michael Jerkins, M.D., M.Ed.
Transcript
- 0:00 The problem is we make enough money as doctors to be able to make mistakes, and it's still on the outside not look like we're making any mistakes, because we still make enough cash flow per month to be able to pay for and service some of this debt. But what it doesn't do, it doesn't allow you to save which allows you more flexibility, which allows you to be in control of your time. Now your money and your debt service stink is in control of your time. Welcome to 0:28 off the chart, a business of medicine podcast featuring lively and informative conversations with healthcare experts, opinion leaders and practicing physicians about the challenges facing doctors and medical practices. My name is Austin Luttrell. I'm the associate editor of medical economics, and I'd like to thank you for joining us today. For joining us today. In today's episode medical economics, senior editor Richard Pearson sat down with Dr Michael Jerkins, a physician specializing in internal medicine and pediatrics, and the co founder of panacea financial, a bank able to cater to the financial needs of physicians. Their conversation focuses on the financial realities that doctors face from student debt and tight cash flow and training to practice, ownership, access to capital and long term stability. Jerkins explains why he believes many physicians run into friction with traditional banking and what panacea's Doctor only approach is trying to solve. They also talk about where physician interests may be heading, including independent practice and models like direct primary care and concierge medicine, plus the practical financial decisions that come with those moves. Dr Jerkins, thank you for joining us, and now let's get into the episode. 1:30 Dr Jerkins, thank you for joining 1:32 us today. Happy to be here. Thanks for having me. 1:35 Our traditional audience a lot of times has been internal medicine and family medicine physicians, especially in smaller and medium sized, independent practices. What are you hearing from them out there? What are the trends? What are they thinking, both from a clinical side as well as a financial side? 1:53 I think that we're starting to see a little bit, even if it's just a slight pendulum swing of interest in folks wanting to be in control over their practice. And there's certainly a knowledge gap in the physician space with, I want to be more in control with, I know how to be in control. That's like, how do I actually do that is difficult, and I would say, actually, working with a lot of veterinarians and dentists and through this work is the physicians are, in fact, the least informed on this. If you look at dental school and veterinary school and dental residency, veterinary residency, they're around industry pretty frequently, for better or worse, whether that be DSOs, large employers, practice brokers, CPAs, they're in the schools constantly, which is good and bad, but at least the part of the good is there's some exposure there. They at least know who to talk to. They understand the players and basics to a degree physicians like we're very pure generally, and that we're not going to have industry in our med schools. We're not going to have industry in our residency and fellowship. And so we kind of really are focused on clinical medicine, which is great, but the only detriment there is when you have these business type questions, which is, I've been employed at this hospital or system for three or four years. I really would love to kind of do this on my own. I literally have no clue who to even talk to to get started. That's where we find most people are at the people who have have some experience, either had some they either worked at an independent practice, they either shadowed an independent practice, or had some family or connection of someone who is in independent practice. But by and large, you know, we're going through our academic medical journey and graduating and just finding an employer to get started, because we need to get our student loans paid down, and start making some money and make sure our clinical skills are kind of up to snuff. But what we're finding is there's more and more interest on how doctors can be more in control of their time and of their practice. And you know, in the primary care and internal medicine side, a big demand, and kind of big shift is in this direct primary care concierge medicine model, which is generally less overhead. You can have a lot, you can have pretty low overhead and start one of these practices, as opposed to say, a more procedural, heavy specialty, where there's a lot of equipment and you have to have more complex build out in real estate, and now with the big, beautiful bill allowing HSA dollars to be applied to subscription based care, something like 30 million American households now have access through their HSA dollars to direct primary care or concierge medicine. We're going to see more and more, I think, demand of that service, and I think you're going to see at least an amount, not going to say it's going to be the majority, but an amount of doctors in your audience, you just mentioned, of primary care, internal medicine, family medicine, going into that space. 4:51 One of the things I have seen in the last few years is that from time to time, there are studies that touch on different generational elements. Shall we call it? And not to necessarily belabor that point about independent practice, but especially about, you know, physicians who are kind of coming out in year 2025, is there some awareness, at least, of some of the benefits, and, frankly, some of the challenges of independent practice, or are they strictly looking for employment? 5:18 I think by and large it's employment. I mean, you're looking at somewhere between 75 85% of new residency and fellowship graduates looking for the employed routes and a smaller minority looking for their own independence, whether that be again, as a minority owner in a larger group or ASC or practice. But most people, and this is true in the dental side too, most people right out of training are trying to find that employed setting their number one priorities, are starting to make money, paying down their student loans, and then they kind of think more long term after that, which is not the best route, but I get why, and I was very similar in some ways, but I do think that we're seeing a little bit is more emphasis on entrepreneurialship in general. I think anything from, you know, a side hustle of that doctors can find a way to make money on the side, whether it be expert witness or locums work or things like that, where doctors are trying to find ways where they can be in control of their time and make some money. That same spirit, I think, has triggered more interest in, how do I become more independent in my clinical practice as well? 6:28 You had mentioned about, for example, that sort of that contrast the responsibilities of a physician, a physician in training and sort of on paper appearing to be, again, maybe not, the best candidate for a loan. What happens? And no one in life likes to have to hear no, and no one likes to have to tell somebody No, but I'm sure that you do come across some applications that maybe they're just not ready for what they're asking for in terms of financial commitment or business experience. What do you do when you have to tell an applicant No? 7:00 Yeah, yeah. So it depends on the thing they're applying for, but most commonly, the reasons we see people that have a lower credit score is because of mistakes in the past, even oversights. Quite frankly, think about things like forgetting to turn on auto pay and you moved and you forgot your cable or phone bill was sent somewhere else, and you it's overdue, it's past due, and your credit score tanked. That's a very common scenario. So those things are very much like, hey, let's look at your credit report together. We can actually coach you on what we found. Give you some next steps on how to correct that, and then some let's keep in touch when we can help you, or, better yet, someone in our network that you can actually talk to, that can help on an advising perspective, we do that plenty of times because of all the folks in our network that aren't necessarily under the panacea umbrella. I mean, just to step back, our mission is to make doctor's lives better, right? So that doesn't mean we're going to make every doctor a customer. Obviously, I would love that. That'd be great, but not every doctor is going to be our customer. So how do you be? How do you how do you remain true to your mission is even the folks who can't become customers finding a way to improve their life as kind of a connector of where we stand in the kind of economics, economic system of the doctor. So that's one main reason. The other thing on the practice side is a lot of people that approach us about startups as an example or buying a practice, they've never owned one. They just aren't sure where to start. So maybe when we look at their application, they don't have a business plan ready. They actually haven't done much market research, or maybe they don't have enough in liquidity. That's a great opportunity for our team to say, here's what you need to do. Let me put you in contact with someone who can help you with market research, with a business plan, with advising to help kind of lower your debt, to income, increase liquidity. And this is the thing. These are the things we want to see. Come back and talk to us once you've kind of made some of those improvements. We'd love to stay in touch and work with you. It's not a hey, declined, have a nice day. That's not the that's not the route we take it all. 9:14 And to go back to another point, I think you, you sort of hinted at a little bit in especially medical school education and training, and sort of the financial element of the business element, or maybe the lack of, what changes would you like to see in undergraduate and medical education to help basic financial literacy for physicians, and then maybe beyond that actual business operational training. 9:39 Yeah, I think you're not going to make any changes until an ACGME like body requires it. There are plenty of schools that have had really good financial literacy programs in place at medical schools, and what ends up happening is the clinical faculty in charge of that is. Isn't generating revenue based on their time facilitating. It takes a lot of time. You got to come up with materials, you got to find speakers, you got to be at the sessions. And those are all minutes or hours you're not seeing patients or doing research. And so the school says this is a waste of time. It's it's done. But if you align the incentives and said, Hey, school actually, did you know you actually have to this is required for your students, and not just on checking the box from a financial aid office perspective, but on basic personal financial literacy, handling debt, understanding budgeting, making housing decisions, things like that, all should be required. And once you do that, the schools would line up and find the people they have in house that have some expertise. And probably naturally would happen is they would have some some natural some national best practices and standards that become kind of throughout the system, because the other thing I see in the residencies is you're not going to teach something that you don't know already. So there's a lot of faculty that don't know financial literacy and personal financial habits that are healthy themselves. So they can't teach it. So they find someone who does, and they kind of reinvent the wheel. We have 1000s of residency programs all reinventing the wheel on trying to educate their doctors on how to negotiate a contract, how to make sure you're not making bad choices with your purchases right out of residency. There's no like we're expending so much energy on this. There are ways that we could probably incentivize an adoption of basically national best practices to get doctors through with less financial stress in their practice. 11:51 Hey there. Keith Reynolds, here and welcome to the p2 management minute in just 60 seconds, we deliver proven, real world tactics you can plug into your practice today, whether that means speeding up check in, lifting staff morale or nudging patient satisfaction north, no theory, no fluff, just the kind of guidance that fits between appointments and moves the needle before lunch. But the best ideas don't all come from our newsroom. They come from you got a clever workflow, hack an employee engagement win, or a lesson learned the hard way, I want to feature it. Shoot me an email at K Reynolds at mjh life sciences.com with your topic, quick outline or even a smartphone clip. We'll handle the rest and get your insights in front of your peers nationwide. Let's make every minute count together. Thanks for watching, and I'll see you in the next p2 management minute you you 12:43 know, what doctor you've touched on, a couple of trends we've talked about, sort of, maybe even a slight shift back to some desire for independent practice. You had mentioned also, for example, the health savings account and direct primary care trends in, you know, say, a year's time, five years, 10 years, what other trends are you kind of watching to really see that are going to affect physician finances? Yeah. 13:09 I mean, I think a big one is understanding what's going to happen with our rural health systems from our Medicaid cuts. We already have the Rural Health rural hospitals under a lot of financial stress. So then it begs the question of, who's going to fill that gap? Or Is anybody going to fill that gap? Are we just going to have deserts of care where someone has to drive two hours when they've had a heart attack or stroke or need to emergently deliver a child, as an example? So there will have to be either some market solutions, more likely, there'll probably be some private slash public partnerships that allow doctors to deliver care in an economically viable way in these rural areas. That likely we're going to see a lot of, potentially, a lot of hospitals close, clinics close, and folks start to go and congregate, and the more populate population dense areas, thus exacerbating a maldistribution of care around this country. That's a big one. That's a huge one. I think the other is going to be what private equity does with certain medical specialties. You know, there's kind of flavors of the week every now and then on specialties that PE is looking to to scoop up and roll up and then sell off. And, you know, I think there's some debate on if that's good for patient care or not, but I think it will be interesting to see what specialties come next, and some have kind of naturally run through that cycle. I also, quite frankly, think that there's a lot of doctors who've learned from their experiences with PE and said, Hey, like word starting to spread. Of, hey, I had this experience, or that experience working with the private equity backed large roll up or large hospital. I would rather this stay Doctor controlled. And Doctor owned and Dr run, so it might affect the decisions there. I'm not going to be totally naive and say that would override some massive payout that some of these owners would see from a PE acquisition as an example. But I do think culturally, the kind of narrative around Doctor owned practices and Doctor owned hospitals is stronger now than it was four or five years ago, because I think a lot of people have been burned by other models when you 15:30 talk to young physicians, what's the first best thing you advise them to do to make a positive difference for their own finances, which also can help give them peace of mind. 15:43 I think the first thing is to understand how they think about money. And it sounds very nebulous and not tangible, but I think once they understand how they think about money, it's easier for them to understand their priorities. And the big thing is, what is the definition of wealth? Well, I take a definition of wealth is really being in control of your time, and so then you back into what does that look like? How do you stay in control of your time? Well, it's making financial choices that allow you to be more flexible with your work. Most commonly, what we see is, and I'm not trying to be on a high horse here. I've experienced some of this myself as well, is doctors have really pushed themselves in education. They've sacrificed. They've seen people their age take a different route, start families earlier, go on nice vacations earlier, buy a home, and we're in the hospital or in the library studying, and so when we finally get our first job, it's like I've earned this like I want this nice house. I'm gonna kind of splurge on some of these lifestyle things without getting our financial house in order. And the problem is, we make enough money as doctors to be able to make mistakes, and it's still on the outside not look like we're making any mistakes, because we still make enough cash flow per month to be able to pay for and service some of this debt. But what it doesn't do, it doesn't allow you to save, which allows you more flexibility, which allows you to be in control of your time. Now, your money and your debt servicing is in control of your time, and so it's really understanding this isn't wealth over here, like just because you have the nice exterior stuff and material things, real wealth is setting yourself up for success, to be in control of your time, and here are some easy things not to do to avoid it. The last thing I'll say is there's a lot of predatory folks in the space for doctors, in the financial space, we have just said we make a lot of money to make some mistakes and still be okay. Well, some of those mistakes are because of bad advice and people on purpose, maliciously, I hate to say it, trying to take advantage of us. So advice I always give, especially on the the the financial advising is find a fiduciary, someone who has legal responsibility for your financial best interest, who has a at least experience with doctors that you can talk to a reference, literally, pick up the phone and talk to the doctor that they've worked with everybody and their uncle says they've worked with doctors, and they have something on their website. But when you scratch below the surface and you ask some basic questions, they don't know anything about student loans. They don't know anything about public service, loan forgiveness, income driven repayment, and they can't name you one doctor they've actually worked with that is like five red flags in a row, and run as far away as you can. So it's trying to have the time and bandwidth to be able to parse through the good and the bad in that space for advising. 18:38 Our main audience is primary care physicians. What would you like to say to them? Or what would you like them to know? 18:45 Well, as a fellow primary care physician, I can say reaffirm that I think they're doing God's work. It is, I think, the hardest job in the healthcare space. I'm very biased, but as more and more things flow down to the responsibility of the individual primary care provider with more barriers to access more standards and recommendations, to keep up with more patients, to see the speed on the treadmill being turned up perpetually. It gets really disheartening, quite frankly. But I think allowing yourself some some grace and understanding your place in the health system is, I think, the most important out there, and the hardest. The hard part is, how do you actually affect change? I think the more primary care physicians we can have in leadership, positions in the healthcare system. I'm not going to say it changes everything overnight, but certainly it adds a perspective that a non clinician or a non primary care provider would bring to the table in an administration. So if you have opportunities for leadership, it might give you some breathing room, but also might allow you to impact and have. Of greater change through the system. 20:02 I'm Richard payer chin reporting for medical economics. My guest today has been Dr Michael Jerkins, co founder of panacea financial, a bank that caters to the financial needs and planning of physicians. Doctor, thank you so much for joining us today. It's been a great conversation. 20:17 Awesome. Thanks for having me. 20:22 We're again, 20:31 that was a conversation between medical economics senior editor Richard perrychin and Dr Michael Jerkins, a physician specializing in internal medicine and pediatrics and the co founder of panacea financial. My name is Austin Luttrell, and on behalf of the whole medical economics and physicians practice teams, I'd like to thank you for listening to the show and ask that you please subscribe so you don't miss the next episode. Be sure to check back on Monday and Thursday mornings for the latest conversations with experts, sharing strategies, stories and solutions for your practice. You can find us by searching off the chart wherever you get your podcasts. Also, if you'd like the best stories that medical economics and physicians practice published delivered straight to your email six days of the week, subscribe to our newsletters at medical economics.com and physicians practice.com off the chart, a business of medicine podcast is executive produced by Chris mazzolini and Keith Reynolds and produced by Austin Luttrell. Medical economics and physicians practice are both members of the mjh Life Sciences family. Thank you. Applause.