So it’s Medicine Mondays… and I talked about I’ve talked about The Track and Falling Off the Track previously.
So now I want to take the time to go over how to approach finding your first job.
First things first. Usually the first thing people talk about when trying to compare two different job openings is the difference in salary. I am going to spend the majority of this post trying to convince you that this is the least important part of a job. There are so many confounding factors that one number versus another number can not be compared that easily.
What do you mean? $200k salary versus $150k salary for the same job is a no-brainer… right?
Yes, if the job is exactly the same. Don’t believe the hype. The extra money has to come from somewhere. You need to look at everything.
Are you an employee or an independent contractor?
How often is call? How bad is it?
How many patients are you scheduled to see a day?
How much vacation do you get?
How are the benefits?
Is there a good health care plan? Dental? Vision?
Is there a 401k/403b? Is there an employer match?
Is there a 457?
Is there a pension? How good of a pension is it?
Is malpractice covered? Is it claims made coverage or is it occurrence?
Do they pay for CME? Do they pay for only the course, or is there a stipend you can use to cover the majority of the trip and the course?
All of the above factors should be considered. Let me put it to you a different way:
$200k, call q4, 20 patients a day, 4 weeks vacation
Decent health care plan, dental and vision
401k no match, no 457, but no pension
Malpractice is claims made
CME up $2000, pays for only the course
$150k, call q6, 15 patients a day, 6 weeks vacation
Decent health care plan, dental, and vision
401k with match, and 457, but no pension
Malpractice is occurrence
CME up to $2000, can be used for coursework/travel/hotel
Which would you take?
Well, it depends on your situation and how much money you need to live off of. However, I would venture to say that these jobs are pretty equal.
Wait… what? How are they equal… one pays $50k more!
Well yes, but the other job has less call, a lower patient load, and more vacation. More so than that, it also has a 401k with an employer match, as well as a 457. Also, the malpractice insurance is occurrence. So let’s examine all these differences.
Less call… how much is this worth to you?
Lower patient load generally means lower stress… how much is that worth to you?
More vacation is more time off… how much is that worth to you?
Do you see the trend?
401k limits are $18k for 2016. A reasonable employer match is like $10,000.
457 limits are $18k for 2016.
So Job B allows you to put away ~$46k pretax whereas Job A only allows you put away $18k pretax. Granted, you make significantly less money so putting away that much money is difficult. However, I think putting away $46k (401k+ IRA) with Job A would require the same lifestyle as Job B.
Malpractice insurance [edit: I did a full post here.]
It has two types, claims made and occurrence. Occurrence is the more expensive one since it covers you at all times. Claims made only covers you while you have the insurance. So if you were to switch jobs, you would have to pay tail coverage (or nose coverage, depending), to cover the part of claims made that isn’t covered. I’ll go over this in more detail in a future post. However, depending on your specialty and the amount of time you worked at your job, tail coverage can be a few hundred dollars, to hundreds of thousands of dollars.
Having to pay for tail coverage can prevent you from you leaving your job. Most physicians do not have $100,000 or $200,000 in liquid cash laying around to pay for tail coverage to change jobs. This simple fact can trap you. For this reason, if you get a job which provides malpractice insurance that is only claims made, you need to take your own necessary precautions and save money to pay for tail coverage should you ever need it.
Ok, ok ok… so Job B is better then?
No, no no. Job A may still be better, depending on what you need. The whole point of comparing Job A to Job B is just to demonstrate to you that one number means nothing. I’m a radiologist and the first thing we learn as 1st year residents is “One view is no view.” with regards to x-rays. You can not hope to take a 3-dimensional object and image it in only 2 dimensions without losing a ton of information. Having two orthogonal views gives you so much more information. The same idea applies here. $200k versus $150k is not enough information.
You need to evaluate all of the above to make an educated guess.
Take a step back, don’t lose sight of the forest for the trees.
When you are looking at jobs during residency and fellowship, it is easy to get blinded by the big numbers in front of you. $200,000 is a lot of money when you are making $40,000 and working 80-100 hours a week. Please do not be blinded by the $. Look at the whole picture. Make sure the job is something you actually want and that you will be happy with.
Taking a job which makes significantly more money… only to leave it a few years later to move may cost you more than any difference in salary. $200,000 versus $150,000 is really not that much of a difference. Let’s examine this more… Go to PaycheckCity Salary Calculator. Let’s say you live in Baltimore, Maryland and you make $200,000, paid bi-weekly,are single, and have 0 allowances.
Punch in the numbers and… Every two weeks your paycheck is $5097 and change.
Now let’s just change it to $150,000, and keep everything else the same and… Every two weeks your paycheck is $3848 and change.
So you make $1200 less every two weeks, x 26 checks = $31,200 less a year. So your salary was $50k more… but your take home was only ~$31k more.
The more money you make, the more taxes you pay. Remember that.
Here’s an example:
Let’s say you took this $200k job over the $150k job only because it paid more. You work there for 3 years and so you managed to bank $100k more versus the $150k job. (This is not Job A versus Job B, this is just a general $200k job versus a general $150k job.) Now you realize you’re not happy at your job. The extra $50k a year you make just isn’t worth it to you anymore…
You decide you really should have taken that $150k job in the first place, so you look for it again and lucky you, a spot just opened up again. So you think to yourself, great, I made $100k extra over the last 3 years and now I can go to this job which I will probably like better. “I’ve suffered and made my money”, you think to yourself, and now you are ready to slow down and take a “better job”.
Here’s the problem:
You bought a house. Closing costs to sell the house will hurt. Your current job’s malpractice was claims made, so you will need to pay tail, which will also hurt, this could range from a few thousand to tens of thousands for a 3 year span depending on your specialty. On top of that, since you were making “an extra 30k/year” compared to the $150k job you passed on, which was significantly higher than the $40k a year you made as resident/fellow… you were a little more lavish with your spending. You started buying better name brand clothes, you got that BMW you always wanted, and you even went on a few lavish vacations just because… Now you also have to make sure your current job ends and your new job begins within a reasonable time frame. Just ONE MONTH without a job for a physician is $8000-10000 gone.
All of the sudden that “extra $100k” you made from taking the higher paying job doesn’t really exist anymore…
In general, taking a job solely for the money is usually a bad idea… even if you rationalize it to yourself that you are just moving to place X for job Y for a few years to make money.
Your first job is very unlikely to be your last.
However, the best thing you can do for yourself when looking at jobs is to be honest with yourself. Which job is REALLY the better job? The extra money has to come from somewhere. Whether that means you work harder, or work longer, or do more call, or see more patients, or whatever the case… There ain’t no such thing as a free lunch (TANSTAAFL).
When evaluating to different jobs, a good thing to do is to put the information for each job side by side as a comparison. Then you need to decide how much each difference in jobs is worth to you.
Job A is q4 call and Job B is no call. How much is no call worth to you? Is it worth $20k? $50k? $100k? I don’t know, that depends on you and your specialty.
Always include pre-tax retirement options. A job that has a 401k employer match AND a 457 is worth a lot. Or jobs that allow you put away $53k pre-tax as a partner also deserve extra consideration.
A pension should get special consideration. In reality, a pension may or may not pan out. Kaiser Permanente was well-known for having an outstanding pension, but I think there are talks of changing it or phasing it out. Your Mileage May Vary. The Veterans Affairs pension has also increased the % of amount which employees must pay into it a few times over the last few years as well, but overall, I don’t see any federal government pension going away anytime soon.
Weigh the differences in your own professional happiness and stress level. Is this a job you want to do, or a job you have to do? Will taking this job be more stressful than other options? How much is that added stress worth? Once again, this is personal question and heavily dependent on you and your specialty.
Salary should never be the sole factor for deciding on a job. Ideally, it should be one of the least important factors.
In general, taking a job solely for the money is usually a bad idea… even if you rationalize it to yourself that you are just moving to place X to job Y for a few years to make money. (see above)
Look at the whole picture: Call. Work Load. Professional happiness. Stress Level. Vacation. 401k/403b/457. Employer Match. Pension. Health Benefits. Malpractice coverage.
Be honest with yourself. What are each of these factors worth to you?
Next week I’ll talk about Malpractice Insurance, and the following week I’ll talk about Physician Contracts (and 2 and 3).
[edit 9-6-2016: added links to the posts I wrote later.]
Agree? Disagree? Questions, Comments and Suggestions are welcome.
You don’t need to fill out your email address, just write your name or nickname.
Pingback: Physician Contracts – Senior Resident
Pingback: The Dream - Senior Resident
Pingback: Early Retirement is Easy?
Pingback: The (Temporary) First Job #illumedati - Senior Resident
Pingback: Medicine Mondays Roadmap 10-2-2017 #illumedati - Senior Resident
Pingback: Resilience #illumedati - Senior Resident
Pingback: The 20 Year Career #illumedati - Senior Resident