The cost-benefit of becoming a dentist/doctor

[palmera]

I'm having a bit of a debate with a friend.

He has a few friends who are just finishing up or who've just completed dental/medical school, and my friend is under the impression that these friends are now on a steady track to unimagined wealth.

I think that over time, once you have enough experience and business savvy, you can open your own practice and make a very comfortable living. But, unless you've captured a lucrative part of the market (rich people, celebrities), you're not going to be financially independent anytime before 50.

And when you retire at 60 to 65, it's only through careful planning and money management that will make sure you do so with a few million.

I think this because:

-Unless you have rich parents, post people (in Canada) will graduate with $80k+ (modest) in debt.
-You've lost 5 to 10+ years of earning (and saving and investing potential).
-When you graduate, you have a only a couple to a few years before starting a family, so right off the bat you're losing even more earnings (especially if you're a woman), unless you don't take parental leave.
-You need a good amount of time (5 to 10 years) before you set up your own practice to really accelerate your income.
-Overall, and from my own observing, this counts for a lot more than people think, lifestyle inflation is huge for dentists and doctors due to societal assumptions and expectations.

Therefore when all is said and done, by the time their career and income is ramping up, mine will be winding down, as ideally, I've already began saving and investing since 23 years old, and have achieved respectable financial independence.

Thoughts?

[RealPerson]

You are dead on. The opportunity cost of dental/med school is very high, as is the actual tuition. Besides the items you mentioned, many private schools are opening because universities see dental school. The tuition is huge and the number of dentists graduating in the future will greatly outpace the need.

If you become a dentist or physician for fame and money, you are definitely on the wrong track. These really are callings, more than professions. The fact that health care is increasingly becoming a business with larger and larger entities, makes that the individual providers will be financially squeezed.

One avenue in the US is getting your training through the military. No student loans and you get to learn the job in the military. After you come out, you can start a practice.

Still, if we are talking ERE, dentist or physician is not the way to go. There are quicker and easier ways.

[Chad]

The real question is what type of doctor they are going to be. If it's a general practitioner then you maybe correct. If they are going to be a specialist then they have a good chance of out earning the savings and compounding interest. For example, my mother used to be a CFO of a rural hospital group. They had a surgical cardiologist who made just shy of $1M/yr in a town where houses routinely sell for less than $100k. I would assume their salary would increase in a major metro area.

Of course, all of that is moot if the only thing you are trying to do is get to ERE the quickest way possible. Then the non-doctor job with almost a decade more of savings is faster.

[Dragline]

Dentists seem to be a dime a dozen these days. Not sure what the relative cost of schooling is.

Chad's right about doctoring. In rural areas and smaller towns, specialists can often make big city money and live relatively cheaply (or quite large -- my cousin married an anethesiologist in Greenville, SC and they have every toy you can imagine). Note that tuition is about 40% lower if you go to a public medical school in your state. But it is a long haul and a huge commitment. I think that's why most people who become doctors tend to like what they do -- they've been weeded out already through surviving the process. There is also so much status in being a doctor -- its like being a demi-god.

If you were to compare med school with law school with getting a Ph.D., the medical doctors probably come out ahead on average and would have more options in terms of finding a high salaried position in a low-cost area. But the average doctor might not do as well as the skilled tradesman or highly paid engineer who gets into the workforce earlier. The doctor certainly would not be on an early retirement plan.

[JasonR]

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[Sclass]

A couple of friends of mine in college were pre dental. I looked them up and they run little private practices. I don't think they are terribly rich or close to FI. The one with the fancier practice seems to push a lot of services like fake glue on teeth and whitening.

A dentist buddy of my roommate in grad school actually went bankrupt and closed his practice that his parents bought him. I got the idea being successful in the game was like being a real estate agent. You had to build up and maintain a clientele. He wasn't good at this. He now works for an established office.

The richest dentist I knew had an office that literally had a root canal assembly line. The owner would just cue patients up and move from chair to chair with the prep and final cleanup done by techs. She took all the money she made and built medical office buildings.

As for the doctors I know, most work for big medical foundations and make good salaries but they work hard. I think the entire med school process filters for people who work very hard without questioning it too much. Just my humble opinion. I think if you think about what you're actually doing during all nighter residencies you might just quit. To me it always looked like a questionable ROI. Except in the case of plastic surgeons...the hustlers of medicine. But even those guys are getting challenged by Korean facelifts.

There was a really great article posted here about how some wealth manager said that doctors seldomly become the 1% mainly because of average investing and high expenses. I'll try to dig it up. My personal physicians (and I've had a lot) looked like they had above average lifestyles that they worked very hard for.

[simple aly]

Lots of people hate going to the dentist and for me with my tiny mouth and rampant tooth-grinding its sheer misery.

If I was a dentist I would woo clients by trying to make them comfortable and catering to their physical comfort and psychological well-being as well as their teeth. I would imagine a dentist like this would always have clients unless they were just bad at dentistry.

[simple aly]

The richest dentist I knew had an office that literally had a root canal assembly line. The owner would just cue patients up and move from chair to chair with the prep and final cleanup done by techs. She took all the money she made and built medical office buildings.

I had a dentist that seemed to operate his business along similar lines. I thought he was amazing and very bright but sadly wound up in federal prison.

[tylerrr]

A couple of friends of mine in college were pre dental. I looked them up and they run little private practices. I don't think they are terribly rich or close to FI. The one with the fancier practice seems to push a lot of services like fake glue on teeth and whitening.

A dentist buddy of my roommate in grad school actually went bankrupt and closed his practice that his parents bought him. I got the idea being successful in the game was like being a real estate agent. You had to build up and maintain a clientele. He wasn't good at this. He now works for an established office.

The richest dentist I knew had an office that literally had a root canal assembly line. The owner would just cue patients up and move from chair to chair with the prep and final cleanup done by techs. She took all the money she made and built medical office buildings.

As for the doctors I know, most work for big medical foundations and make good salaries but they work hard. I think the entire med school process filters for people who work very hard without questioning it too much. Just my humble opinion. I think if you think about what you're actually doing during all nighter residencies you might just quit. To me it always looked like a questionable ROI. Except in the case of plastic surgeons...the hustlers of medicine. But even those guys are getting challenged by Korean facelifts.

There was a really great article posted here about how some wealth manager said that doctors seldomly become the 1% mainly because of average investing and high expenses. I'll try to dig it up. My personal physicians (and I've had a lot) looked like they had above average lifestyles that they worked very hard for.

I agree mostly.....But I will add that almost all people who make a lot of money, work very hard for it....It's a misconception that most rich people(or people with very high salaries) don't work hard for it. Some of them work constantly.

[Swede]

I don't understand the Canadian doctor producing system, but I assume it's metric, and therefore incorrect. Parental leave? You're telling me you get time off to spend with your baby? Commies.

I just spent 6 months with my 1 year old daughter and am going to have another two months off this summer. When I told my boss we were going to have a kid and needed to plan for parental leave, she asked me if I shouldn't take a full year? I'm a male physician in Sweden.

To us, the thought of no parental leave and just 2 weeks vacation seems ridiculous.

[Seneca]

It depends heavily on what you consider the opportunity cost of going to med school.

On the doc side, as Chad alludes to, the system is pushing docs to increasingly specialize to catch up.

[RealPerson]

The richest dentist I knew had an office that literally had a root canal assembly line. The owner would just cue patients up and move from chair to chair with the prep and final cleanup done by techs. She took all the money she made and built medical office buildings.

I had a dentist that seemed to operate his business along similar lines. I thought he was amazing and very bright but sadly wound up in federal prison.

I presume he went for the "income tax is unconstitutional" scam. At least the inmates in that prison will be flossing every day I presume.

[Sclass]

Here was the thread I mentioned. The financial advisor talks about highly compensated medical professionals.

viewtopic.php?f=13&t=4410&hilit=Businessinsider

I agree mostly.....But I will add that almost all people who make a lot of money, work very hard for it....It's a misconception that most rich people(or people with very high salaries) don't work hard for it. Some of them work constantly.

Well said. What I was trying to get out when I said they work hard for it is there is no free lunch. It's money, good money, but not efficient money which was kind of where this thread was going. I read cost benefit in terms of what you put in vs. what you get out.

Efficiency is efficiency regardless of absolute values.

[simple aly]

I presume he went for the "income tax is unconstitutional" scam. At least the inmates in that prison will be flossing every day I presume.

No, a combination of letting his assistants do too much of the professional work (requiring a license) and being too aggressive with insurance billing. Having worked on health insurance litigation, neither of these practices are exactly unheard of. He just got ratted out.

[simple aly]

To us, the thought of no parental leave and just 2 weeks vacation seems ridiculous.

There are probably billions of people in the developing world who think that a five-minute bathroom break and a full meal would be amazing. As an employer if I had the choice between an employee who wanted long vacations and one who was hungry for any opportunity, I would give it to the latter, not to exploit them but because they deserve it.

[SimpleLife]

Would this not likely apply to Lawyers as well?

[Chad]

Would this not likely apply to Lawyers as well?

Yes, but the variances would be greater. For instance, lawyers done't need to be shit on residents for years, but they also have a much harder time of finding good jobs compared to doctors.

[RealPerson]

I presume he went for the "income tax is unconstitutional" scam. At least the inmates in that prison will be flossing every day I presume.

No, a combination of letting his assistants do too much of the professional work (requiring a license) and being too aggressive with insurance billing. Having worked on health insurance litigation, neither of these practices are exactly unheard of. He just got ratted out.

Interesting. Letting unlicensed staff members do work requiring a license would typically get you in trouble with the dental board of your state. A prison term would be very unlikely, except maybe if something went terribly wrong (patient died...). Insurance fraud is a completely different thing. That may well land you in jail.

[chenda]

I think if your going into medicine for the perceived financial benefits your doing it for the wrong reasons. And its not a career you can really slack off in and if you don't like it, your really going to quickly hate it. Been a dentist can also be physically demanding on the neck and shoulders, FWIW.

Speaking of jail and dentists, I used to work in the dental industry for a few years and worked with hundreds of dentists . One of them went to jail for defrauding the NHS for hundred of thousands, (he even put his dog on the payroll) Another suddenly confessed to murdering his wife 20 years earlier and also went to jail. And then there was the dentist who called me up in a fluster to tell me his was selling his practice, turned out his wife walked in on him and his 18 year old nurse 'in the chair' so to speak...

It was like a soap opera.

Still, I'm sure these were the exceptions, most of them were genuinely good professionals

[IlliniDave]

Much of what I know about doctors and finance was the somewhat anecdotal data presented in The Millionaire Next Door , which of course is a couple decades old now (would love to see those guys revise/update).

MDs typically make a lot of money, $400K and up isn't uncommon for some types of surgeons. But as a group they are not great accumulators of wealth. The status consumption expectations that come with the territory chew up a lot of it. A lifelong friend of mine married a prominent cardiac surgeon practicing at a prominent institution in one of the premier west coast cities after spending the first 20 years of her adult life living on < $30K/yr managing zoo exhibits. She now lives in a whole different world from me to the point it's hard for us to even talk to each other anymore (sad for that, but happy for her--it's a dream life).

On the low end, typical family doctors are under a lot of squeeze from insurance companies/networks and make far less that we would sometimes expect (but still have many of the same status pressures). Although she is still fairly young, as a mid-career engineer I make somewhat more than my regular PCP, I have strong reason to believe.

Doctors are also reputed to be lousy investors, although among the prominent index proponents out there, both William Bernstein (Four Pillars of Investing) and James Dahle (The Whitecoat Investor) both seem on a mission to help their profession-mates out. Many theories for it, most seem to center around overconfidence.

Like someone else said, they get a late start to the high-pay portion of their careers, and often start in the hole, but most could easily pull away down the stretch from most salaried professionals. And those of the elite skills and those with the business savvy to build practices can equally outdistance their peers. Probably not great ERE candidates in the strictest sense, but I'd guess most doctors, if they put there mind to it early on, would find themselves in pretty good position to retire moderately early.