Financial/Legal

 

As a contract and tax attorney for physicians for over 30 years, I have reviewed many asset summaries of late-career physicians. Although most have historically strong annual incomes of $200,000 to $400,000, accumulated wealth varies tremendously. Some physicians in their 60s have a home, a small retirement plan, and little else. Others have cash equivalents of $5,000,000 or more, no debt, real estate, and other assets. In my experience, this variance usually does not relate primarily to income differences but rather spending control and financial knowledge. If you are interested in having the opportunity to retire and not worry about finding an “early bird” special at your favorite restaurant, this article provides ten tips to help you achieve that dream.

1. Fund a Roth IRA. Immediately start funding a Roth IRA. The current limit is $5,500 per calendar year. The principal and interest will grow tax-free (not tax-deferred) over decades. At your retirement age, you will have $500,000 tax-free (invested at historic rates of growth).

2. Contribute to an employer retirement plan. Contribute to your employer’s Roth 401-K or regular 401-K. Add money starting the first day you are eligible at the rate of at least 5% of your compensation. By age 35, contribute no less than 10% of your compensation up to the legal maximum. In a Roth 401-K, you will have decades of tax-free accumulation. You may also enjoy the employer matching contribution, which varies from job to job. Do not take loans on 401-K plans. If you borrow and then terminate employment before completing repayment, the borrowed funds are treated as a plan distribution, subjecting them to taxation and possibly a penalty if you are under age 59.5. If switching jobs, move your 401-K retirement plan account into an IRA; do not cash it out. If necessary, you usually can withdraw funds to make a down payment on a home or for an emergency, but plan contributions should be viewed as “tomorrow” money. You can borrow to purchase a home and to finance your children’s educations but you cannot borrow to retire.

3. Be debt-free. It is easier to accumulate wealth if you are debt-free. Mortgages, student loans, and car payments should be minimized and eliminated as quickly as possible so that available net income is used to invest both through retirement plans and on an after-tax basis. Cars should be purchased, not leased as the “tax benefit” of leasing is a myth. Leasing a car is an expensive way of borrowing money, as you are effectively purchasing only the most expensive depreciating years of the car’s useful life (the initial few years). You should also not have credit card debt at any time as credit card debt means you are spending money before you earn it. Borrowing for clothing or a vacation reflects the inability to control one’s spending.

4. Use tax-advantaged investment vehicles. Interest income on your investments is taxed at ordinary income rates, perhaps 30% or more, but dividends issued from stock or stock mutual funds are taxed at lower long-term capital gains rates. Similarly, when you sell a stock or a stock mutual fund, the appreciation is taxed at long-term capital gains rates under most circumstances. As you are able to set funds aside, make sure that you are using tax-advantaged investment vehicles.

5. Consider no-load mutual funds. When investing in the stock market or otherwise, consider no-load mutual funds such as those offered by Vanguard that do not require an “investment advisor.” Such funds do not have sales charges and save you money. The greatest chance you have of underperforming the market relates to the expenses associated with investment, more so than the particular investments selected. Since almost all advisors underperform the market, you should consider investing on your own, minimizing costs, and watching your funds grow. As a younger physician with many high-income years in front of you, a good portion of your investments should be in equities to enjoy their appreciation over decades. With bank interest rates being minuscule, there is no reasonable alternative.

6. Develop a budget. If you or your spouse has an issue with shopping or overspending, it is imperative that you develop a budget: first allocating funds to long-term savings such as a retirement plan, next to short-term savings, then to unavoidable recurring costs such as rent or mortgage, student loans, food, and discretionary expenditures. The perfect time to put this in place is when you go from the salary of a resident or fellow into a full-time job and your pay increases by multifold. Read the book The Millionaire Next Door: The Surprising Secrets of America’s Wealthy by Thomas J. Stanley and gain control, as it is easy to do otherwise with an unprecedented and significant salary jump. If you start to live on your new salary, you will never be in a position to amass wealth and retire comfortably.

7. Send your kids to public, not private school. For each of your children, would you rather pay astronomic tuition bills for 4-8 years of college or 16-20 years counting grades 1-12 in private school? When you have children approaching school age, choose an A+ school district and send your kids to public school, not private school – they will still get into competitive colleges. This can save hundreds of thousands of dollars per child.

8. Fund a 529 plan. Whether or not you currently have children, you can fund a 529 plan to enjoy tax-free growth and plan for education expenses of children or future children. If you do not have children yet, you can name yourself or a different party as the beneficiary and then change it after children are born. If you do not have children, you can either use the 529 for someone else or cash the investment and recover the money including growth/loss thereon. Trying to fund college educations out of current income is difficult and it is better to prefund than to pay back student loans over many years.

9. Draft a will. If you are married or have children or both, it is imperative that you have wills drafted so that your wishes are implemented upon your passing. Many tax advantages are available without using complicated trusts and it is important that you maintain up-to-date wills should the unforeseen occur.

10. Purchase disability and life insurance. Your most valuable financial asset is your income stream over the coming years. Protect it with adequate private disability and life insurance policies. Policies provided by your employer typically end upon termination of employment and having a portable policy is important.

These tips will help you maximize your financial position over your work life and through retirement. The best time to get on the right track is yesterday; the second best time is today. Staying in shape financially is easier than messing up and then attempting to fix it.
 

Mr. Schiller is a physician contract and tax attorney and has practiced in Norristown, Penn. for the past 30 years. He can be contacted at 610-277-5900 or www.schillerlawassociates.com or David@SchillerLawAssociates.com.

 

As a contract and tax attorney for physicians for over 30 years, I have reviewed many asset summaries of late-career physicians. Although most have historically strong annual incomes of $200,000 to $400,000, accumulated wealth varies tremendously. Some physicians in their 60s have a home, a small retirement plan, and little else. Others have cash equivalents of $5,000,000 or more, no debt, real estate, and other assets. In my experience, this variance usually does not relate primarily to income differences but rather spending control and financial knowledge. If you are interested in having the opportunity to retire and not worry about finding an “early bird” special at your favorite restaurant, this article provides ten tips to help you achieve that dream.

1. Fund a Roth IRA. Immediately start funding a Roth IRA. The current limit is $5,500 per calendar year. The principal and interest will grow tax-free (not tax-deferred) over decades. At your retirement age, you will have $500,000 tax-free (invested at historic rates of growth).

2. Contribute to an employer retirement plan. Contribute to your employer’s Roth 401-K or regular 401-K. Add money starting the first day you are eligible at the rate of at least 5% of your compensation. By age 35, contribute no less than 10% of your compensation up to the legal maximum. In a Roth 401-K, you will have decades of tax-free accumulation. You may also enjoy the employer matching contribution, which varies from job to job. Do not take loans on 401-K plans. If you borrow and then terminate employment before completing repayment, the borrowed funds are treated as a plan distribution, subjecting them to taxation and possibly a penalty if you are under age 59.5. If switching jobs, move your 401-K retirement plan account into an IRA; do not cash it out. If necessary, you usually can withdraw funds to make a down payment on a home or for an emergency, but plan contributions should be viewed as “tomorrow” money. You can borrow to purchase a home and to finance your children’s educations but you cannot borrow to retire.

3. Be debt-free. It is easier to accumulate wealth if you are debt-free. Mortgages, student loans, and car payments should be minimized and eliminated as quickly as possible so that available net income is used to invest both through retirement plans and on an after-tax basis. Cars should be purchased, not leased as the “tax benefit” of leasing is a myth. Leasing a car is an expensive way of borrowing money, as you are effectively purchasing only the most expensive depreciating years of the car’s useful life (the initial few years). You should also not have credit card debt at any time as credit card debt means you are spending money before you earn it. Borrowing for clothing or a vacation reflects the inability to control one’s spending.

4. Use tax-advantaged investment vehicles. Interest income on your investments is taxed at ordinary income rates, perhaps 30% or more, but dividends issued from stock or stock mutual funds are taxed at lower long-term capital gains rates. Similarly, when you sell a stock or a stock mutual fund, the appreciation is taxed at long-term capital gains rates under most circumstances. As you are able to set funds aside, make sure that you are using tax-advantaged investment vehicles.

5. Consider no-load mutual funds. When investing in the stock market or otherwise, consider no-load mutual funds such as those offered by Vanguard that do not require an “investment advisor.” Such funds do not have sales charges and save you money. The greatest chance you have of underperforming the market relates to the expenses associated with investment, more so than the particular investments selected. Since almost all advisors underperform the market, you should consider investing on your own, minimizing costs, and watching your funds grow. As a younger physician with many high-income years in front of you, a good portion of your investments should be in equities to enjoy their appreciation over decades. With bank interest rates being minuscule, there is no reasonable alternative.

6. Develop a budget. If you or your spouse has an issue with shopping or overspending, it is imperative that you develop a budget: first allocating funds to long-term savings such as a retirement plan, next to short-term savings, then to unavoidable recurring costs such as rent or mortgage, student loans, food, and discretionary expenditures. The perfect time to put this in place is when you go from the salary of a resident or fellow into a full-time job and your pay increases by multifold. Read the book The Millionaire Next Door: The Surprising Secrets of America’s Wealthy by Thomas J. Stanley and gain control, as it is easy to do otherwise with an unprecedented and significant salary jump. If you start to live on your new salary, you will never be in a position to amass wealth and retire comfortably.

7. Send your kids to public, not private school. For each of your children, would you rather pay astronomic tuition bills for 4-8 years of college or 16-20 years counting grades 1-12 in private school? When you have children approaching school age, choose an A+ school district and send your kids to public school, not private school – they will still get into competitive colleges. This can save hundreds of thousands of dollars per child.

8. Fund a 529 plan. Whether or not you currently have children, you can fund a 529 plan to enjoy tax-free growth and plan for education expenses of children or future children. If you do not have children yet, you can name yourself or a different party as the beneficiary and then change it after children are born. If you do not have children, you can either use the 529 for someone else or cash the investment and recover the money including growth/loss thereon. Trying to fund college educations out of current income is difficult and it is better to prefund than to pay back student loans over many years.

9. Draft a will. If you are married or have children or both, it is imperative that you have wills drafted so that your wishes are implemented upon your passing. Many tax advantages are available without using complicated trusts and it is important that you maintain up-to-date wills should the unforeseen occur.

10. Purchase disability and life insurance. Your most valuable financial asset is your income stream over the coming years. Protect it with adequate private disability and life insurance policies. Policies provided by your employer typically end upon termination of employment and having a portable policy is important.

These tips will help you maximize your financial position over your work life and through retirement. The best time to get on the right track is yesterday; the second best time is today. Staying in shape financially is easier than messing up and then attempting to fix it.
 

Mr. Schiller is a physician contract and tax attorney and has practiced in Norristown, Penn. for the past 30 years. He can be contacted at 610-277-5900 or www.schillerlawassociates.com or David@SchillerLawAssociates.com.

 

As a contract and tax attorney for physicians for over 30 years, I have reviewed many asset summaries of late-career physicians. Although most have historically strong annual incomes of $200,000 to $400,000, accumulated wealth varies tremendously. Some physicians in their 60s have a home, a small retirement plan, and little else. Others have cash equivalents of $5,000,000 or more, no debt, real estate, and other assets. In my experience, this variance usually does not relate primarily to income differences but rather spending control and financial knowledge. If you are interested in having the opportunity to retire and not worry about finding an “early bird” special at your favorite restaurant, this article provides ten tips to help you achieve that dream.

1. Fund a Roth IRA. Immediately start funding a Roth IRA. The current limit is $5,500 per calendar year. The principal and interest will grow tax-free (not tax-deferred) over decades. At your retirement age, you will have $500,000 tax-free (invested at historic rates of growth).

2. Contribute to an employer retirement plan. Contribute to your employer’s Roth 401-K or regular 401-K. Add money starting the first day you are eligible at the rate of at least 5% of your compensation. By age 35, contribute no less than 10% of your compensation up to the legal maximum. In a Roth 401-K, you will have decades of tax-free accumulation. You may also enjoy the employer matching contribution, which varies from job to job. Do not take loans on 401-K plans. If you borrow and then terminate employment before completing repayment, the borrowed funds are treated as a plan distribution, subjecting them to taxation and possibly a penalty if you are under age 59.5. If switching jobs, move your 401-K retirement plan account into an IRA; do not cash it out. If necessary, you usually can withdraw funds to make a down payment on a home or for an emergency, but plan contributions should be viewed as “tomorrow” money. You can borrow to purchase a home and to finance your children’s educations but you cannot borrow to retire.

3. Be debt-free. It is easier to accumulate wealth if you are debt-free. Mortgages, student loans, and car payments should be minimized and eliminated as quickly as possible so that available net income is used to invest both through retirement plans and on an after-tax basis. Cars should be purchased, not leased as the “tax benefit” of leasing is a myth. Leasing a car is an expensive way of borrowing money, as you are effectively purchasing only the most expensive depreciating years of the car’s useful life (the initial few years). You should also not have credit card debt at any time as credit card debt means you are spending money before you earn it. Borrowing for clothing or a vacation reflects the inability to control one’s spending.

4. Use tax-advantaged investment vehicles. Interest income on your investments is taxed at ordinary income rates, perhaps 30% or more, but dividends issued from stock or stock mutual funds are taxed at lower long-term capital gains rates. Similarly, when you sell a stock or a stock mutual fund, the appreciation is taxed at long-term capital gains rates under most circumstances. As you are able to set funds aside, make sure that you are using tax-advantaged investment vehicles.

5. Consider no-load mutual funds. When investing in the stock market or otherwise, consider no-load mutual funds such as those offered by Vanguard that do not require an “investment advisor.” Such funds do not have sales charges and save you money. The greatest chance you have of underperforming the market relates to the expenses associated with investment, more so than the particular investments selected. Since almost all advisors underperform the market, you should consider investing on your own, minimizing costs, and watching your funds grow. As a younger physician with many high-income years in front of you, a good portion of your investments should be in equities to enjoy their appreciation over decades. With bank interest rates being minuscule, there is no reasonable alternative.

6. Develop a budget. If you or your spouse has an issue with shopping or overspending, it is imperative that you develop a budget: first allocating funds to long-term savings such as a retirement plan, next to short-term savings, then to unavoidable recurring costs such as rent or mortgage, student loans, food, and discretionary expenditures. The perfect time to put this in place is when you go from the salary of a resident or fellow into a full-time job and your pay increases by multifold. Read the book The Millionaire Next Door: The Surprising Secrets of America’s Wealthy by Thomas J. Stanley and gain control, as it is easy to do otherwise with an unprecedented and significant salary jump. If you start to live on your new salary, you will never be in a position to amass wealth and retire comfortably.

7. Send your kids to public, not private school. For each of your children, would you rather pay astronomic tuition bills for 4-8 years of college or 16-20 years counting grades 1-12 in private school? When you have children approaching school age, choose an A+ school district and send your kids to public school, not private school – they will still get into competitive colleges. This can save hundreds of thousands of dollars per child.

8. Fund a 529 plan. Whether or not you currently have children, you can fund a 529 plan to enjoy tax-free growth and plan for education expenses of children or future children. If you do not have children yet, you can name yourself or a different party as the beneficiary and then change it after children are born. If you do not have children, you can either use the 529 for someone else or cash the investment and recover the money including growth/loss thereon. Trying to fund college educations out of current income is difficult and it is better to prefund than to pay back student loans over many years.

9. Draft a will. If you are married or have children or both, it is imperative that you have wills drafted so that your wishes are implemented upon your passing. Many tax advantages are available without using complicated trusts and it is important that you maintain up-to-date wills should the unforeseen occur.

10. Purchase disability and life insurance. Your most valuable financial asset is your income stream over the coming years. Protect it with adequate private disability and life insurance policies. Policies provided by your employer typically end upon termination of employment and having a portable policy is important.

These tips will help you maximize your financial position over your work life and through retirement. The best time to get on the right track is yesterday; the second best time is today. Staying in shape financially is easier than messing up and then attempting to fix it.
 

Mr. Schiller is a physician contract and tax attorney and has practiced in Norristown, Penn. for the past 30 years. He can be contacted at 610-277-5900 or www.schillerlawassociates.com or David@SchillerLawAssociates.com.

 

The AGA recently partnered with CommonBond (studentloans.gastro.org) to help its members save thousands by refinancing their student loans. Kevin Tin, MD, who is an AGA member, has a student loan story that can certainly offer guidance and perspective to others. Kevin earned his B.S. in health sciences from Stony Brook University and his M.D. from American University of Antigua. He completed his residency at Maimonides Medical Center in Brooklyn, N.Y., where he is currently a gastroenterology fellow.

As with many other aspiring gastroenterologists, Kevin took out more than $200,000 in federal and private student loans to pay his way through medical school. He recently refinanced these loans and picked up some lessons along the way. Below, he offers some tips for getting free of debt; taking Kevin’s advice to heart can help you worry less about your loans and focus instead on serving your patients.
 

How was your medical school experience?

My medical school experience was memorable for many reasons, particularly because I had an opportunity to study in Antigua. My time there allowed me to experience a different culture and, ultimately, a different perspective. I believe this taught me how to relate to each of my patients’ individual situations and to see things from their eyes. But, the overall cost of medical school (i.e., tuition, cost of living, medical supplies, and study resources) caught me off guard. By the time I graduated, I had amassed more than $200,000 in student loans; this was not something that I felt prepared to deal with.

How would you describe your initial experience with student loans?

BrianAJackson/Thinkstock

Frustrating and stressful. I struggled to understand the complex application processes, the best type of loan for my personal situation, and to find the lowest rates. In addition, I later learned that my loans’ interest capitalized while I was still in school, which made the volume of my debt greater than what I initially borrowed. It would have been helpful to know that up front, as I could have made small, monthly payments earlier.
 

What strategies have you implemented to pay off your student loans?

I’ve learned a few crucial strategies that any physician could, and should, take advantage of to save money on their student loans. First, be sure to spend responsibly while in medical school. I focused on finding free study resources and medical supplies as well as sharing materials with friends and roommates whenever possible. As I mentioned earlier, make small payments when you can; as soon as I entered residency, I started making interest payments on my loans. I wanted to contribute as much as I could, as early as I could, to get out of debt. Second, after graduation, endeavor to live frugally. Although I knew my salary would ultimately increase, I saved as much money as I could and put money toward paying off my loans. Finally, try to refinance your student loans; I refinanced mine with CommonBond. It was an unexpectedly pleasant experience: the website was extremely easy to navigate and any time I needed help, a representative was available to answer my questions. CommonBond also gave me the best rates I could find.
 

What were the benefits of refinancing your student loans?

I initially had a 15-year student loan with a 5.75% APR. When I refinanced with CommonBond, I secured a 7-year, fixed-rate student loan with a 4.2% APR. I made this choice because I’ll be saving $30,000 to $40,000 over the life of my loan, and my monthly payment stays stable, regardless of how the market fluctuates. Refinancing my student loan has put me on the path to becoming debt free, which will allow me to focus more on my career.
 

What is your advice to early-career GIs who have or need to take out loans?

Do your research and do it early. While in medical school, understand what options are available to you and learn to live within your means. In your residency, plan to use a portion of your salary for paying off your student loans, even if it is only a small amount each month. This will reduce the volume of interest that will capitalize, so your loan balance doesn’t grow over time. When you start your full-time job, be financially responsible and limit your spending so you can devote additional funds to paying off your student loans.

If you would like to learn more about student loan refinancing with CommonBond, please visit studentloans.gastro.org. AGA members get a $200 cash bonus for refinancing!
 

Ms. Duggal is vice president of marketing for CommonBond.

 

The AGA recently partnered with CommonBond (studentloans.gastro.org) to help its members save thousands by refinancing their student loans. Kevin Tin, MD, who is an AGA member, has a student loan story that can certainly offer guidance and perspective to others. Kevin earned his B.S. in health sciences from Stony Brook University and his M.D. from American University of Antigua. He completed his residency at Maimonides Medical Center in Brooklyn, N.Y., where he is currently a gastroenterology fellow.

As with many other aspiring gastroenterologists, Kevin took out more than $200,000 in federal and private student loans to pay his way through medical school. He recently refinanced these loans and picked up some lessons along the way. Below, he offers some tips for getting free of debt; taking Kevin’s advice to heart can help you worry less about your loans and focus instead on serving your patients.
 

How was your medical school experience?

My medical school experience was memorable for many reasons, particularly because I had an opportunity to study in Antigua. My time there allowed me to experience a different culture and, ultimately, a different perspective. I believe this taught me how to relate to each of my patients’ individual situations and to see things from their eyes. But, the overall cost of medical school (i.e., tuition, cost of living, medical supplies, and study resources) caught me off guard. By the time I graduated, I had amassed more than $200,000 in student loans; this was not something that I felt prepared to deal with.

How would you describe your initial experience with student loans?

BrianAJackson/Thinkstock

Frustrating and stressful. I struggled to understand the complex application processes, the best type of loan for my personal situation, and to find the lowest rates. In addition, I later learned that my loans’ interest capitalized while I was still in school, which made the volume of my debt greater than what I initially borrowed. It would have been helpful to know that up front, as I could have made small, monthly payments earlier.
 

What strategies have you implemented to pay off your student loans?

I’ve learned a few crucial strategies that any physician could, and should, take advantage of to save money on their student loans. First, be sure to spend responsibly while in medical school. I focused on finding free study resources and medical supplies as well as sharing materials with friends and roommates whenever possible. As I mentioned earlier, make small payments when you can; as soon as I entered residency, I started making interest payments on my loans. I wanted to contribute as much as I could, as early as I could, to get out of debt. Second, after graduation, endeavor to live frugally. Although I knew my salary would ultimately increase, I saved as much money as I could and put money toward paying off my loans. Finally, try to refinance your student loans; I refinanced mine with CommonBond. It was an unexpectedly pleasant experience: the website was extremely easy to navigate and any time I needed help, a representative was available to answer my questions. CommonBond also gave me the best rates I could find.
 

What were the benefits of refinancing your student loans?

I initially had a 15-year student loan with a 5.75% APR. When I refinanced with CommonBond, I secured a 7-year, fixed-rate student loan with a 4.2% APR. I made this choice because I’ll be saving $30,000 to $40,000 over the life of my loan, and my monthly payment stays stable, regardless of how the market fluctuates. Refinancing my student loan has put me on the path to becoming debt free, which will allow me to focus more on my career.
 

What is your advice to early-career GIs who have or need to take out loans?

Do your research and do it early. While in medical school, understand what options are available to you and learn to live within your means. In your residency, plan to use a portion of your salary for paying off your student loans, even if it is only a small amount each month. This will reduce the volume of interest that will capitalize, so your loan balance doesn’t grow over time. When you start your full-time job, be financially responsible and limit your spending so you can devote additional funds to paying off your student loans.

If you would like to learn more about student loan refinancing with CommonBond, please visit studentloans.gastro.org. AGA members get a $200 cash bonus for refinancing!
 

Ms. Duggal is vice president of marketing for CommonBond.

 

The AGA recently partnered with CommonBond (studentloans.gastro.org) to help its members save thousands by refinancing their student loans. Kevin Tin, MD, who is an AGA member, has a student loan story that can certainly offer guidance and perspective to others. Kevin earned his B.S. in health sciences from Stony Brook University and his M.D. from American University of Antigua. He completed his residency at Maimonides Medical Center in Brooklyn, N.Y., where he is currently a gastroenterology fellow.

As with many other aspiring gastroenterologists, Kevin took out more than $200,000 in federal and private student loans to pay his way through medical school. He recently refinanced these loans and picked up some lessons along the way. Below, he offers some tips for getting free of debt; taking Kevin’s advice to heart can help you worry less about your loans and focus instead on serving your patients.
 

How was your medical school experience?

My medical school experience was memorable for many reasons, particularly because I had an opportunity to study in Antigua. My time there allowed me to experience a different culture and, ultimately, a different perspective. I believe this taught me how to relate to each of my patients’ individual situations and to see things from their eyes. But, the overall cost of medical school (i.e., tuition, cost of living, medical supplies, and study resources) caught me off guard. By the time I graduated, I had amassed more than $200,000 in student loans; this was not something that I felt prepared to deal with.

How would you describe your initial experience with student loans?

BrianAJackson/Thinkstock

Frustrating and stressful. I struggled to understand the complex application processes, the best type of loan for my personal situation, and to find the lowest rates. In addition, I later learned that my loans’ interest capitalized while I was still in school, which made the volume of my debt greater than what I initially borrowed. It would have been helpful to know that up front, as I could have made small, monthly payments earlier.
 

What strategies have you implemented to pay off your student loans?

I’ve learned a few crucial strategies that any physician could, and should, take advantage of to save money on their student loans. First, be sure to spend responsibly while in medical school. I focused on finding free study resources and medical supplies as well as sharing materials with friends and roommates whenever possible. As I mentioned earlier, make small payments when you can; as soon as I entered residency, I started making interest payments on my loans. I wanted to contribute as much as I could, as early as I could, to get out of debt. Second, after graduation, endeavor to live frugally. Although I knew my salary would ultimately increase, I saved as much money as I could and put money toward paying off my loans. Finally, try to refinance your student loans; I refinanced mine with CommonBond. It was an unexpectedly pleasant experience: the website was extremely easy to navigate and any time I needed help, a representative was available to answer my questions. CommonBond also gave me the best rates I could find.
 

What were the benefits of refinancing your student loans?

I initially had a 15-year student loan with a 5.75% APR. When I refinanced with CommonBond, I secured a 7-year, fixed-rate student loan with a 4.2% APR. I made this choice because I’ll be saving $30,000 to $40,000 over the life of my loan, and my monthly payment stays stable, regardless of how the market fluctuates. Refinancing my student loan has put me on the path to becoming debt free, which will allow me to focus more on my career.
 

What is your advice to early-career GIs who have or need to take out loans?

Do your research and do it early. While in medical school, understand what options are available to you and learn to live within your means. In your residency, plan to use a portion of your salary for paying off your student loans, even if it is only a small amount each month. This will reduce the volume of interest that will capitalize, so your loan balance doesn’t grow over time. When you start your full-time job, be financially responsible and limit your spending so you can devote additional funds to paying off your student loans.

If you would like to learn more about student loan refinancing with CommonBond, please visit studentloans.gastro.org. AGA members get a $200 cash bonus for refinancing!
 

Ms. Duggal is vice president of marketing for CommonBond.

 

An unfortunate fact for many physicians practicing in the United States is that they will contend with medical malpractice suits at some point in their careers. While data specific to gastroenterology malpractice claims is difficult to find,¹ the Physician Insurers Association of America has reported that out of the 28 specialty fields of medicine analyzed from 1985 to 2004, gastroenterology ranked 21st in the number of claims reported², representing about 2% of the total overall number of claims.

A 2007-2008 survey of 5,825 physicians, not limited by subspecialty, showed that 42.2% of all physicians had a malpractice claim filed against them at some point in their career.³ Of all physicians aged 55 and older, 60.5% of respondents had been sued at some point during their career.³ Incidents of medical liability claims were much higher among men (47.5%) than among women (23.9%). ³ The average cost to defend these cases through trial is more than $100,000, but the average cost diminishes to $21,163 with cases that are dropped, dismissed, or withdrawn prior to trial.³

In 2017, JAMA Internal Medicine published additional statistical findings related to medical malpractice claims.⁴JAMA reported that the rate of claims paid on behalf of all physicians had declined by 55.7% between 1992 and 2014; from 20.1 per 1,000 physicians to 8.9 per 1000 physicians.⁴ The mean payment for the 280,368 claims reported in the National Practitioner Data Bank during this time frame was $329,565 (adjusted to 2014 dollars).⁴

JAMA also reported that between 2004 and 2014, diagnostic error served as the most prevalent basis for allegations of medical negligence against all physicians.⁴ These allegations comprised 31.8% of claims during this period.⁴ With respect to gastroenterologists, prior data from 1985-2004 similarly suggests that diagnostic interview, evaluation, or consultation results in the most claims against this group of physicians.⁴ The most common allegations specific to gastroenterologists involve malignant neoplasms of the colon and rectum, followed by abdominal and pelvic symptoms, regional enteritis, colitis, and malignant neoplasms of the stomach.² Errors in diagnosing stomach, colon, and rectal cancers resulted in the highest average indemnity payment.²

Professional liability

Patients can allege or establish malpractice liability against a doctor based on a number of things; we will discuss a few of the most common types of liability, offer suggestions as to how you might minimize your risk of being sued, and how best to cope when you are sued.

Negligence: One of the most common theories you may be sued under is negligence. To state a negligence claim against a physician, a plaintiff must show that the doctor owed the patient a duty recognized by law, that the physician breached that duty, that the alleged breach resulted in injury to the patient, and that the patient sustained legally recognized damages as a result. In a lawsuit brought on the basis of claimed medical negligence, a patient claims that a physician, in the course of rendering treatment, failed to meet the applicable standard of care.

Informed consent: Another theory is informed consent. A physician must obtain full, knowing, and voluntary informed consent from her patient for any nonemergency surgical procedure. A patient’s lack of consent claim is premised on the allegation that the physician failed to reveal a significant risk, which caused harm to the plaintiff, and that had the potential risk been disclosed, a reasonable person would not have consented to the treatment or procedure. Informed consent requires more from a physician than simply having the patient sign a form. The physician performing the procedure for which consent is required must ensure that the patient is aware of the benefits of the proposed treatment, the material risks of the treatment, alternative options to the proposed treatment, and possible consequences of declining the treatment. This information must be communicated to a patient so that she clearly understands it.

Contractual liability of doctor to patient: Physicians and patients can enter into express written contracts regarding the care provided. These contracts can include various treatment plans, the likelihood of success, and even the physician’s promise to cure. Traditionally, courts have respected a physician’s freedom to contract as he or she chooses. However, once a contract is formed, a plaintiff may have a cause of action for breach of contract if the outcome of the treatment is not what was promised.
 

Minimizing risk

Opportunities exist to decrease the chances of being sued. One major area involves documentation, as the patient’s records will serve as the basis of the litigation. Accordingly, physicians should ensure notations are legible so that lawyers, jurors, and others participating in the patient’s care do not misunderstand the records. This has been made easier by the recent implementation of electronic health records. Records should also be comprehensive and kept contemporaneously with treatment to maintain accuracy and to avoid the appearance of impropriety. Subsequent entries must be clearly identified and dated. Never change records after a patient commences a suit against you. Remember that everything you write can come out during the investigation phase of the lawsuit.

 

Another opportunity to decrease your chances of being sued is to keep informed about recent developments in your field. Make a point to read pertinent literature, attend seminars, and do whatever is necessary to stay aware of, and to incorporate into your practice, current methods of treatment and diagnosis.

Physicians should also be cognizant of contractual liability. When discussing treatment, never guarantee results. Additionally, once a physician-patient relationship is established, you cannot withdraw from the relationship without providing adequate notice to the patient in time to obtain alternative care. Terminating the relationship without such is called abandonment, and can result in professional discipline and civil liability.

Finally, physicians should be aware of how relationships with the patient, institutions, and health care providers can affect liability. Communication is key to fostering a good doctor-patient relationship, and studies support that the quality of the doctor-patient relationship is a primary factor in determining whether a patient will sue her physician.² You should also understand how your relationship with your workplace affects your potential liability. For example, your workplace may be vicariously liable for negligence found on your part, and therefore, deemed ultimately responsible for any verdict or settlement amount. Conversely, you could be found vicariously liable for the actions of health care providers with whom you work. In the surgery context, the basis for this type of liability is that the surgeon is in a position of highest authority and has ultimate control over everything that occurs during the course of surgery. Therefore, you should understand the consequences of your relationships with the patients, facilities, and providers with which you work.⁵

Conclusion

Before a lawsuit, and as a regular part of your practice, it is important that you thoroughly and legibly document all aspects of care provided, stay current with medical advances, and take the time to create a relationship with your patients involving quality communication. It is impossible for us to provide you with enough information to adequately prepare you for the day on which you may be sued. We nevertheless hope that following the aforementioned suggestions will be of some help.

References

1. Medical Malpractice Claims and Risk Management in Gastroenterology and Gastrointestinal Endoscopy. American Society for Gastrointestinal Endoscopy, 2017. <www.asge.org>.

2. Physician Insurers Association of America. PIAA Claim Trend Analysis: Gastroenterology, iv. Lawrenceville, N.J.: PIAA, 2004. <http://www.piaa.us>.

3. Kane C., Policy Research Perspective: Medical Liability Claim Frequency: 2007-2008 Snapshot of Physicians, American Medical Association, 2010.

4. Schaffer A.C., et al. JAMA Internal Med. 2017;177(5):710-8.

5. Dodge A.M. Wilsonville, Ore. Book Partners, Inc. 2001.

 

An unfortunate fact for many physicians practicing in the United States is that they will contend with medical malpractice suits at some point in their careers. While data specific to gastroenterology malpractice claims is difficult to find,¹ the Physician Insurers Association of America has reported that out of the 28 specialty fields of medicine analyzed from 1985 to 2004, gastroenterology ranked 21st in the number of claims reported², representing about 2% of the total overall number of claims.

A 2007-2008 survey of 5,825 physicians, not limited by subspecialty, showed that 42.2% of all physicians had a malpractice claim filed against them at some point in their career.³ Of all physicians aged 55 and older, 60.5% of respondents had been sued at some point during their career.³ Incidents of medical liability claims were much higher among men (47.5%) than among women (23.9%). ³ The average cost to defend these cases through trial is more than $100,000, but the average cost diminishes to $21,163 with cases that are dropped, dismissed, or withdrawn prior to trial.³

In 2017, JAMA Internal Medicine published additional statistical findings related to medical malpractice claims.⁴JAMA reported that the rate of claims paid on behalf of all physicians had declined by 55.7% between 1992 and 2014; from 20.1 per 1,000 physicians to 8.9 per 1000 physicians.⁴ The mean payment for the 280,368 claims reported in the National Practitioner Data Bank during this time frame was $329,565 (adjusted to 2014 dollars).⁴

JAMA also reported that between 2004 and 2014, diagnostic error served as the most prevalent basis for allegations of medical negligence against all physicians.⁴ These allegations comprised 31.8% of claims during this period.⁴ With respect to gastroenterologists, prior data from 1985-2004 similarly suggests that diagnostic interview, evaluation, or consultation results in the most claims against this group of physicians.⁴ The most common allegations specific to gastroenterologists involve malignant neoplasms of the colon and rectum, followed by abdominal and pelvic symptoms, regional enteritis, colitis, and malignant neoplasms of the stomach.² Errors in diagnosing stomach, colon, and rectal cancers resulted in the highest average indemnity payment.²

Professional liability

Patients can allege or establish malpractice liability against a doctor based on a number of things; we will discuss a few of the most common types of liability, offer suggestions as to how you might minimize your risk of being sued, and how best to cope when you are sued.

Negligence: One of the most common theories you may be sued under is negligence. To state a negligence claim against a physician, a plaintiff must show that the doctor owed the patient a duty recognized by law, that the physician breached that duty, that the alleged breach resulted in injury to the patient, and that the patient sustained legally recognized damages as a result. In a lawsuit brought on the basis of claimed medical negligence, a patient claims that a physician, in the course of rendering treatment, failed to meet the applicable standard of care.

Informed consent: Another theory is informed consent. A physician must obtain full, knowing, and voluntary informed consent from her patient for any nonemergency surgical procedure. A patient’s lack of consent claim is premised on the allegation that the physician failed to reveal a significant risk, which caused harm to the plaintiff, and that had the potential risk been disclosed, a reasonable person would not have consented to the treatment or procedure. Informed consent requires more from a physician than simply having the patient sign a form. The physician performing the procedure for which consent is required must ensure that the patient is aware of the benefits of the proposed treatment, the material risks of the treatment, alternative options to the proposed treatment, and possible consequences of declining the treatment. This information must be communicated to a patient so that she clearly understands it.

Contractual liability of doctor to patient: Physicians and patients can enter into express written contracts regarding the care provided. These contracts can include various treatment plans, the likelihood of success, and even the physician’s promise to cure. Traditionally, courts have respected a physician’s freedom to contract as he or she chooses. However, once a contract is formed, a plaintiff may have a cause of action for breach of contract if the outcome of the treatment is not what was promised.
 

Minimizing risk

Opportunities exist to decrease the chances of being sued. One major area involves documentation, as the patient’s records will serve as the basis of the litigation. Accordingly, physicians should ensure notations are legible so that lawyers, jurors, and others participating in the patient’s care do not misunderstand the records. This has been made easier by the recent implementation of electronic health records. Records should also be comprehensive and kept contemporaneously with treatment to maintain accuracy and to avoid the appearance of impropriety. Subsequent entries must be clearly identified and dated. Never change records after a patient commences a suit against you. Remember that everything you write can come out during the investigation phase of the lawsuit.

 

Another opportunity to decrease your chances of being sued is to keep informed about recent developments in your field. Make a point to read pertinent literature, attend seminars, and do whatever is necessary to stay aware of, and to incorporate into your practice, current methods of treatment and diagnosis.

Physicians should also be cognizant of contractual liability. When discussing treatment, never guarantee results. Additionally, once a physician-patient relationship is established, you cannot withdraw from the relationship without providing adequate notice to the patient in time to obtain alternative care. Terminating the relationship without such is called abandonment, and can result in professional discipline and civil liability.

Finally, physicians should be aware of how relationships with the patient, institutions, and health care providers can affect liability. Communication is key to fostering a good doctor-patient relationship, and studies support that the quality of the doctor-patient relationship is a primary factor in determining whether a patient will sue her physician.² You should also understand how your relationship with your workplace affects your potential liability. For example, your workplace may be vicariously liable for negligence found on your part, and therefore, deemed ultimately responsible for any verdict or settlement amount. Conversely, you could be found vicariously liable for the actions of health care providers with whom you work. In the surgery context, the basis for this type of liability is that the surgeon is in a position of highest authority and has ultimate control over everything that occurs during the course of surgery. Therefore, you should understand the consequences of your relationships with the patients, facilities, and providers with which you work.⁵

Conclusion

Before a lawsuit, and as a regular part of your practice, it is important that you thoroughly and legibly document all aspects of care provided, stay current with medical advances, and take the time to create a relationship with your patients involving quality communication. It is impossible for us to provide you with enough information to adequately prepare you for the day on which you may be sued. We nevertheless hope that following the aforementioned suggestions will be of some help.

References

1. Medical Malpractice Claims and Risk Management in Gastroenterology and Gastrointestinal Endoscopy. American Society for Gastrointestinal Endoscopy, 2017. <www.asge.org>.

2. Physician Insurers Association of America. PIAA Claim Trend Analysis: Gastroenterology, iv. Lawrenceville, N.J.: PIAA, 2004. <http://www.piaa.us>.

3. Kane C., Policy Research Perspective: Medical Liability Claim Frequency: 2007-2008 Snapshot of Physicians, American Medical Association, 2010.

4. Schaffer A.C., et al. JAMA Internal Med. 2017;177(5):710-8.

5. Dodge A.M. Wilsonville, Ore. Book Partners, Inc. 2001.

 

An unfortunate fact for many physicians practicing in the United States is that they will contend with medical malpractice suits at some point in their careers. While data specific to gastroenterology malpractice claims is difficult to find,¹ the Physician Insurers Association of America has reported that out of the 28 specialty fields of medicine analyzed from 1985 to 2004, gastroenterology ranked 21st in the number of claims reported², representing about 2% of the total overall number of claims.

A 2007-2008 survey of 5,825 physicians, not limited by subspecialty, showed that 42.2% of all physicians had a malpractice claim filed against them at some point in their career.³ Of all physicians aged 55 and older, 60.5% of respondents had been sued at some point during their career.³ Incidents of medical liability claims were much higher among men (47.5%) than among women (23.9%). ³ The average cost to defend these cases through trial is more than $100,000, but the average cost diminishes to $21,163 with cases that are dropped, dismissed, or withdrawn prior to trial.³

In 2017, JAMA Internal Medicine published additional statistical findings related to medical malpractice claims.⁴JAMA reported that the rate of claims paid on behalf of all physicians had declined by 55.7% between 1992 and 2014; from 20.1 per 1,000 physicians to 8.9 per 1000 physicians.⁴ The mean payment for the 280,368 claims reported in the National Practitioner Data Bank during this time frame was $329,565 (adjusted to 2014 dollars).⁴

JAMA also reported that between 2004 and 2014, diagnostic error served as the most prevalent basis for allegations of medical negligence against all physicians.⁴ These allegations comprised 31.8% of claims during this period.⁴ With respect to gastroenterologists, prior data from 1985-2004 similarly suggests that diagnostic interview, evaluation, or consultation results in the most claims against this group of physicians.⁴ The most common allegations specific to gastroenterologists involve malignant neoplasms of the colon and rectum, followed by abdominal and pelvic symptoms, regional enteritis, colitis, and malignant neoplasms of the stomach.² Errors in diagnosing stomach, colon, and rectal cancers resulted in the highest average indemnity payment.²

Professional liability

Patients can allege or establish malpractice liability against a doctor based on a number of things; we will discuss a few of the most common types of liability, offer suggestions as to how you might minimize your risk of being sued, and how best to cope when you are sued.

Negligence: One of the most common theories you may be sued under is negligence. To state a negligence claim against a physician, a plaintiff must show that the doctor owed the patient a duty recognized by law, that the physician breached that duty, that the alleged breach resulted in injury to the patient, and that the patient sustained legally recognized damages as a result. In a lawsuit brought on the basis of claimed medical negligence, a patient claims that a physician, in the course of rendering treatment, failed to meet the applicable standard of care.

Informed consent: Another theory is informed consent. A physician must obtain full, knowing, and voluntary informed consent from her patient for any nonemergency surgical procedure. A patient’s lack of consent claim is premised on the allegation that the physician failed to reveal a significant risk, which caused harm to the plaintiff, and that had the potential risk been disclosed, a reasonable person would not have consented to the treatment or procedure. Informed consent requires more from a physician than simply having the patient sign a form. The physician performing the procedure for which consent is required must ensure that the patient is aware of the benefits of the proposed treatment, the material risks of the treatment, alternative options to the proposed treatment, and possible consequences of declining the treatment. This information must be communicated to a patient so that she clearly understands it.

Contractual liability of doctor to patient: Physicians and patients can enter into express written contracts regarding the care provided. These contracts can include various treatment plans, the likelihood of success, and even the physician’s promise to cure. Traditionally, courts have respected a physician’s freedom to contract as he or she chooses. However, once a contract is formed, a plaintiff may have a cause of action for breach of contract if the outcome of the treatment is not what was promised.
 

Minimizing risk

Opportunities exist to decrease the chances of being sued. One major area involves documentation, as the patient’s records will serve as the basis of the litigation. Accordingly, physicians should ensure notations are legible so that lawyers, jurors, and others participating in the patient’s care do not misunderstand the records. This has been made easier by the recent implementation of electronic health records. Records should also be comprehensive and kept contemporaneously with treatment to maintain accuracy and to avoid the appearance of impropriety. Subsequent entries must be clearly identified and dated. Never change records after a patient commences a suit against you. Remember that everything you write can come out during the investigation phase of the lawsuit.

 

Another opportunity to decrease your chances of being sued is to keep informed about recent developments in your field. Make a point to read pertinent literature, attend seminars, and do whatever is necessary to stay aware of, and to incorporate into your practice, current methods of treatment and diagnosis.

Physicians should also be cognizant of contractual liability. When discussing treatment, never guarantee results. Additionally, once a physician-patient relationship is established, you cannot withdraw from the relationship without providing adequate notice to the patient in time to obtain alternative care. Terminating the relationship without such is called abandonment, and can result in professional discipline and civil liability.

Finally, physicians should be aware of how relationships with the patient, institutions, and health care providers can affect liability. Communication is key to fostering a good doctor-patient relationship, and studies support that the quality of the doctor-patient relationship is a primary factor in determining whether a patient will sue her physician.² You should also understand how your relationship with your workplace affects your potential liability. For example, your workplace may be vicariously liable for negligence found on your part, and therefore, deemed ultimately responsible for any verdict or settlement amount. Conversely, you could be found vicariously liable for the actions of health care providers with whom you work. In the surgery context, the basis for this type of liability is that the surgeon is in a position of highest authority and has ultimate control over everything that occurs during the course of surgery. Therefore, you should understand the consequences of your relationships with the patients, facilities, and providers with which you work.⁵

Conclusion

Before a lawsuit, and as a regular part of your practice, it is important that you thoroughly and legibly document all aspects of care provided, stay current with medical advances, and take the time to create a relationship with your patients involving quality communication. It is impossible for us to provide you with enough information to adequately prepare you for the day on which you may be sued. We nevertheless hope that following the aforementioned suggestions will be of some help.

References

1. Medical Malpractice Claims and Risk Management in Gastroenterology and Gastrointestinal Endoscopy. American Society for Gastrointestinal Endoscopy, 2017. <www.asge.org>.

2. Physician Insurers Association of America. PIAA Claim Trend Analysis: Gastroenterology, iv. Lawrenceville, N.J.: PIAA, 2004. <http://www.piaa.us>.

3. Kane C., Policy Research Perspective: Medical Liability Claim Frequency: 2007-2008 Snapshot of Physicians, American Medical Association, 2010.

4. Schaffer A.C., et al. JAMA Internal Med. 2017;177(5):710-8.

5. Dodge A.M. Wilsonville, Ore. Book Partners, Inc. 2001.