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In Hamlet, Polonius gives his son advice for living that contains some of Shakespeare's most quoted lines: "Neither a borrower nor a lender be," and "This above all: to thine ownself be true."
Following is a summary of the advice I would give to a young doctor at the beginning of his or her professional career. It is based on observations of what people do well and what people do badly, and on my years of experience representing doctors.
The most important lesson-More important than the deal is the person in the deal
A good partner can take a bad situation and make it turn out well. A bad or incompetent partner can take a great situation and ruin it. When doctors buy or sell practices, the transactions tend to work based on the nature and good faith of the parties, not their written contracts. It is wise to associate only with good people. No matter how tempting a deal may be, pass it up if you have to associate with anyone with a bad reputation. If you're not sure why someone has a bad reputation, become his or her partner, and you'll find out.
The second most important lesson-If it looks too good to be true, presume it is not true
This universal rule applies at all times. Every offer presented to you will look great. If it doesn't look great, the promoter will go back to the drawing board and change the assumptions until it can be presented as a surefire, can't-miss deal. You do not have to give a reason for saying "no." The burden is not on you to defend your decision. The burden is on the promoters, who will do their best to make you feel guilty or stupid for not jumping at whatever they're pushing. Don't fall for their ploy.
The third most important lesson-Build a team of advisors
Use a lawyer and accountant who specialize in representing doctors. Get recommendations from other doctors. They are called advisors because they advise and you decide. We have known doctors who were not "allowed" to take lawful deductions because their accountants were not comfortable with it. Some accountants, unfortunately, are so fearful of an audit they do not permit clients to take aggressive, lawful deductions. If the accountant is that fearful of an audit, change accountants.
The rest of the lessons, in no particular order
Salespeople-Don't lose sight of the fact that salespeople earn their livings by selling. They are not impartial advisors. "Reviewing" by a salesperson is a sales device.
Salespeople emphasize their strong points and ignore or downplay their weak points. Do not be shy. Ask, "What are the possible problems I should be aware of?"
Don't seek tax advice from a salesperson. If the purchase cannot be justified without tax benefits, it's not worth buying. If tempted to buy, get a second opinion from your tax advisor.
Even if the salesperson is a friend, a clergyperson, a relative, or another doctor, when selling, he or she is a salesperson and all "salespeople" rules apply. I have seen doctors make the absolute worst decisions when they buy from or invest with a friend.
Financial priorities-It takes money to make money, so your first investments should be in your practice. The next investment is your home. Then establish a savings program for retirement and your children's education. All along, be sure to have adequate life, disability, medical, and liability insurance.
When those priorities are met and money is still available, enjoy it-If you protect yourself with insurance and investing programs, this gives you the flexibility of spending and enjoying the rest of your cash. Do not deprive your family of current living standards to save beyond your reasonable needs. This has several advantages:
• It eliminates one source of marital disagreements.
• Some doctors die before they enjoy their savings. It's far better that your spouse be able to take one cruise with you than two cruises after you're gone.
• The "save it all" advisors and the "spend it all" advisors are both wrong. Having a good balance between saving and spending is the key. No "expert" can make these decisions for you.
Take your vacations-Vacations are necessary in a high-pressure profession. Combine vacations with professional meetings when possible. You can establish new professional contacts, increase your knowledge, and often deduct the costs. Total productivity is increased by taking some time off. Be suspicious of employees who never take vacations, as this may suggest an unhealthy devotion to duty. Sometimes it's an indication the employee is embezzling.
Beware of patients at the extremes-Some will treat you with no respect, and others will treat you like a saint. Be suspicious of the new patient who says, "I want the best treatment possible, and money is no object." It may be no object because he or she has no intention of paying.
Beware of patients who are too complimentary. They can be the first to sue or change doctors when their unrealistic expectations are not met. Emphasizing good results is a team effort, and success requires patient cooperation. If a patient flatters you too much, turn it around and tell the person that the good result was due in significant part to his or her cooperation.
Some patients show little regard for their health and little respect for their doctors. Do not let these patients take advantage of you. This means resisting nonemergency, after-hours appointments for them. They have little regard for your time and will cancel appointments for any frivolous reason.
Don't bill patients nominal sums for broken appointments. The small fee for a broken appointment gives patients an alternative (i.e., they can break the appointment and suffer a minor penalty). When a patient who has broken an appointment visits the office again, advise him or her that future broken appointments without valid excuse will result in termination.
Be skeptical about investments-If it seems too good to be true, it probably is. Investing is not as difficult as many make it seem. Most doctors are best served by keeping their investments sane and simple. Their financial needs are met by annual savings, avoiding big mistakes, and compounding growth.
Remember that no one cares more about your money than you and your spouse. You can invest quite adequately if you're willing to take some time to learn how.
Do not invest in private business ventures run by others. I've never seen a doctor go bankrupt from malpractice claims. Every bankruptcy resulted from investing in a private business and personally guaranteeing the debts as a partner or guarantor.
Your practice is not a business; it's a profession-There is certainly a business aspect to your practice. To ignore that invites poverty. But fixating on the money is self-defeating. The wealthiest doctors I have known concentrated on their patients, and the money always followed.
Be satisfied-If you enjoy your work, your family, and good health, you have the important things in life. Never lose sight of this.
Brandon S. Collier. JD, LLM, provides tax and business planning services to the dental profession through Collier & Associates Inc., a law and consulting firm representing doctors in all phases of practice transitions and appraisals, retirement plan services, and tax deductible CE seminars. He is the editor of the biweekly Collier & Associates Doctors' Newsletter, which has provided tens of thousands of doctors with timely and practical wealth-building advice for 45 years. For more information, visit CollierAdvisors.com or call (216) 765-1199.
