Summary:
· Update On Trevor's Newest Business Endeavor [0:00:52]
· Embarking On A Journey: A Solo Private Practice [0:04:22]
· Protect Your Practice: Invest In Disability Insurance [0:06:26]
· Leading With Ownership: More Responsibility, More Satisfaction, More Rewards [0:10:44]
· The Trigger: Taking The Leap Into Solo Private Practice [0:13:16]
· The Perfect Timing For Your Business: Meeting Organic Needs [0:19:56]
· To Own Or Not To Own: The Practice Dilemma [0:24:00]
· Private Equity Knocking? Standing Strong In Independence [0:27:13]
· Best Of Both Worlds: The W-2/1099 Combo [0:29:39]
· The Latest Buzz In The Cryptocurrency Universe [0:35:33]
· Don't Let Go Of Your Value; It's Your Voice And Power [0:36:51]
Welcome to the Financial MD Show. This is the only podcast designed specifically for residents and young physicians to help you become educated on financial planning for physicians and avoid many of the common financial mistakes doctors make. Your hosts, Jon and Trevor, explore a different topic with each episode. Jon Solitro is a financial planner and certified financial education instructor. He’s been working with young physicians for the better part of the decade and lectures to graduate medical programs around the country. Dr. Trevor Smith is a board-certified ophthalmologist with a full-time practice and he has learned the ins and outs first-hand what it takes to make smart financial decisions as a young physician. And now, here are your hosts, Jon and Trevor.
Jon: Well, welcome again to the Financial MD Show. We are so honored to have back in the co-host seat, Dr. Trevor Smith, after some time getting busy doing some things. Trevor had a ton of stuff going on and we continued to try to get some content out, but always left his co-host seat open here. So, Trevor, super glad to have you back and sitting in and chatting and making this – I mean, you're the reason that people listen to the Financial MD Show, so our listenership has been dropping drastically and we're so glad to have you back.
Trevor: That's hilarious. Appreciate, appreciate that ego boost.
Jon: Yup, yup. So, what's going on man? How you've been? What have you been up to for the last – I don't know – this year? Let's say that.
Update On Trevor's Newest Business Endeavor [0:00:52]
Trevor: Oh man, yeah. So, I'm sitting here in my office. I'm over in Wyoming, Michigan, just opening up a practice. So that has been the primary busy item of the year. Yeah, I was just looking back on my calendar of when things have happened or like even just like when bills were paid for, you know, different projects I've been working on and I couldn't believe some of the things that felt like last year were like three months ago.
Jon: Okay, wow.
Trevor: It's one of those where I'm like, wow. I didn't know I was… I knew I was busy, but I didn't know – I was like mentally squeezing so much in. So, yeah, I'm here over Wyoming, Michigan. It's just south of Grand Rapids. It's kind of more like Granville, Wyoming, Byron Center. We're all kind of in the same area, just south of Grand Rapids. So, yeah, I decided to launch my own practice, been looking into that for years – two, three years – and finally decided to pull the trigger. So I was evaluating the practice where I still operate. I still do surgery over in Ionia, Michigan with another practice, and so, I'm still doing that and that's supporting me, starting the practice at the same time, so it's nice. I get to talk about it. I don't have to secretly, you know, be like opening a practice.
Jon: That's great.
Trevor: Even throughout the whole process, I was really transparent with my boss, Dr. Mike Flohr, a great guy. I've been in the Ophthalmology world practicing. He's a solo guy for like 40 years so he gets it, so that was nice.
Jon: Yeah.
Trevor: Lots of hurdles of like how do I handle this situation, how do I evaluate this, so that was one of the big ones. I was like, you know. I just… the stress of this, I figured, you know, it'd be better to do it without trying to make it a secret at the same time.
Jon: Yeah.
Trevor: Because people do do that and it's understandable, but I'm outside of the territory and it's been kind of weird like, dare I say, I feel like there's kind of like a God component to things. I don't tend to use that too loosely, but I couldn't have made this scenario. It hasn't been simple, but it's been better than I could have made it. The fact that I get to keep operating while…
Jon: Yeah, really, that's probably not that common, right?
Trevor: No. So I'm like doing two days a week out there. They kind of needed me less because they wanted to hire an optometrist so they kind of wanted me to be doing more part-time and I wanted to be doing part-time so it's just like win-win and then the timing worked out incredibly well so it was kind of right when I was wanting to launch, they were wanting me to just focus on surgery, so they could control their overhead costs.
Jon: Yeah.
Trevor: So it's more of an "eat what I kill" scenario now.
Jon: Yeah.
Trevor: I've never been in that position before. That's kind of fun which is inherently what I'm doing in my practice here, right?
Jon: Yeah, right.
Trevor: It's kind of like a little pre- like a little taste of when I have a lot of patient flow here, what I can picture. It's just kind of the motivations, I guess, will be very similar. It's like I got to see patients. I got to do surgery to pay the bills and I have to produce for them for them to pay their bills and to pay me. So, it's cool – that's the major update. What else is new? I think I've learned a lot more about what everything costs in my industry and it's expensive.
Jon: Yeah, yeah.
Embarking On A Journey: A Solo Private Practice [0:04:22]
Trevor: So, I chose to work with a group. It's called Independent Practice Partners and I don't mind giving them a nice shameless plug. They just do ophthalmology currently.
Jon: Okay.
Trevor: So, it's a group of roughly four or five ophthalmologists that have started their own solo practices years ago like 20… I think from 2012 to 2018… somewhere in that range most of them started, and they figured out a system for helping other people start their solo ophthalmology. They're philosophically in favor of more solo doctors being around and I am as well. That's one of my motivations. So, they've done… they've helped open, I think, 17 – no. I think now they're up to – I think I was the 20th or the 21st solo ophthalmologist they've helped start and that experience gave me a lot of confidence to pursue this despite knowing, you know, it's going to take time, it's going to be expensive – all that kind of stuff. Owning my own business was a big – my own practice specifically was a big goal for me – and wanting to do that in a way where I knew I would succeed seemed like a smart move.
Jon: Yeah.
Trevor: So I went with, yeah, having like kind of some consultants on board, but it meant something that they weren't just like consultants can be kind of a dirty word, you know, in some ways like the people that definitely collect fees and don't always provide value. They definitely collect fees, right?
Jon: Yup.
Trevor: So, you don't want just an extra expense; you want a lot of value-added if you're going to work with somebody, you know. So, that's been nice. They provide a lot of value, a lot of experience, and just peace of mind. That's part of what you pay for... for those things.
Jon: Yeah, for sure, like insurance, right? Like it's almost… that startup insurance sort of – not a guarantee – but if I want to up my chances, how do I spend some money to up my chances of success and not making some of those big mistakes, so that's huge.
Trevor: Yeah. So I paid off my student loans earlier this year. I think we did a pod after that.
Jon: Yeah.
Protect Your Practice: Invest In Disability Insurance [0:06:26]
Trevor: That was key I felt like I wanted to just get rid of. I wanted to lower my risk and my downside however I could. I mean, I'm willing to go bankrupt and lose everything I have at this point in my life.
Jon: Yeah.
Trevor: Practice.
Jon: There's no better time to start a business then, yeah.
Trevor: Right, yeah. Like, so you have to think like what scenarios would that be. I mean, one would be like you just pick a terrible location or you can't operate like you have a physical issue. That's where I have disability insurance to cover that side of it, you know.
Jon: Yeah.
Trevor: If you don't ensure your equipment and some of it breaks, that's another downside.
Jon: Yeah.
Trevor: And then just not having enough runway; so not being well-funded, not having the finances to get through a six-month period of barely seeing anybody. Cover that by working for the other practice.
Jon: Yeah.
Trevor: That's an extra – I didn't think I was going to have that, honestly. I thought I was just going to have to move on. So having that gives me like a huge level up in terms of financial safety and then I got a great banking situation. My loan is at a competitive rate. Bank of America has an amazing program for doctors starting up practices.
Jon: You know, they do, and there is – I've talked to a guy from Bank of America. One of my clients bought his family practice and used Bank of America and so I got to chat with that guy a little bit and it is, yeah, seems a little bit unique for medical practices.
Trevor: It's unique. Yeah, I went to Chase for a head-to-head and I bank with Chase. I actually… I really like Chase and I've got a – there's a local guy here in West Michigan who just does a fantastic job. I just talked to him recently. I was like, why do you do such a good job like, you literally answer my phone calls whenever I call. You solve my problems even if it's like a credit card. Like he doesn't get anything out of it, right? I was like, and what's your deal like why do you do such a good job? And he's just like, ah, well, I just like what I do and I want people to have a good experience. I was like, hmm, there's no angle here. He just does a good job. I like this, you know?
Jon: Interesting.
Trevor: So I wanted to go give Chase, you know, a shot, but they don't have a doctor program like that. I think Bank of America is kind of one of the only ones. You know, commercial loans are at like 8 or 9% right now.
Jon: Yeah.
Trevor: Bank of America was substantially less to my surprise.
Jon: Nice.
Trevor: So, you know, there's lots of paperwork. You bought a home within the last year and a half… two years. You bought a property.
Jon: Yes.
Trevor: Like, I mean, your circumstances were different on that one but, you know, the paperwork involved, it's like – oh, just one more piece of paper. You have to go through that, right, but access to capital lowers the risk a lot so we've got that going too and that was a connection through Independent Practice Partners to know about that program. I don't know if I would have ended up finding it, otherwise. It's amazing what you can potentially have missed. It could have been in a scenario where I'm borrowing at 9% so easily, you know, like I checked with some credit unions. You're like, those are usually the best rates. They want local business. Everybody I talked to said to go with a credit union, local – Lake Michigan Credit Union – whatever.
Jon: Sure.
Trevor: That's a popular one.
Jon: Yeah.
Trevor: I heard that from multiple people that was like the best advice and you start to think – okay, I heard it from multiple people, they're doctors, that's how they finance their thing – and that would have been, you know, for the amount of money I'm borrowing over time, it would have been, you know – I don't know – $80,000 difference.
Jon: Sure.
Trevor: Maybe, probably more. So, it's kind of kind of mind-blowing.
Jon: Yeah.
Trevor: I don't know. Those are my thoughts. Those are like, the risk things I've been thinking about. Just controlling those because, otherwise, you don't do stuff out of fear, right, and you have to jump in a little bit. You don't know, there's a million things, you know, a little problem here and there that pops up along the way. You have to know that you're willing to deal with that kind of stuff to start your own business, but it's usually bigger things that keep people from… and I really do think more doctors should be solo.
Jon: Yeah.
Leading With Ownership: More Responsibility, More Satisfaction, More Rewards [0:10:44]
Trevor: I think it's one of the reasons we're in kind of the lack of medical leadership position we're in right now.
Jon: Okay.
Trevor: It's because of the clock-in/clock-out doctor mentality we have, instead of ownership of the patient's experience.
Jon: Yeah.
Trevor: Not just from a customer standpoint but actually like the quality of care starts to get dictated by non-physicians.
Jon: Yeah, that's a great point and it can force the physicians to feel like, I'm just here to do a job, right, yeah.
Trevor: And if they don't feel valued like if they don't feel valued because they're equivalent to everybody else in the company and it's not like they need to…they're not better… we're definitely not better.
Jon: Yeah.
Trevor: But there's an authority there. There's like a leadership component because of the knowledge that you have. Like you're the one who when you run like a risk scenario in a hospital setting like why did this person get, you know, like a UTI, you know, and they keep track of these numbers.
Jon: Yup.
Trevor: The buck stops with the doctor, right, who gets sued like it's the doctor in most situations. In the operating room, you can even have, you know, an anesthesiologist or a CRNA, but really, it really comes down to you as the surgeon even if you're not running the anesthesia.
Jon: Yeah, sure.
Trevor: Yeah, anyways, if a doctor can kind of know the reasons they're not taking on the responsibility, they can cross off those fear factors that keep people from moving into their owning their own practice and I think if you're willing to shoulder more responsibility you end up with more – what's the right word – you end up with a lot more just job satisfaction.
Jon: Yeah. Like you said, ownership.
Trevor: Yeah.
Jon: Value, yeah. That makes total sense. I can see your point of wanting to see more doctors in solo practice and having that actual fiscal ownership and physical ownership affect ownership and everything else the work you do and that's great. What was it that you feel like made you finally pull the trigger? Because, yeah, we've talked about this for years off and on, just depending on what else was going on and… but I know it's kind of always been there, so now you're doing it. What was that tipping point for you do you feel like?
The Trigger: Taking The Leap Into Solo Private Practice [0:13:16]
Trevor: Yeah. My story was sort of like weirdly back and forth so I thought I was going to maybe buy this other practice I'm still working for doing surgery and I'm not like spilling the tea or sharing any secret. These are things that like Dr. Flohr and his family like they are super open people as well so it's been like a really nice combination of personalities in a lot of ways actually. So I thought I was going to buy the practice. We couldn't match up on price like just making a deal happen and so then it was like, well, I want to own a practice and I can't own your practice and I can't compete with you because I signed a non-compete which is totally reasonable. I wouldn't want to, you know, go into someone's backyard after they hired me anyway. I just don't… wouldn't feel good about that.
Jon: Yeah.
Trevor: So they were kind of just like, well, you're going to start your own practice, right, and I'm like, yeah. So, I started doing that, thinking, you know, if I don't buy their practice, I got to kind of have some things going because it takes so long to get started just to open your doors.
Jon: Right.
Trevor: Three months would be incredibly fast. Realistically, you're looking at five to six right where I'm at. I'm at about five from when I got the ball rolling.
Jon: Okay.
Trevor: So I started doing that and then once I realized I wasn't going to buy their practice for sure, I was like I got to go full steam ahead. I've just been doing that since May basically.
Jon: Yeah.
Trevor: And it just kind of takes that period of time and then during that period of time, they were kind of like, well, you can stay; be kind of like flip-flop back and forth, and there is just some positive changes on some areas in the clinic that I was asking for that I didn't think would change and then they did. So, there was a moment where I was like, hmm, maybe I should just stay, but I really, really wanted to own my own practice, and Dr. Flohr is great. He could just tell and he was just like you're not going to regret this, you know. So he was encouraging me to do that, too.
Jon: Yeah.
Trevor: And then he ended up medically retiring from the surgery component just like in the last few weeks and so I'm kind of like meeting a need for the practice there and so, this kind of like happened very organically.
Jon: Yeah.
Trevor: And just kind of staying open to like I really appreciate my relationship with Dr. Flohr and that practice, so I've wanted to like keep going there and I love working with the staff and I think it's like really good for me to work with staff and just keep practicing like how to manage. Right now, I can practice managing there before I have my own staff here. I can keep my surgical skills up. It's been like this really… I think that's probably true for everybody from the outside, it's going to look like – oh, I decided to open a practice – and then boom! Like I opened a practice, you know?
Jon: Yup.
Trevor: And then probably in two years, they'll be like – oh, you got busy so fast; it must have been so easy – and even I'll probably think it was easy, you know. A couple of years from now, I'll probably be like – oh, you should open a practice, it's no big deal; if I can do it, you can do it. Like, remind me not to say that later because it's actually extremely hard and tiring and stressful, but it's good like it's definitely worth it. Putting a good team together is the key and, fortunately, for ophthalmologists, I would say, go with IPP. I mean, they're a great group. There's got to be other equivalents for other fields.
Jon: I'm sure, yeah.
Trevor: Like I didn't have to put a team together like I hired this team that already existed and so like join the team but I still own my own practice and they're teaching me how to build my own team.
Jon: Yeah, fantastic.
Trevor: So, it's very much like I'm not trying to do it all on my own. I could not do this all on my own, for sure. They answer questions for me constantly. Every little – there's just so many details, right?
Jon: It's great. Yeah, that's huge. I bet there's more in the Family Practice, Primary Care, and Pediatrics, like those kinds of ones that you see quite often. The ophthalmology is there for sure as far as one that's commonly independent practice but, yeah, I'm sure the other specialties have those as well. How'd you hear about them?
Trevor: That was like 2020 right after COVID, I was looking for a new job, I was between jobs, and I was like, okay, I have not a lot of experience. I probably don't want to be starting a practice in the middle of COVID just kicking off, but I was trying to think what that would look like and reading books about it and I had like all my student loans still so I was just like I don't… I definitely can't do this right now. So I kind of scrambled into another position. But while I was looking, there's this website – I think one of my friends told me about it; one of my friends from residency called the Solo Building Blog. A couple of guys worked on it, but I think it was mostly the brainchild of Ho Sun Choi who started up Independent Practice Partners. So, he graduated residency and he even, as far as I understand it – and a lot of this is from his blog rather than just talking to him directly – but he couldn't find a job he really liked that he found that was favorable where like his skills and thoughts and drive was going to be rewarded.
Jon: Okay.
Trevor: And he couldn't find a spot where he was going to work for somebody that would reasonably let him buy in or buy them out. So, he ran all the numbers and he was like it's worth it for me to start my own practice. So straight out of residency, he just kind of bootstrapped his way into starting his own practice like without a lot of… what sounds like without a lot of help other than – not like he didn't have help. Like I know his family was part of it. There are a number of components, but like he didn't have a service like what he built.
Jon: Right.
Trevor: And from that, he blogged about it a lot, and then people – other solo doctors – they kind of form like this little club of like solo doctors and you could pay a one-time fee and then you'd be in this big email group and people talk about what do you buy and where do you get.
Jon: Almost like a Mastermind group sort of thing or something.
Trevor: Yeah, yeah, yeah, exactly like that.
Jon: Okay.
The Perfect Timing For Your Business: Meeting Organic Needs [0:19:56]
Trevor: So that organically grew and then I think there was probably some organic demand for – hey, I want to do… I want to do a solo practice like you, can you help me do that – and then, time, they made it more official.
Jon: That's great.
Trevor: It's very cool. I mean, that's the advantage of if you're just savvy enough to like form a community online and you're meeting an organic need. People are pounding on your door, asking for you to provide a service. That's like the perfect time to start a business, you know.
Jon: Yeah, right, exactly.
Trevor: Don't worry about creating customers. The customers are asking you to create the service.
Jon: Yeah.
Trevor: I'm sure I'm glad he did it because I don't know… I think I would have gotten here eventually, but it could have been – I don't know – two years, four years, 10 years, maybe another practice where I couldn't really have a voice on how things were done. That's really hard to find, you know, like I was looking at one practice where I respected all the ophthalmologists there but I thought, you know, one guy said, I might slow down in five years which is code for I might slow down in 10 to 15 years.
Jon: Right, but probably won't, yeah.
Trevor: Yeah.
Jon: Similar thing in our business. We've got… I got into this business with the – I was kind of sold on the idea – hey, the average advisor is 57, there's going to be a ton retiring, there's going to be all sorts of opportunity to buy, you know, firms and buy books of business and stuff – and it just wasn't the case because when I started, I found out like, you know, you can do this into your 70s if you wanted to and you're healthy and they did.
Trevor: Why wouldn't you?
Jon: It's not a super intense business, you know. Once you get this kind of select group of clients, you find that these old advisers just kind of, yeah, work two or three days a week, make decent money, and it's like, why would they retire? I get it – they've got the schedule they want, the lifestyle they want, money's good. So I was just like, man, I can't be waiting around anymore for somebody to kick it. I got to start on my own but, yeah, so totally.
Trevor: Yeah. So, that was a big motivator for me. It was like wanting to have an influence on how things are done even just like how money is spent and what equipment is purchased and all that kind of stuff and it's funny because like you start to do it yourself and everybody who's been in business for like, you know, 20 years-plus like one generation of time like well totally gets this, but like as soon as I started buying stuff, I was like, oh, now, I kind of get it, you know. Like, now, now I understand why they said that. Like before I was like… that doesn't make sense to me. I think we should do it this way. You like start to do it and you're like, oh, I get it, you know.
Jon: Yeah.
Trevor: It's nice. It's humbling.
Jon: Yeah, well, it kind of like my daughter, you know, graduating from high school and getting out into the real world now and she's working a couple of jobs and going to community college and I feel like her and my relationship has gotten better like she seems to be taking my advice sometimes and she's just a little more got some common sense on life. It's pretty great.
Trevor: Yeah, there's just nothing like experience.
Jon: Yeah, totally. Way to fast-track it, man. That's super exciting. I've been excited to watch you and super proud of taking that leap and glad we're able to catch you kind of at the beginning phases of this but, obviously, there's been already some work and planning that's gone into it. I talk to residents from time to time who are like, I'm going to get out of residency and start my own practice and stuff. It's like, I still have yet to see somebody do it, so that's cool you're saying about Dr. Choi and seeing somebody do that and help others.
Trevor: Yup.
Jon: So, do you feel like there's a certain type of people that should own their own practice and some that shouldn't? Like, what do you feel is that differentiator?
To Own Or Not To Own: The Practice Dilemma [0:24:00]
Trevor: That's a good question. I think I'm pretty practical about it, I'd say, like if you don't have a lot of equipment, you'd have to buy. I was just... I saw my Internal Medicine doctor today and, man, I wish I was an internal med doctor because like the startup cost would be so much lower, like, I have friends that are like… I have a friend who's a rheumatologist and another guy who's like a Sleep Medicine doctor. I'm like, man, sleep medicine, you could just make so much money doing a sleep because those book out pretty far. There's only so many in town like you could be one of the Big Sleep Centers without a ton of effort just because of demand and he's like, yeah, there's, you know. It's a big thing like, yeah, right, you don't know you don't know. It'd be a lot of work. It would be… it took me, you know, a year, two, three years and getting a different financial position to pull the trigger but it would be successful, for sure, right, so like should he do it? Like, well, he would have to want to and then it's a risk, right? I mean, I think that's what people are always deciding is like, oh, that sounds scary or just the perceived… the effort or the time, but you've got… On the one hand, I've got a friend, a rheumatologist; the other one's like a sleep doctor. Like the sleep medicine one, if you did the clinic and everything, that's a lot of capital outlay, right?
Jon: Yeah.
Trevor: But if you're a rheumatologist or internal medicine, like you could start up a clinic like just so easily without a lot of money.
Jon: Yeah.
Trevor: You could read a couple of books on business startups. The Medical Entrepreneur is a pretty easy one. You could start a practice without… I mean, for like under a hundred grand.
Jon: Yeah, sure.
Trevor: And immediately have all the freedom to be on vacation as much as you want to. It's more responsibility, but it's still… like freedom and responsibility go together. I feel like those can be considered like opposite ends of a spectrum, but they're like, they go together like by taking on responsibility, you get the privilege of more freedom. But, yeah, I don't know. It's hard to say. I think you just have to really want to do it.
Jon: Yeah, oh, for sure.
Trevor: Or you have to really not want to do the way things are done.
Jon: Got you.
Trevor: And I feel like the people who start practices now because it's – I don't know why – but perceived to be very difficult to be successful. I don't think that's true. I think it just takes time. I think it's just patience. I think if you start your own practice, you like it's almost an inevitability that you'll do well if you're a good doctor.
Jon: Yeah.
Trevor: Because there's so much demand.
Jon: Yeah.
Trevor: I was motivated by both like I didn't like the way…
Jon: Yeah, it's a good point.
Trevor: Like the private equity world is going with ophthalmology and I like the idea of having my own thing.
Jon: Now, are you – you talk about private equity. You know, we see that all the time. Private equity is buying up practices. How do you avoid that, you know? If everybody or a lot of other practices are going that way, there must be a reason… there must be something to it, but you don't like that, you know, philosophically like what, when you think down the road, that's obviously going to be a temptation at some point, right?
Private Equity Knocking? Standing Strong In Independence [0:27:13]
Trevor: I don't think so. I have thought about that like if somebody came in and wanted to write me a check or whatever, what would it have to be and I was like, I just don't think I would want to do it.
Jon: Yeah.
Trevor: Not like there's no amount of money, but there's no realistic amount of money like.
Jon: Right.
Trevor: Everything comes at a cost, right? No one's going to give you something for nothing, so there's always a trade-off. It's going to be you're committing to something. Do you want to be an employee or not? I mean, it's like the real question.
Jon: Well, yeah.
Trevor: I don't mind being an employee but there are just so many better things about not being an employee and owning your own business, like you being the one who owns the business gives you all these like tax privileges. Just that alone is why would you give that up.
Jon: Yeah.
Trevor: Yeah, I don't think I would. That's part of the reason these guys don't want to sell their practices. I mean, it's just you really do kind of have to get a decent chunk of change to want to give up all those benefits.
Jon: Right.
Trevor: So unless you want to be retired, like why would you sell for less than a lot? You wouldn't. So it's not like I don't understand. It's just for me who's someone who's willing to open their own practice and take the time and some losses upfront like my apples-to-apples of buying the practice versus starting my own. A lot of other people's apple-to-apple is taking a salary somewhere else or buying this practice – buying themselves a job.
Jon: Okay.
Trevor: Like why would I buy myself a job when I can borrow myself into owning a company?
Jon: Yeah, totally.
Trevor: Right? So, it makes a lot more sense where I'm at and with what I know and understand about taxes and business. The numbers are like it's not even close. It's like you want to own your own thing. You want to be able to depreciate. You want to be able to pay yourself in a couple of different ways maybe with an S Corp. People argue about whether that's worth doing or not, but that's just a tiny piece of the pie like you are treated better, you know, owning your own company by the IRS.
Best Of Both Worlds: The W-2/1099 Combo [0:29:39]
Jon: Yeah, I've had… I actually had a couple of times now where I've had one of our physicians come to me in a meeting and say, hey, I've got this job and they're offering me either W-2 or 1099, which one should I go with? I was like, no, gosh, 100%, you know.
Trevor: Yeah.
Jon: It's even close, that's… and that's worked out well because, you know, I've talked about this couple before where they worked it out just right. They're both anesthesiologists. One of them was W-2; the other one, I said, let's take the 1099, and basically, if we do this right, we can live off his salary and bank hers pre-tax, you know. So we set up the solo 401(k) and we set up the cash balance plan and the, you know, all that stuff, defined benefit plan like it was…yeah. I've never had a client put away that much for retirement pre-tax on an annual like over a period of a few years.
Trevor: Yeah.
Jon: Because of that, now granted they're very disciplined and smart – not all my clients are that way – but it was a good opportunity – what's that?
Trevor: That's an amazing combo. I feel like the best thing you can do is like I'm going to have 1099/business ownership. If I could combo up with somebody like a nice state government employee…
Jon: Right.
Trevor: Because, you know, like the Michigan State benefits are like insane, right, the state employees like their health insurance is like insane, like the coverage levels are just nuts.
Jon: Yup.
Trevor: Yeah, like it's nice if you can get the best of both worlds on that.
Jon: Like a teacher or something, yeah.
Trevor: Right, exactly, yeah. There's a ton of perks that's kind of underrated. Teachers are underpaid, obviously, but their benefits are like…
Jon: I've seen… yeah, my wife used to work for the school districts doing health insurance and she was like, I mean, it is the top tier like I've never seen any better benefits.
Trevor: They don't pay anything.
Jon: No. Like if you want a massage every week, go for it. It's covered.
Trevor: Right.
Jon: Yeah. So, again, they're worth it. We obviously don't pay them enough. Glad they have benefits. But, the lesson is: marry a teacher.
Trevor: That's right.
Jon: Especially if you're an independent contractor… and then like this couple, too, you know, because they were able to, you know, meanwhile, the husband's maxing out his 401(k) at work, you know. So it's like all that stuff combined so, yeah, that totally makes sense there. In fact, we had when I was in Grand Rapid this week for our Financial Advisers Association, we have a lobbyist come in every year and just kind of tell us, hey, what's going on. He hears what's up, you know, at the capital and different things that they're talking about and bills that are coming up, and one of them like some other states have talked about, I think some have passed; started with Uber and Lyft trying to get these independent contractors, gig workers, to go W-2 because I think we had this giant chunk of the population that thought, oh, they are making so much money, these companies, they should be paying my employment taxes and giving me benefits and all that kind of stuff and it's like, no, what you have as independent contractors, the ability to not work for anybody to both Uber and Lyft like, you know. And then, you basically get to write off so much, you know, just all that kind of thing that they're probably not totally thinking through. But now, one of the laws in Michigan that they're talking about – I don't know how far it's gone – but, you know, trying to do away with the independent contractor concept for many industries and I just don't get it. Unless we're talking strictly a play of getting more revenue into the state, I get that, but other than that, it's like, man, who would be on board for that?
Trevor: Yeah, that's a tough… It sounds good to say like, people should get more benefits, but unfortunately…
Jon: Well, sure, yeah.
Trevor: The question is what's better for the individual, for the worker, is not typically what's asked. It's sort of like what sounds good, and it sounds good to say like let's get these people benefits, that benefits the politicians so that I think that's where that comes from because if you… as we're just saying, if you run the numbers, they're better off just managing their own finances, but that can be complicated and not everybody wants to do that. Probably, the majority don't want to have to think about how their money is spent. They just want to have access to healthcare and a car and food and shelter and some fun money and they don't want to run their own budget, so that's a flowing concept - the "we'll take care of you" concept of the government.
Jon: Yeah, exactly.
Trevor: Yeah, which works really great until the government doesn't take care of you anymore.
Jon: Absolutely. Yeah, that's another conversation for another episode.
Trevor: Yeah.
Jon: We'll talk about that. We should go into some political science examples.
Trevor: Right, yeah, some economics. Yeah, that's sound good.
Jon: Yeah, bring out some Milton Friedman.
Trevor: Yeah, some Rothbard. We can get into some Austrian economics, also known as real economics, if you will, for another time.
Jon: So, good. So, life is good. You're on track. You're moving along.
Trevor: It's good.
Jon: Anything else? Any new and exciting? What's happening in the cryptocurrency world? Any commentaries for us?
The Latest Buzz In The Cryptocurrency Universe [0:35:33]
Trevor: Thankfully nothing. No commentary is necessary. Everything is quiet and less people are being scammed which is great.
Jon: Yeah.
Trevor: So I'll just continue to say Bitcoin is great. It's a real commodity. It's still regulated by the CFTC. There might be a spot ETF approved, maybe someday in the next few months or in the next couple of years or nobody really knows and people like to speculate on that, but Bitcoin is a real asset. You can actually store yourself and everything else in that space is pretty, pretty centralized, and it's manipulatable. I mean, what's the point? The U.S. dollar is already manipulated and we use that. I feel like that's enough currencies for me that I use that are manipulated. I don't need to do any others.
Jon: Yeah, well said.
Trevor: Just that one's fine and I'm grateful we have access to U.S. dollars, I know. I'm very grateful for it. So, Bitcoin is better technology, that's all.
Jon: Yeah, good.
Trevor: There you go… that's the shortest I've ever been on the topic.
Jon: It is really, I know. Wow, geez, now I don't… got all this time to kill now.
Don't Let Go Of Your Value; It's Your Voice And Power [0:36:51]
Trevor: I have one other thought on the practice thing. Because this was a major motivator and it should be the motivator, this is the reason I want a lot of my friends to open their own medical practices, solo or otherwise, because we are the thing, not just doctors and nurse practitioners, I'm not being exclusionary or elitist, all of the providers, anybody who can bill, create value, right; we're the ones who actually like make the service happen. We're the ones that will bill the insurance company or the individual even take them out of it. Like I do an eye surgery. I provided that for the patient, you know. If we were in Mexico, they pay me cash maybe as in the privatized scenario.
Jon: Yup.
Trevor: It's a transaction, right, and when you work for somebody else you do not get to retain that value so you are giving that value away, and then when you give away your own value, you also give away your voice, so that's like… that's why I was kind of just lightly saying before why I think we should have more doctors being independent is we can't really… we can't really say from a strong standpoint, we can't argue well and with authority if we don't control our own value. So it's totally worth it. I will actually make more money doing it this way. It's more risk, but I can control my overhead, like the actual gross revenue, the amount of money that I create as an individual business, as a physician. That money, you know -- that pool of money -- I can decide how much do I want to spend and how do I want to use it and how many employees do I want to have.
Jon: Yup.
Trevor: We get like extracted from that if you're employed at a hospital or in other scenarios and I think when you get separated from your own value, you also get separated from your money like people take it and I don't think… I don't think that's right. I don't think that's right in any business scenario. If you're the one creating the value – if you're a manufacturer – you don't want to charge if it costs you $5 to make something and then you're going to sell it to somebody else for 10 and they're going to resell it on Amazon for 100, it's like selling it on Amazon for 100 yourself, you know.
Jon: Right, totally.
Trevor: I just… I just don't like that. So, that has appealed to me to the degree that I decided to spend a lot of my time and energy on opening my own practice. That was one of the primary drivers.
Jon: Sure.
Trevor: It just feels like the right thing to do with the gift and knowledge that I've been given and I so want other people to do the same thing. For their own benefit, they can keep all the extra money. They can give it away. They can make a difference in the world like, I just think if you're creating value, you should go the extra 5 to 10 percent especially if you can do it all upfront like I am. That extra time, this one or two years, do it all upfront and I will take home a lot more value that I can use to change the world in whatever way I think is best and I want other people to be able to do that. I want to empower other people to do that just like Independent Practice Partners has for me. So, that's… I didn't mention that component, but that's a big motivator so I want to sneak that out.
Jon: Yeah, no, that makes total sense and I think that's a good wrap-up and to kind of add just a final piece of why that can make sense for a lot of people and some of the just the good like you said. Money, sure, but so many other ancillary factors that come out of that that make it worth considering.
Trevor: Exactly.
Jon: I'm obviously a big proponent of that as well. This is, you know, you and I are in a similar position of kind of owning our stuff and what we do and having the control over it and it's hard work and there's some risks and decisions to be made and cost to be had, but I don't regret it at all.
Trevor: It's worth it… it's worth it.
Jon: Yup.
Trevor: More gratifying when you take on more responsibility.
Jon: And that's… and I don't know if everybody's wired that way, but I think you and I certainly are.
Trevor: You're right, you're right.
Jon: It seems like a no-brainer, but… well, cool. Well, I think that's all the time we have for today which is great. I love it when you and I start a conversation. We managed to fill enough of an episode to make it worthwhile to publish. So, yeah, well, guys, be sure... we'll be back one way or another in a couple of weeks as we get the next episode and continue rolling on our next topic. We're getting to the end of the year so we're going to have some topics coming out that are timely that you want to make sure you catch. So make sure you're following or subscribing here. Please, I know every podcast I asked this, but certainly leave a review so that, number one, this show comes up when people search for this because if you feel like this information is valuable, other physicians need to hear this, then your rating and review are going to help spread that word. So, do a good thing for your fellow physician. Share this, leave a rating and a review, and then hop on over to our other social media places and post and share there. We've got our TikToks that are cranking out. We try to just get some out on a regular basis whether it's clips of this or other stuff that I throw up on the camera; Instagram, Twitter, and Facebook are going on. So, please get there, and help spread the word if you like it. If you don't like it, tell us. Somehow, we love to hear what's going on and until next time. Dr. Smith, good to see you, buddy.
Trevor: You, too. Thanks, Jon.
Jon: Yup. This is Jon Solitro with the Financial MD Show, we will see you next time.
Thanks for joining us for another Financial MD Show. Be sure to head over to financialmd.com to get more in-depth resources on financial tips for physicians and don’t forget to join the Financial MD community group on Facebook, where physicians at all stages of their career gather to share tips and get ideas on achieving true financial success. We’ll see you next time.
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Resources and Links:
· Independent Practice Partners: Business & Management – https://ipracticepartners.com/
· Resource Guide: Insurance for Startups – https://massfoundersnetwork.org/resource-guide-insurance-for-startup/
· Disability Insurance for Business Owners – https://www.investopedia.com/articles/personal-finance/061214/disability-insurance-business-owners.asp
· Doctor Loans for Licensed and Practicing Medical Professionals –
· Solo Building Blogs – Helping solo practice physicians succeed –
· Private Equity Funds –
· S Corporations –
· What is a W-2 Form? – https://turbotax.intuit.com/tax-tips/irs-tax-forms/what-is-a-w-2-form/L6VJbqWl5
· 1099 Form: Definition – https://www.nerdwallet.com/article/taxes/what-is-1099-tax-form
· What is a 401(k) and how does it work? –
· Cash Balance Plans – https://warrenaverett.com/insights/benefit-plans-101-an-intro-to-cash-balance-plans/
· What is a defined benefit plan? –
· Commodity Futures Trading Commission (CFTC) – https://www.investor.gov/introduction-investing/investing-basics/glossary/commodity-futures-trading-commission-cftc
· What is a spot Bitcoin ETF? – https://bitcoinmagazine.com/guides/spot-bitcoin-etf
· Financial MD Website – https://www.financialmd.co/
· Financial MD YouTube page –
· Financial MD Facebook community – https://www.facebook.com/FinancialMD/
· Financial MD TikTok – https://www.tiktok.com/@financialmd
· Financial MD Instagram – https://www.instagram.com/financial.md/
· Financial MD Twitter – https://twitter.com/financialmd2
· Financial MD LinkedIn –
· Financial MD App – https://apps.apple.com/us/app/financialmd/id1507757039
· Financial MD Apple Podcast –