Why Residents Need Their Own Professional Corporation

Postgraduate doctors are conditioned to replicate those who train them.

you Are Destined to be Like your Trainer

Under the influence of Sir William Osler, teaching medical students and residents at the bedside is a fundamental component of learning medicine. Medicine is best understood with patients and teachers working together in real-time with the learner.

In theory, residents choose this preferred relationship during their “match” process in medical school. It’s supposed to represent the best fit for their professional development within their desired medical specialty. Most of the time it’s either a resident or faculty member at that training program that convinces you that their particular location is the best place for you to take your last step in becoming an attending physician.

Much like the military, there is a built-in hierarchical power structure that weaves learning into a pressurized environment of life and death. Precision and perfection are expected. Conforming to the image of your superior is nearly required as part of your successful matriculation

Over the subsequent years the installation of medical knowledge, skills acquisition, and behavioral conditioning all build block by block until you are gradually freed from the oversight of your superiors. You will often end up reflecting the best of your residency influencers. As you know, each of you is typically an amalgamation of the 5 people you spend the most time with. For residents, this will most commonly be made up of their peers and faculty members. In my experience, there is often a person or two who especially inspire you to a professional and personal life that mirrors theirs, and they are often labeled role models or mentors. These types of people authentically understand your world, speak to truth to you, are guiding lights, and are important both during your training and throughout your attending career. Being a part of a supportive community of professionals is really a critical part of thriving as a doctor, yet you will find it increasingly difficult to connect with other professionals once you are in practice. For example, I work in the same hallway less than 20 feet away from one of my friends who is a physician associate at my clinic, yet we rarely converse or see each other during the average workday. We are just busy and wrapped up doing our jobs and providing patient care.

With this challenge of professional connection being a reality for many doctors, I would like to point you towards the resource PeerRXMed which helps busy attending physicians maintain relationships with one another. You will likely discover as an attending physician that the convenience of peer relationships that are built into residency programs vanishes as you are pressured to do your job and then rush home to connect with your loved ones. In this space, you will still need others, but it will be harder to make time for them due to all the other competing time demands.

So as you start to prepare for your post-residency career, mostly what you know and have experienced comes from the domain of your training program. Professional growth and holistic personal development with your peers are all accelerated in the incubator of your post-graduate training program. Your awareness and exposure to life as an attending physician are often framed by who and what you are exposed to during this time frame. This exposure rarely includes doctors who have their own PC

What most training programs lack is providing education and support for the financial and business needs of their trainees. You are left to fill your illiteracy in these areas with your own resources. Ultimately, there is the mindset that your future employer will provide the most convenient solution to you for filling in these gaps. Employment in particular addresses your financial and business illiteracy by providing a regular paycheck with a high income while the business of medicine is off-loaded to your corporate management. In the end, you show up to work each day and make a great living doing it, simply enough.

EMPLOYED FACULTY PRODUCE EMPLOYED ATTENDINGS

So it is no surprise that in the spirit of trainers replicating themself in training environments, residency faculty are likely to reproduce employed physicians with the same mindset. It’s behavioral science 101. You will be shown the door of traditional employment as the next step in your professional journey, and not be made aware of any other options. Although there may be the mention of the potential for going into private practice, you and your mentors will duly note they are shrinking from the landscape, and therefore this would be considered too risky of an option

This is further reinforced when the physician recruiters come calling, as they represent the next wave of conditioning. They point towards the “real world” and what job offers are out there, albeit with a bias towards the employers who are paying them to recruit you. When more than 90% of them only offer employed positions, you are further led to believe that this must be your future. After all, it’s hard to imagine that both your mentors and the actual marketplace could be wrong. This is why according to national physician recruiter, Merritt-Hawkins, in 2021 more than 80% of graduating residents chose employment in some form, either with hospitals (45%) or with large corporate groups (30%) making up the bulk of employment options.

I don’t disagree with this movement towards the safe harbor of employment because traditional private practice is quickly becoming a thing of the past, while healthcare employment will become the primary job structure for the majority of you.

I think there are 3 broad reasons for this employment trend:

3 REASONS FOR EMPLOYMENT

1. Debt: The debt burden for medical training that now averages an astounding $300,000 pushes residents to look for simple and predictable turnkey solutions to provide predictable high-income compensation and incentive-laden loan payback programs from employers. In comparison to most other job options, the financial incentives from these employers are just too hard to pass up, especially compared with the additional financial burden of starting your own independent practice.
2. Corporatization of Medicine: US Healthcare is now under the control of multiple 3rd party stakeholders with deep pockets. They are systematically eliminating the competition from medical small businesses and this trend will push most physicians to accept the mindset of “if you can’t beat them, join them.”
3. Culture: As Millenials and Generation Z doctors begin to dominate the attending physician ranks, their desire for mobility, lifestyle, shift work, and predictable income is easily matched by employers who can offer to fill these needs.

I think these 3 factors over time will aggregate physicians into employment arrangements that further distance them from patients and the communities they serve. This is the downstream effect of the sterile employment model that undermines the beauty and power of the doctors operating their own small businesses. Having the autonomy to run a business and altruistically do good for people in a community is a powerful mindset that feeds the well-being of doctors. When this autonomy and altruistic motive is removed within employment, it is a recipe for burnout.

As an employee, you will become a technician that fulfills the mandate of your large corporate employer as they seek to control and manage the masses through our professional services. You are a cog in their wheel.

EMPLOYED DOCTORS NEED A PC TO PROTECT THEIR PROFESSIONAL LIFE AND WELLBEING

Through all of this, you are unknowingly conditioned to believe that you no longer need to incorporate yourself because your corporate employers have your professional life and the business of medicine all covered on your behalf.

Admittedly, it is a bit counterintuitive to think about starting your own individualized PC in the midst of all the trends mentioned previously.

Employees don’t typically incorporate themselves in America, do they? No, that is because most cannot do this, but they do unionize as a method for maintaining their control over their work environment and their well-being. You don’t have to look much further than Starbucks and Amazon to see recent evidence of workers joining arms to support their well-being.

Doctors are a ferociously independent lot – the proverbial unherdable cats – but as financial and corporate citizenship pressures mount – this question is increasingly asked: What can you do to protect yourself from burnout under the control of a relentless employer? However, doctors are different than typical union members because doctors include independent entrepreneurs, physicians in training, AND employees. Federal laws prevent this collective group from joining forces, but each of these subsets does have the potential to unionize the self. However, typically there is too little traction for doctors in each group to combine forces and work together against large corporations. Residents do seem to be making inroads recently, as they buck this trend of not unionizing.

Although you won’t likely protect yourself through a union, you can protect your self-interest from large corporations by forming your own PC. The PC option is available to individuals like professional athletes, entertainers, lawyers, and you as a doctor of medicine.

A DOCTOR OF MEDICINE IS LIKE A PROFESSIONAL ATHLETE

That’s right, any doctor of medicine can form their own PC to preserve their professional interests and protect their well-being.

This is my message to you: forming your own PC is a hidden choice for you and is one of the most important powers you possess for preserving your investment in your professional life. Athletes and entertainers do this, so why shouldn’t you?

Let me try to break this down for you even more by reviewing the direct corollaries of the business structures that are needed for physicians and professional athletes as each fulfills their job. Those parallels include:

1. Both are “recruited” or “matched” as part of their training processes. Athletes to Universities, and doctors to GME programs
2. Both are conditioned to accept minimal payment for their service to their organizations in exchange for being educated. Athletes get a “free” degree and are paid nothing* and doctors are paid 20-25% of the rate of their attending physicians.
3. The corporate owners of the athletes (Universities) and physicians (GME institutions) grow and build big business empires on the shoulders of those they train. There are both profit and non-profit models, but all typically have corporate leaders that make millions annually for their leadership
4. The rights of athletes and physicians are subjugated to those who control them in this process. A conditioning process right from the beginning that keeps them tightly controlled by their “owner”. Mostly it’s benevolent, but at times it is not. Alignment, teamwork, and performance for the benefit of the organization are all entrenched. Individualism, diversity, and creativity are all sequestered as selfish.
5. Matriculation to the next level involves becoming the employees of the corporate owners who totally control the playing field. Athletes are either drafted or become free agents. Physicians simply see themselves as free agents and sign where they want.

But let me pause here, and say this is where physicians must learn from our tribe of athletes. We are still stuck between the models of old and new.

The old model was that upon graduation from residency, we formed or joined a small medical corporation, aka private practice, in a community of our preference. Our building, patients, and pay were all tucked nicely into the small business model. We were PCs.

In this version, we were free agents who chose their community of preference but kept control over their own PC and patients.

Over the past few generations, progressive changes from insurance, government, big pharma, and hospitals have all led to these 3rd parties taking over control of medicine.

Now, when graduate physicians are still free agents, but those choose their corporation of preference. They no longer have control of patients, and the notion of forming a PC has faded into the past.

But this is where physicians need to take a deep look at how their athlete friends do it and learn. This is what athletes do:

YOU NEED AN AGENT

Professional athletes recognize their financial and business weaknesses and one of the key steps that they take is to hire an agent to represent their personal and professional financial and business interests. In fact, hiring an agent is the critical demarcation that signals they are no longer an amateur athlete, but now are a professional. Young doctors, I invite you to observe and learn from what these athletes do:

1. They link arms with an agent. This marks their journey from amateur to professional. A professional agent handles the myriad of personal and professional elements of their client’s life, including contract negotiation.
2. Their agent forms a PC for them, which becomes a central point for economic diversification.
3. Employment Contracts are with Athlete, PC
4. Commercials, endorsements, and advertising is with Athlete PC
5. Product Development and Branding is with Athlete PC
6. Terms of Athlete PC’s non-compete and subjugation to their primary employer are spelled out in the contract
7. Income flows through the PC
8. The athlete gets his-her paycheck through their PC
9. They focus on their craft and skills and let their agent manage all the other affairs.
10. The agent negotiates the best contractual terms for the athlete, including performance bonuses for the individual athlete, and performance bonuses for the team’s success.
11. Their agent coaches and helps them make professional and personal decisions throughout their careers.
12. Their agents act as filtering intermediaries for the financial vultures who seek to prey on the professional athlete’s lifetime earning potential. In essence, they help protect the athlete.
13. The agent works with the player’s union to advocate for the general safety and well-being of all athletes that are subjugated to their employers.
14. The agent helps the navigate the athlete in free agency or contract renewal. In essence, helping the athlete to thrive and maximize his-her career. Loyalty to a particular organization is not always primary.
15. Maximizing lifetime earning potential could be moved up as a priority.
16. Joining a winning team for less income could be a priority
17. Finding a company that needs and values its skill set could be a priority.
18. Maximizing career longevity and sustainability might be prioritized
19. Community of preference might be a priority

Currently, physicians graduate from residency and sign employment agreements that are myopically focused on financial terms, and typically hire no one to represent them. With self-sufficient confidence, they askew hiring help, and figure collecting a predictable paycheck is all they need since most healthcare employers are benevolent….

Wake up, doctors!!

You are underestimating what you are walking into, and underestimating your need for help.

As you join the big leagues, follow the pattern of another tribe that walks a similar line.

INCORPORATE YOURSELF

1. Hire an Agent
2. Form your own PC
3. Have someone besides yourself negotiate your contract
4. Have a trusted team of professionals maximize your personal and professional life
5. Practice your craft with growing excellence
6. Diversify your income channels
7. Keep your eye on the net-worth meter

Forming your own PC is a very important method for preserving all of the benefits associated with your lengthy and expensive investment in becoming a medical professional. You have earned this small business power.

I wish someone had told me about it when I was a resident.

And now that my son is a resident, I am determined that I need to share this important information with him and his entire cohort of residents throughout the country.

Your medical education conditioning processes exclude your power to incorporate yourself and reduce your choices as young doctors to a small list that includes:

1. Specialty and training location choice
2. Where we want to live
3. Employment-who we want to work for
4. Our free time outside of medicine
5. Our personal finances

What we don’t realize is that employment and contracts are actually filled with choices

What we don’t realize is that our flow of income is filled with choices

This is why you need to form your own PC

YOUR PC PRESERVES YOUR CONTROL OVER YOUR PROFESSIONAL LIFE

1. Your own PC will allow you to control the flow of your income. Controlling income gives you greater control over your taxes and savings.
2. Your own PC allows for greater income diversity. Most physicians have income that comes from beyond their primary practice. PCs allow for greater nimbleness in taking on side hustles.
3. Your own PC allows you to own and control your benefit plans. This may sound scary at first, but with a good outsourcing company like SimpliMD, you can easily manage this. In particular, this unlocks the door for larger retirement plan options.
4. Your own PC allows you to develop your own personal brand and influence in social media. Your employer will have a certain brand and marketing strategy that they want you to build for them. By having your own PC, you can actually do both simultaneously through a correctly formed contract.
5. Your own PC allows for portability. You can now much more easily change employers or positions and still maintain control over your digital influence. Influence used to be boxed in by geography, but in today’s world, this is no longer the case.
6. Your own PC will increase your contract options, including what I happen to believe is the best model called “employment lite”.
7. Your faculty mentors won’t tell you about this because they are unaware
8. your recruiter won’t tell you about this because they are paid by the employers and obligated to favor them
9. Your employer won’t tell you about this because they fear losing some control over you in this arrangement

Lastly, forming your own PC is not overly expensive, nor is it expensive to maintain. So even if you don’t use it right out of the gait, you have it on the sidelines to leverage for your benefit whenever the need arises.

YOU DON’T KNOW WHAT YOU DON’T KNOW

Most of you just don’t know what you don’t know about the business of medicine and your professional choices. Here are two truths that should inspire you to start your own PC:

1. You are special: You have earned the right to form your own PC. This is not the same thing as going into private practice, instead, it’s like wrapping yourself in a professional structure that preserves all the small business powers you have earned. The power to form a PC is limited to a very small group of professionals such as lawyers, entertainers, engineers, dentists accountants, and doctors. Much like the initials MD or DO on the end of your name make you special, so do the initials PC on the end of your name make you even more special.
2. You can do both: You can be employed by a large corporate employer and still own your PC, and in fact, the best employment model is combining these two into what is called employment lite. This combination will improve your professional well-being on top of enhancing your household financial health.

DO IT NOW AS A BUILDING BLOCK

I was speaking to a married couple in family medicine residency recently and I loved how they described the concept of starting a PC as they began to get their minds wrapped around its benefits to them.

She said “It’s like buying the land that you plan to build your dream house on”

I loved that analogy because starting your own PC will cost you some money, just like the land does for building a house. And yes there are some minor maintenance expenses with taking care of the land. But once the land is purchased then you can get down to the fun part of using the land to create your best future. But you can’t build a house without having the land first.

Too many young doctors are building their dream houses on the land owned by their corporate employers, rather than the land that is owned by their very own PC. Your PC is the building block that you should want to build on because it is yours and no one else’s. Only can control it, and you alone (and your loved one) get to decide what to build on it. Ultimately this autonomy is one the most important elements that will help you prevent burnout and also allow you to thrive as a doctor.

SimpliMD specializes in setting up PCs for doctors and can help you create a basic version for less than it costs to go on vacation. I suggest residents create their PC about 1.5 years before they graduate. You can use your moonlighting money to pay for starting your PC and depending on your situation, you can even funnel your moonlighting money through your PC if the numbers work in your favor.

But by forming your own PC before you graduate you will be able to communicate to all future employers that your desire is to use your PC as the contractual entity for your professional services (called an employment lite agreement or PSA). On top of this, if you hire an agent agency to represent you during your recruitment and contractual phases, this will also communicate your self-awareness of both your business-mindedness and value in the marketplace. This, in turn, will be beneficial to you in sorting out which employers are willing to work with you as a PC. Making this part of the recruitment phase goes a long way toward opening the right doors for you to build your preferred professional future as an employed doctor. It certainly makes it much easier than saying “I plan to start a PC”, which basically communicates you are not ready, nor are you truly business savvy.

Here is the pro tip, employers are used to engaging in contracts with PCs, even if they say “traditional employment contracts are the only thing we do.” That is because employment lite contracts are what they use to convert private practice doctors (who have a PC) into employment. As large corporations buy up private practices, these arrangements happen all the time. Thus they know how to do it, it’s just a matter of them being willing to do it with you at the start of your career.

You can have an employment lite contract with virtually any entity that wants to hire you for your professional services. This could be a hospital, a multi-specialty clinic, a single specialty partnership/group, or even just a multi-member small private practice. In each of these situations, your contractual relationship with these entities can be organized through your own PC.

And should you choose to not be employed, certainly your PC will be perfect for use as a locum, direct primary care/concierge medicine/direct medical care models, any type of contracted labor, and private practices of all types.

The bottom line is that most young doctors make a huge mistake by choosing not to incorporate themselves early in their career because they mistakenly believe incorporation means you not going to choose employment as your preferred job structure.

You really need to understand, that, unlike the traditional private practice-PC model, the modern PC is more like a virtual envelope for your professional life, and does not require you to operate and manage a complicated medical practice. But it does do is allow you to hold onto your professional autonomy by running your own small business that has an employee of one, you.

The little know fact to most doctors is that you can both be employed by a large corporation and also operate your own individual PC as the contracting entity with that employer. When you do this, you become “Dr. You, Inc.” and this small change will help preserve one of your most important earned power associated with your medical training, your ability to form your own small business PC. In turn, this will help preserve your professional life and help protect you from the risks of burnout that is all too common today for doctors.