J. Edward Bates, M.Ed., senior director of the Texas Tech University Health Sciences Center (TTUHSC) Office of Graduate Medical Education, invited me recently to speak at the monthly meeting of residents. The topic he gave me was financial planning and debt management. Since I know several of the professors in Texas Tech University’s nationally renowned Personal Financial Planning Department, I brought in a colleague from there to assist me in the endeavor. My friend did most of the talking that day since these areas are his “stock and trade.”

But, I did have the opportunity to say a few things during the session and spoke about the trend toward physicians joining large group practices versus going on their own or with a small group. This is a very germane decision to a resident’s financial planning.

I have watched a change over my 35 years in the industry. We have gone from the day when most doctors worked by themselves, or maybe in a small group of two or three others, to most joining large groups as they start their practice. This change is being driven, I think, by the rising administrative burdens of being independent and from competitive pressures that can drive a small practice into insolvency. If insolvency is not a problem—constant headaches from managing the practice might be.

I told the residents that joining a large group is not an escape from the financial or management challenges facing physicians; nor, does it relieve them of the responsibility to know what is happening in “their” business.

Often a large physician group will offer attractive compensation for an initial “honeymoon period.” After that period, the practice will switch to performance-based pay, which may be lower overall compensation. Of course, it can work the other way, too, and result in more compensation for the doctor. But, the point is the doctor is at risk. The large practice is not. This is why I told the residents to pay attention to their charges, collections, overhead and so forth. Otherwise, they may find themselves in an undesirable situation from a financial perspective.

TTUHSC School of Medicine does a wonderful job in producing physicians. I think it is nice when we can talk about business issues with them also, as Mr. Bates arranged.