I just came back from a weekend “retreat” sponsored by my local medical center for board of directors, physician leadership and patient advocates.  This gathering was to discuss the coming changes in medical compensation both at the doctor and hospital levels.  Several national speakers talked at length about how Medicare and private insurance companies plan to expand plans to transition from traditional fee-for-service medicine to quality-based or accountable care compensation.

I have been involved with my physician-hospital organization (PHO) for over 20 years and running my own practices for over 30 years.  From that perspective, I knew that this day was coming.

The shocking aspect for me was how many members of the audience were not aware of these changes being afoot.  Whenever I brought up this possibility to doctors in meetings, many did not feel that this change was going to affect them.

However, unless retirement is imminent and by that I mean in the next year, the medical care system is going to go through significant change.  Ultimately, hospitals will only be compensated for the right care at the right time, and at the price determined by the government entities that control the purse strings.

Now, I am not going all “Tea Party” on you here as I am the furthest from that viewpoint politically and socially.  However, I see it as a relatively simple math problem.

Our society is getting older partially because of our efforts to prolong life, and that’s a good thing.  The bad part of the equation is that the older are getting sicker and more expensive due to chronic diseases that we cannot cure but can only manage.

Because the older and poorer citizens are covered by government-based insurance (mostly due to the fact that private marketplace either won’t or can’t cover them), government in the form of Center for Medicare Services (CMS) will make the rules on reimbursement.  Frankly, there is a limited number of dollars that our society can expend on health care, and the fee-for-service pie cannot keep on growing without bankrupting all of us.

What I tried to express to the doctors in attendance at the retreat is that this new compensation model will affect them in their pocketbook eventually.  If you are an employed physician, eventually the hospital or group employer is going to demand that you be more efficient and cost effective, or face pay reduction or even dismissal from employment.  If you are in private practice, you will have to be nimble and accountable to prove to the payers that you are able to deliver quality care by whatever metrics they determine.

Obviously, one other approach is to drop out of the system altogether by not accepting insurance reimbursement and going fee-based or concierge model.  The bottom line is going to be your bottom line.  If you do not save or invest enough on the front end, you will not have enough freedom to choose on the back end.

By adhering my high savings and low debt model, which included practice options that did not depend on insurance reimbursement, I was able to make choices in the past several years that led my current practice.  Very little of my cashflow now depends on insurance payers.  I can make decisions on what I want to do or how I want to practice without feeling like I am being painted into a corner.

As Bob Dylan sings, the times they are a changing.  They will continue to change mostly because the current system, even the advocates of stopping Obamacare have to agree, is unsustainable.

If we as physicians don’t want to be run over by this train coming down the tracks, we must be prepared to change with the times or jump off the tracks.  In either case, you need to know what is coming, have a plan to deal with it, and gather the resources to implement that plan.

During the course of my multiple decades of medical practice, I have met some amazing people, particularly those in the business arena.  I have had several patients who have run relatively (or seemingly) mundane businesses such as roofing and janitorial companies.  They dress daily in jeans and T-shirts, yet are worth millions of dollars.

One roofing contractor I know pointed out to me that he barely had a high school education, but was worth more than most of the doctors in our town.  He claims that fact is because most of the local doctors he knows “were stupid about money”.

To that end, I thought I would summarize some of the lessons I have learned from these unlikely millionaire mentors in my community in the next several blog posts.  These lessons are relatively universal and can apply to many professions and lines of work.

Becoming a self-made millionaire is no simple task.  For those who accomplished this goal, they all had a process or a set of guidelines that they followed on that path.

Lesson #1- Make It A Game.  One elderly patient I know who owns multiple single family homes and apartment building rentals has accumulated his real estate empire slowly over many years.  When I asked him about his philosophy, he basically always looked at his business as a game to be won.

When the money to buy a large apartment building or office building got big and he was nervous, he thought about it as “Monopoly money”.  As long as he could clear enough to pay the mortgage and expenses, he knew he would be OK and the rest was gravy, or would go into the next acquisition.

Lesson #2- Never Get Comfortable.  This is a problem too many doctors have in their careers and their financial lives.  Many business people have told me that stopping on the journey to the top to say ” I’ve worked hard enough. I can slack off now,” is the kiss of death.

When you meet your goal whatever that is, you need to set another goal further out.  Sitting on your laurels is a dangerous thing.  Either the rapidly changing world will pass you by or the financial eggs you have accumulated in your basket will shrink a la the Great Recession.

Lesson #3- Continue To Study and Work Harder Than Anyone Else.  Even those in fields like roofing and hardware tell me that they need to continually read in their fields, go to trade shows and keep up on the latest innovations.  There is always someone somewhere who is trying to get an edge in the marketplace.

Doctors unfortunately seem to feel insulated in their niches, but if they don’t keep up, it is bad for their careers and worse for their patients.  No matter how talented you are or how advanced you may feel you are in your field currently, you will never reach your full potential or a mastery level if you don’t continually “sharpen the saw” more than others.

Lesson #4–Learn From Your Mistakes.  Everyone fails and makes mistakes. It is human nature.  For liability and ego reasons, us doctors do not like to admit that, but it is true.

Sara Blakely of Spanx fame has told the story that her father used to always ask her what mistakes she had made or failures suffered during the day when they sat down for dinner each night.  He was always disappointed if she didn’t at least have one, because to him that meant that she was not trying enough things outside of her comfort zone.

The failure or mistake is not the problem.  The problem comes if you do not learn from the mistake and grow from it.

I have made many mistakes in my medical career, especially in this business side of running a practice.  However, I always examined what happened, took it as a learning experience, brushed off my ego and moved forward.

Lesson #5- Read Every Day.  While I discussed studying and working hard in Lesson #3,  reading in general is incredibly important.  Since an early age, I was a voracious reader.

My mother always used to say you can go anywhere if you know how to read.  Try to read a wide variety of books, including novels, self-help, biographies, history, and anything else under the sun.

You can always learn something and frequently apply that to some aspect of your life and business, even if it is simply inspiration.  I have had business mentors tell me that they found lessons that they used in their offices from reading Doris Kearns Goodwin’s great biography of Lincoln, Team Of Rivals.

I have several more lessons that I will continue to impart on you in next week’s blog post.  Suffice it to say that medical professionals and doctors have lots of lessons to learn from those in other industries and lines of work.

If we can learn and integrate these lessons, then our lives, our patient’s lives, and our profession will be greatly rewarded on multiple levels.

A big campaign in medicine nowadays is to get more patients aware of each of their important health parameters. Billed as “know your numbers”, patients are urged to know their individual blood pressure, blood sugar and cholesterol levels in addition to their weight. Knowledge of these numbers allows a patient to assess her health risk in the longer term.

I think that as important as your physical health is, your financial health is also vital to your longevity. One’s finances are a common source of stress for individuals and families that can and does affect mental health, physical health, and the stability of marriages and relationships.

In terms of numbers, doctors, especially in employed settings, concentrate on annual salary. While certainly a factor in your fiscal health, salary is not everything. Whether you make $100k, 200k or more a year means nothing if you spend more than that in a year.

Knowing your net worth is critically important. Net worth requires you to know a significant list of other numbers, especially as your financial life expands.  Simply put, net worth is assets minus liabilities.

You should know the value of all your existing monetary assets quickly.  All you have to do to obtain that number is add up your savings accounts, retirement funds, and equity on properties owned.

Some strict accounting folks add value on property such as cars and furniture, but I discourage that practice. It’s a lot of work, doesn’t amount to a lot of money, and all those assets depreciate over time anyway.

Liabilities are obviously all money owed, including student loans, mortgages, car loans and business lending.  If you followed my advice from previous blog posts, you should not have a car loan, as borrowing money to fund a deprecating asset is doubly wrong.

Once you calculate your net worth, which is the big kahuna number, at least you know where you are now or where you are starting from financially.  The next number everyone should have is a goal number.

The goal number can mean different things to different doctors. For most, the goal number may be the amount of money needed to retire.  For others, it may the amount of money needed to buy multiple priority items such as your kids’ college, a second home, or rental properties.

Just like your net worth will change over time (hopefully always to the upside), your goal number will change also as life goal posts are passed and your goals get more adventurous.  As I have said before, some just want financial security, and some want eventual financial freedom (my choice).  Security and freedom in the fiscal arena will only happen if you KNOW YOUR NUMBERS.