In another fireside chat, I connected with Dr. John McBurney on LinkedIn. He and I spent over 1.5 hours talking about his journey and the wisdom he would impart to other doctors.
For all the show notes, free resources, and to connect personally with me, check out the bottom of this page.
This podcast is dedicated to helping doctors like you slash your debt, slash your taxes, and live a liberated lifestyle.
Dr. McBurney is a neurologist who started with the military, moved to private practice working under other physician owners, and now today is doing locums full time while he is establishing his own private practice.
In part one of this interview, you will:
– Discover how a small town boy came to see physicians as the role models he wanted to emulate
– Learn how he came out with almost no student debt and how he feels student debt today is a trap
– Why money wasn’t something he developed a significant relationship with when he grew up
– How being in the army helped him to keep his finances under control
– Why he decided on the military option
– Discover how he made great money as an intern
– How buying and selling real estate hurt his financial future
– Learn how the decision of ’20’ played into his decision of going into private practice eventually
– Why he prefers being a military doc to ‘abusive’ private practice medicine
– Hear the story of how he witnessed medicare fraud and why he had to testify against a former colleague
– Who the person who gave him the best financial advice (Hint: It was someone really close to him that wasn’t his parents)
– How a hairdresser had an estate over $1 million
In part two, this episode continues the journey of Dr. John McBurney. Make sure to check out part one from last week or check out the entire podcast by clicking here!
In this fireside chat, we uncover his financial choices and decisions. His vices and his greatest decisions and the advice he would give to a younger John
In this podcast you will..
– Discover his guilty pleasure of cars and what that meant to their retirement (Hint: He wasn’t a popular guy at home for a time)
– How he simplified his finances to set himself up for retire
– What kind of corporation he is using for locums
– Learn what he promised his kids financially
– What kind of practice he will be establishing and the model he is following (Hint: It involves a past podcast guest)
– Discover how he is going to work with chiropractors, energy healers, and how a wellness center factors into that
– Learn how he is using locums as a bridge between his last job and his ideal clinic
– Why john’s situation is significantly different than the normal ideal medical practice that others are setting up and what he is doing to set it up for success
– Discover john’s advice to his younger self (Hint: it involves a curve) and what he would avoid
– Learn the stupid mistake that he thinks many practice owners make for the sake of reducing taxes
– How the combination of charting and locums leads to more money
Resources Mentioned In This Podcast:
(not mentioned, but recommended by Dr. McBurney)
TRANSCRIPTION
Welcome to the Freedom Formula for Physicians Podcast, where it’s all about slashing your debt, slashing your taxes, and creating a liberated lifestyle. And now your host; who met his wife while training for the four hundred meters in Seattle and is eating gluten free, while lusting after Brit: Dave Denniston.
Dave: Hello my friends this is Dave Denniston and welcome back to the Freedom Formula for Physician Podcast. This is a podcast dedicated to helping doctors just like you slash your debts, slash your taxes and live a liberated life style. Oh well my friends I just wanna say I love connecting with so many of you the e-mails and the phone calls and people who have bought my book, I just wanna say thank you so, so much for listening to this podcast, spending a busy, busy time out of your compact schedule to tune in here. And I have to tell you we now have over 13 thousand downloads by the time this podcast comes out, so again thank you from the bottom of my heart for listening tuning in. And I just wanna encourage you hey connect, reach out to me I love hearing from you. One of the places that I am on is LinkedIn, so if you happen to go to LinkedIn look for David Denniston, cfa. So I love to connect with my audience or if you go to Doctor Freedom podcast.com I have my personal face book page link down there on the right hand bar as well as the LinkedIn, so reach out say hey. If you are a Physician and you love listening to this podcast and also I just want to do a few quick shout outs here, on iTunes, one of the most important thing for the podcast is to get reviews. So I’d like to thank Jeff Wandering, sexy nerds are us, Jena E Johnson, Glen Livingston and TBW 3406, Mark McAlister, Jessie, JK and Jimmer. Every single one of you mean so much to get comments like that at the podcast and I’d love to ask each one of you there listening to do that as well so we can get to know more and more people and get more and more downloads. And here in a moment my friends we are gonna have a conversation a fire side chat with a physician, this is a person that I was connected with LinkedIn and I think I had wished him a Happy birthday or something of that nature and we started a great conversation between the two of us and next thing you know we hop on the phone or actually it was on the computer and we recorded the conversation and this gentleman he is so special, he is a Physician, he’s a Neurologist who started with the military and he had a long career there for about twenty years, then he moved to private practice where he has a big pitfalls and things that really caused him to loose a little bit of hair and sleep and now he’s actually looking to start his own practice rather than working for someone else but in the mean time he’s doing locums fulltime. So it’s a really great journey I know you’re gonna enjoy these stories as much as I did. All together we talked for like one and a half hours and so I’ve cut down the content to try and be as concise as possible in so capturing his journey, so I cut it down to about an hour, so I’m splitting this up we’re gonna do like one hour this week and about thirty minutes next week. And also I’m not gonna have any commercials today so you can just roll on through it, just cause I enjoy this gentleman so much out of respect to him and him spending time with me, I want to make sure to honor that so with no further ado here is John McBurney.
Dave: So tell me a little bit about your back ground in medicine. How did you get started, what was that journey like?
John McBurney: Yeah you know sometimes I ask myself what the source of my motivation for going into medicine was really, you know I grew up in a small town in East Central Alabama, Opelika which is next to Auburn which is where the you know the university where all the football and all that stuff is.
Dave: Yes!
John McBurney: And I was the first person in my family to graduate from college, my parents were smart people but it was you know in an era as we’ve been talking about protocol skills and where you could certainly make a reasonable middle class living with a limited amount of education. So while my father went to college, he never finished, I think I came along and kinda derailed his educational plans. And I would think growing up in that small town that I just saw physicians as the main exemplars or role models that I would want to emulate, they weren’t- I was never around attorneys, I was never around you know really successful entrepreneurial class people, in fact I don’t think the word entrepreneurial was in even in the lexicon back in the 6os, certainly not in Opelika Alabama so, so- but you certainly go to the doctor and you know the doctor would be the most powerful, most accomplish person in the community by a wide margin you know. So I said well I want to be like that and you know I was a pretty good student, and anyway I-I, I worked my way through Auburn as a nursing assistant or an orderly at the hospital there in my home town the same hospital that I was born in fact; now called East Alabama Medical centre, it was called Lee County hospital back then and made a lot of contacts with positions there, came under the influence of some really, really accomplish physicians, who were all alumni of Emery which was so. Emery was so a reach for me when I applied to medical school, but I got in and having no idea how I would pay for it and back then it was pretty easy to get a military scholarship to go to medical school, so I got a help professional scholarship program fluoride scholarship to go to Emery. So I graduated from Emery without any debt and I graduated from Auburn because I worked my way through without any student loan debt and…
Dave: Was that was that uncommon John? You know as you’re growing up there or was it common just cause those cost was low enough that you could get a way without debt at that time?
John McBurney: Yeah I think cost were quite a bit lower especially in place like Auburn, I think when I started at Auburn the tuition was a flat fee it wasn’t by hour and if I remember correctly and I’m not a 100% sure that I do but I think it was $400 a quarter for tuition. And books were relatively inexpensive especially if you bought used books. So you know I could I could make my minimum wage job and you know a few 20s pass my grandparents and my parents when they could help me, yeah I was able to somehow just make it. I don’t understand how it worked honestly I think back and it seems like if somebody describe that’s how they were gonna do it I would describe it as a pretty shaky preposition you know so…
Dave: So what you, what do you make of today then where you know we have so many physicians coming out with 200 -250 I mean literally a mortgage.
John McBurney: Yes, yeah it’s horrible, it’s horrible and in fact I think it is one of the real causes or contributors to the epidemic of physician distress and the epidemic of suicide among young physicians they are absolutely trapped, if they get part way in and decide hey you know this isn’t really what I thought it was gonna be it isn’t what I want to do, they have this gigantic non-dischargeable debt and I’ve gotten involve through you know move on. Org and different organization to lobby for some, you know student debt relief at a legislative level, I really think that under some circumstances that student loan debt needs to be forgivable in bankruptcy you know …
Dave: Yes!
John McBurney: If somebody says I just want to go teach elementary school or I wanna go work I a bike shop or I just need to go just sort of steer you know at my navel and meditate for a while to preserve what’s left of my sanity, they need to be able to make that choice, that would not be an easy choice but they need to and you know it’s really bad for physicians but it’s not unique. I think that another group that is getting crush by debt are veterinarians.
Dave: Cause if they’re only making eighty or ninety or hundred thousand dollars max maybe then they’re not making…
John McBurney: Yeah that and the I’m sure that schools that a lot of them are being forced to go to cause there’s just aren’t that many slots in the US are unbelievably expensive. They’re unbelief…I mean I’ve read you know things of graduates of these off sure Caribbean veterinary colleges coming out of a million dollars of debt.
Dave: Do you think growing up was, what kind of like attitude did you have about money, was being debt free something that was important to you, instilled in you growing up. What was that journey of growing up in Alabama like as you started thinking about money and money decisions?
John McBurney: You know I think one of the weaknesses of my upbringing is that there was enough scarcity that money wasn’t something that I developed a very significant relationship with because there just wasn’t any. You know so I definitely went through a period of time where I and to a degree still treat money may be less intelligently than I could or should you know but in contrast my pairs I think I’ve been able to-probably because for twenty years I was in the army and I wasn’t making the big bux when it was still in Europe where physicians makes you know the same amount of money so I sort of avoided that track
Dave: This is interesting. Let’s talk about the army for a little bit, so I’m following your journey, you started out in Alabama you’re idolizing physicians, you see them as someone that you wanna aspire to be go to your undergraduate, you go to medical school. When does the army fit into this picture?
John McBurney: Yes! So as a health profession scholarship program or HPSP student your kinda owned by the military so you don’t apply for residency through the match, you apply through the military program and so it’s a completely separate thing and so I wind up getting selected initially for the psychiatry internship at Walter Reid in DC and then I switched to Neurology about half way through my internship and decided I wanted to be a Neurologist. Probably just because I wasn’t identically elective at Emery, that was really an amazing elective as a senior student I had two patients and weekly one hour a week for each of them inside oriented psychotherapy as a student and then I had an hour of supervision with a young psychiatrist who ran the drug and alcohol program at the VA and the cater and was himself training to a psychoanalyst. He would fly up to New York to Colombia University to get supervision a couple of times a month and so I had this experience that was unique. I doubt that there was anywhere in the country that offered students that kind of latitude and I would be surprised if they still offer that at Emery quite honestly, but by the end of that senior year I was beginning to have doubts that I just wanted to do that for the rest of my life and so I’ve done a lot of Neurology as a student anticipating that a psychiatrist would need to be well burst and a Neurologist, so I showed up to a-you know I showed up to Walter Reid and started. I actual started my internship on Neurology and I knew a lot more than the first set of Neurology residence did. They were just starting their residency so I got a lot of strokes, yeah just really had a good time and infuriated the psychiatric department when I could. I de-committed and signed with a different team, so-anyway so I did my internship and the my 3 years of residency at Walter Reid and then I was assigned as a solo Neurologist in a community hospital at Forth bin in Georgia with big like a training facility with infantry centers there, ranger schools there.
Dave: Yes! Let me just interrupt you for a second first.
John McBurney: Yeah.
Dave: Let me just interrupt you for second. Let me just say first of all thank you for your service, I think obviously…
John McBurney: I was-I was enjoying the great piece I really was, at the end of my time in the military was the first person going forward and we were expecting the worst, everybody was shipping out.
Dave: Well I would like to step back for a second.
John McBurney: Yeah.
Dave: So something that I didn’t capture, you served all this time. I didn’t capture why you decided to go for the military option you know as you were evaluating like how did that decision come about?
John McBurney: Yeah so I-I was really proud and excited I had gotten into Han marine I was horrified of the cost I made an appointment with the financial aid director at Emery University, I didn’t really understand how financial aid worked in that there was really no financial aid available to me at all, it wasn’t that I rejected financial aid. Back then there just wasn’t any there weren’t you know there weren’t these federal guaranteed or federal student loan, there weren’t programs, you just you know, you could either get private sources of loans or you just had to have the money, and so I had no idea how I was gonna come up with that. I think the tuition at Emery then was a little under ten thousand a year which sounds like such a joke now, but I was terrified I had no idea how I was going to be able to do that. I was weighing offers at state schools and where it would have been a lot less expensive and I met with this guy and he basically treated me like a [inaudible 17:02] he treated me like a complete unworthy human being because I was even having to you know try to understand how financial aid work, and he just sort of blew me off and so at the same time back then the scholarships were extremely… the military scholarship were extremely competitive now and back then the military was begging for people to consider you know applying for their program, so this army recruiter just made it super easy and the next thing I know I’m all accepted and I get books tuitions are four hundred a month, a non-taxable stipend.
Dave: Cause this was at the height of the Vietnam War I’m guessing.
John McBurney: No it was after Vietnam I graduated from Auburn in 77, so I just met I had to register with the draft the lottery rather and it ended when I was a senior in high school so…
Dave: Wow!
John McBurney: So there was defiantly still the post Vietnam after taste that instilled a lot of very, very strong anti-military sentiments. That was one of the things I had to confront when in was in medical school and that most of the you know junior faculty for sure were extremely anti-military.
Dave: Let me, can I get back to where, so your serving in the military and tell me about financial decisions obviously most physician get paid less for being in the military, so how were you thinking cause you said you served for twenty years, wow two decades…
John McBurney: Yeah.
Dave: In peace time but still you’re serving the military for twenty years taking a relative pay cut, you’re probably I’m guessing moving around the country, maybe the world. How was money kinda coming into play in this journey?
John McBurney: Yeah, so you know number one I made a lot more as a resident, than a residence typically made in civilian programs. I was a captain for four years I was on reserved status during medical school to launch over there. So when I started this intern I was the captain over 4, we got a huge-we got 17.3% pay raised from Ronald Ragan and so and you know in the early 80s I was making almost forty thousand dollars a year as an intern, which wasn’t bad money
Dave: That’s great money.
John McBurney: So my wife was working and we initially rented into a little house in Kensington, which was just north of the district and we got, we got, to think that we wanted to buy a house and this was Paul Broker, Heather Fed interest rates were you know the prime rate was at 1.22% then.
Dave: Yes!
John McBurney: We bought a house where the developer brought down the interest rate on our mortgage to a mere 12.9%. So we were house poor and then we lost a lot of money successively on buying and selling real estate with those moves. We made…
Dave: Cause you had to pretty much, you didn’t have much of a choice.
John McBurney: Yeah there was no- we could have continued to rent and that’s what we should have done but we didn’t want to do that you know we want to have these set of place and that’s what owning a home gives you just a sense of belong a sense of place. So we bought this town house out there in Chantilly which is out near the Dallas airport, we convinced ourselves that the community wouldn’t be bad based on going and looking at it on the weekend not realizing how what a nightmare it would be during rush hour, we paid you know an arm and a leg for-for our mortgage payment and then part way into that you know my wife gets pregnant with our son and we felt it’s really important for her to stay home after he was born, so you know we really couldn’t afford the house so we wind up basically just selling it to get rid of it and so yes so in contrast to a lot of military people I can more calm that arm’s where rotation is really frequent. You know as a physician in the military at least back then you know you could sort of get to a place and stay there; I was at Mattican for nine years.
Dave: That’s a long time in the military.
John McBurney: Yeah, and you know I got to do a lot of new things I-we started a Neurology residency there so I was involved with the start up of this Neurology residency I-we built a brand new hospital that was just shell when I got there, we were still in the old OR2area building when I got there but we got to be involved with designing the build out of the hospital, the equipment, the diagnostic suite, the Neurology program started an Epilepsy marching unit sleep lab, so that’s pretty heady stuff I mean you know 1989 my-I put in a request to buy equipment to go into our Neuro-dianostic each sleep lab for half a million dollars, that was a lot of money back then. You know so.
Dave: Do you think; So it sounds to me as I’m just listening to you talk that I’m really hearing you’re getting a lot of fulfillment
John McBurney: Oh yeah!
Dave: Out of helping to build a whole program and…
John McBurney: Yeah, yeah.
Dave: You’re staying around for that reason as well as I’m sure dedication to the country and were you very entertaining at this point, the idea of private practice or were you looking to get to the 20 years for a pension or what, what’s-what conflicts are you dealing with side as you’re evaluating financial retirements you know type decisions down the road.
John McBurney: Yeah so, you know you don’t go in thinking you’re gonna go for 20 but you going saying well I wanna do this and you just sort of break it down into bite size chance time lines and so the next think you know you get beyond some point where you go cheap, what-what’s the annuity value of a military retirement that’s 50% of your base pay and has cost of living built in and it starts paying as you retire in your 40s, that’s a lot cause right now I make about forty five thousand a year military retirement pay and I’ve been getting that for almost fifteen years and it will.
Dave: And is that-did you ever think about delaying that? Was there any advantage to delaying that pension?
John McBurney: It’s not an option.
Dave: Not an option. Ok, so interesting.
John McBurney: NO you could, you could if you were in a strong financial position I supposed just immediately put that in some other type of investment you know truth be told we lived on it, you know like what I found was, we did do some outside moonlighting type of work when I was in the military and probably added about 30-40% to the income that we received through the military, and-and one thing I should say in correction is when you’re in the military as a physician you know you’re not just getting paid by infantry, major mix, there are all these additional pays that you get and one of the thing is the longer you sign a contract for the bigger that money is, so that fully 50% of your compensation could be based on these there’s something called a more of a medical officer retention bonus, might want to be a thirty or forty thousand dollars a year depending on your specialty. So-so that’s another way its broken down into 5 years chumps , you go well I really want to take this more that they are offering me and so you wind up just a piece of the time going along and the next thing you know is like I said I would think the value of that if you were to just say if you’re gonna at age 43 a purchase and annuity that started paying you thirty five thousand dollars a year at age 43 and had cost of living built into it and survivorship for your spouse built into it, how much would that cost.
Dave: Yes.
John McBurney: It probably be at least a couple million dollars I would guess.
Dave: I would think so. Would have to crunch the numbers on that that would be an interesting exercise I’m sure you went through
John McBurney: Yes that becomes the draw you know it’s just can I get to twenty and also the lower of going on to do other things and I will tell you in retrospect I feel like the best time of my entire career was the time when was in the military I dealt with the most honorable and ethical and reasonable people of my entire career and honestly I feel like my post military experience has been a series of almost hostile abusive encounters.
Dave: Wow!
John McBurney: I could tell you some stories that would make you curl. You know I could tell you stories about being in Neurology practices where the senior partner re-keenly took a quarterly bonus of over two hundred thousand each, a quarterly bonus. So there is no ethical way that a Neurologist can make a million dollars a year from clinical work, there’s no way that you can do that ethically. I had a job where it was in a resort type of area, it seems like it was going to be like the answer to our dreams, it had exactly what I thought I wanted and my wife was also working with me kinda as my assistant and the first pay day came and we didn’t get pay and so I just very, I said I am not going to react to this, it’s probably just a mistake, there may be a problem with the direct deposit routing number who knows. So I called the office manager and I say was it today pay day and she started sobbing and confess that the what I’ve been told is fraudulent that the practice was under investigation, that money was disappearing and that she don’t know where it was and she couldn’t make payroll.
Dave: Oh my God.
John McBurney: And so you know we stuck around for a few more days we got an attorney to give me some advise, ultimately resign without giving notice and the next day actually went and sat down with a special investigator for the attorney general’s office for medicate fraud and gave them a tape account of what I’ve witness for four hours. And then had to pick up and figure out what to do after that again because of non competes and this particular individual was very lawsuit happy he actually had an attorney on retainer, they paid $5000 a month retainer just to harass people and intimidate people, so yeah I mean I’ve seen it I’ve seen some really, really bad things and I think that you know physicians coming out of training with the they need to be very, very discerning about what they get themselves mixed up with because people are going to any links fair or foul to try to preserve the big money days in medicine and I think they’re gone. I think that the money is descent it’s not great when you compare it to the opportunity cost and to the debt load that people come out of their education with but it’s you know it’s better than most folks can aspire to, but the lower of when it sounds to be too good to be true, it’s too good to be true.
Dave: It probably is. So what do you think in terms of you have your military experience John and you got the private practice. Along this path what has been some of the best financial advice that you’ve got and from whom?
John McBurney: Ok, long pause, I you know probably from my wife. My wife is very frugal she doesn’t believe in wasting money her mother; her mother and father raised two children successfully on a modest amount of money my father in law was a hair dresser in Atlanta. He was very successful you know he wind up I don’t know if you’ve seen the movie Driving Miss Daisy.
Dave: Oh yes.
John McBurney: He actually did miss Daisy’s hair. At a time that these wealth women would go to the beauty parlor once week to have their hair done, he did the governor’s wife Frank Saunders’s wife’s hair, there was a large department store in Atlanta called Riches, he did Mrs. Riches hair and those ladies absolutely loved Mr. Charles as he was known. And so you know but that’s-that’s definitely, you know just sort of middle class income and yet when my mother in law died she had an estate of about a million dollars.
Dave: Wow!
John McBurney: That’s just about pension pennies. She was able to build up and I think my wife and her did that from her and, so that’s the reason why we had any success that we have had.
Dave: Alright my friends this is Dave Denniston welcome back to the Freedom Formula for physicians Podcast. Well don’t know if you can tell or not but I’m a little bit under the weather, I’ve been having a bit of a sore throat going on but I wanted to make sure to get this out to you. So we’re doing here part two of the conversation with Dr. John McBurney and a Neurologist that lives in the state of Oregon, part one last week really kind of set everything up here, we talked about how he got to where he’s at right now, and now in part two of the episode, we really get into the financial stuff. So in this podcast today your gonna learn about his guilty pleasure of cars and what that had meant to the retirement, I tell you he wasn’t a popular guy at home for a little while. He also simplified his finance and so he’s gonna talk about that, you gonna learn about what kind of corporation he’s using for locums, you’re gonna learn about what he promised his kids financially and how that’s affecting his retirement. We are also gonna discover what kind of practice he will be establishing and the model he’s following and I’ll tell you a hint this involves a past podcast guest and a part of this that is really interesting he’s gonna talk about his past working with different healers and doctors. He’s been transitioned into locums and how he’s using locums as a bridge from his last job to his ideal clinic. So my friends there’s a lot of great financial advice in this part of the podcast as he talks about his financial journey, so I know you’re gonna love it, so with no further ado here is the podcast.
MUSIC BREAK [00:37:26=00:37:31]
Dave: So you learn these great lessons from your wife.
John McBurney: Yeah.
Dave: If you could boil that down to just two or three lessons, what do you think those were?
John McBurney: Yeah so avoid debt and don’t waste money.
Dave: Was there a point you guys ever had obviously other houses and something like that that was a little bit of an issue. Was there a point when you had to deal with that you think you got to stay off and stay on the straight and narrow path?
John McBurney: I had a real fixation on cars for a while and I ran through a bunch of ever escalating expensive cars for awhile, had a seventy thousand dollar BMW at one point. I was not a very popular guy at one point when I came home with that car and I eventually had to just weigh myself off the automobile, you know because unlike a house which you know and with the reasonable amount of degree you know likelihood can be a descent investment you know car unless you sell it, it’s just lost for the minute you start driving it’s recurring expenses you know depreciates rapidly you know the and you know the stereo type of the position of a physician driving a big expensive car is really an ugly stereo type to most people you know.
Dave: And do you think, were you buying into that stereo type , the kind a reason you wanted that car or…
John McBurney: Yeah.
Dave: Did you just love cars growing up or is it a little bit of jealousy you know some of your peers making more money at what point I mean what do you think was behind this?
John McBurney: Yeah I don’t now why I thought that I-I a new Maxima wasn’t good enough and that I needed a M5 BMW but I, you know the leather was a lot nicer in the BMW I don’t know, it was a lot more powerful, it was a lot faster, so it was just a sign of immaturity.
Dave: Interesting! Well now today one of the things I thought that was so unique you and I were conversing back and forth on LinkedIn and here you are today your working towards your own private practice, you’re doing locums you had shared with me earlier before we started recording and you say now you’re living in a small house.
John McBurney: Right.
Dave: And you’re living in a really great neighborhood in the pacific North West, you have a ten year old car and you use a bike to commute.
John McBurney: Right.
Dave: And you don’t have any credit card debts you don’t have anything like that and you’re starting your own practice, so that so exciting to be doing all of those things mow in this stage where you are, so congratulations on that but with all of these things going on how are you kinda tracking your progress to financial freedom?
John McBurney: I know what our remaining outstanding obligations are, and I know what our bank balance is and what our retirement balance is. You know I honestly worry about the longer term prospect, I don’t know how we can afford this little expensive house and if I decide at some point to not work you know so you’re the Portland real estate market is really, really dynamic; it’s not- Portland is still not as expensive as the Seattle, which I know your very familiar with but for most folks in the United States they would be truly blown away by how expensive Portland is. The thing that Portland has going for it is Real-estate investment area is it is still the least expensive major city on the west coast North of America. If you start walking down the west coast of North America starting the British Columbia in Seattle, Portland, San Francisco, LA, San Diageo, you know Portland is half as expensive as San Francisco but it’s still really expensive, it’s still really expensive compared to a lot of places so you know half a million doesn’t get you much in a poor- anyway what I’ve done is, I’ve incorporated I have an LLC my intent is to file my LLC taxes as an escarp working with an accountant who has a lot of experience working with decisions doing locums. We’re aiming for rupree tax retirement contributions out the LLC totaling 51 thousand for this 2017 we will have a remaining debt which were our daughters collage loans plus loans paid off at about this time next year.
Dave: Congratulations!
John McBurney: Yeah thanks. And we’re very proud of her she’s done an amazing work but if she doesn’t make a fortune and so we’ve basically promised our kids undergraduates college without debts at anywhere they could get in, a car and a savings account and so that’s what they got and we just finished helping her and also our son buy their first homes, so those are very meaningful thing to us. But in any case I’m gonna use my income from doing locums potentially as a bridge to self finance establishing a integrative and functional Neurology micro practice. And the goal of that to be not have big overhead because it will be cash based practice to really adopt a model. There’s a family doctor in Eugene, name Pamela Whipple, are you familiar with…
Dave: Pamela and I are friends. She’s been on the podcast.
John McBurney: Yeah. So it’s really very much what she talks about, I actually just got an email from a friend of mine who is an internist here who got contacts with a chiropractor and an energy healer who has a wellness center. It literally would be to try to do what Pam had did which is to wrap a room on a part time basis in a wellness center and to slowly try to develop that practice as a part time endeavor and as I get busier to start cutting back on travelling.
Dave: I think that sounds like a wonderful plan and this one I think that for your situation given some of the things that you’ve experienced; I think that you have this pension income that you can count on, you have the locums that you can certainly do as much or as little as you want and…
John McBurney: Right.
Dave: I think what’s so interesting about Pamela’s way of going about creating the ideal medical clinics is having the town hall meetings…
John McBurney: Yeah.
Dave: Is that something that you’ve started yet or what’s that process gonna look like is that something still a year away or what, when you’re gonna hold –or when are you gonna get started with that?
John McBurney: So my goal is to develop that over 2017 there’s some additional training that I wanna do I’m networking like crazy within sort of integrated complimentary alternative community here, if I have a meeting set up with one of the deans at the natural college of naturopathic medicine on Friday where I may do a little bit of volunteer teaching as a good road gesture and also too further network and the goal would be to roll this out by the beginning of 2018.
Dave: Wow. Good so about a year away, how exciting. It sounds like for and I think being in the pacific north west is a fantastic place to do this by the way..
John McBurney: Yeah.
Dave: And just because I think a lot more openness to alternative medicine than perhaps other places that sounds like, I typically think of Neurologist and I think of hanging your own Shingle out is much more difficult usually in today’s medical world because your usually depending on referrals from your colleagues in a hospital setting you know it’s not like Pamela who I believe is a primary physician, you know people would come and see her for almost anything. In your case being a specialist, I imagine what you’re doing of setting up your own referral network of some of the other people that are specializing in functional or alternative medicines like a chiropractor.
John McBurney: Right!
Dave: Is probably gonna be a great source for you.
John McBurney: Naturopaths, chiropractors, yoga teachers you know its- people actually spend more, people in the United States now spend more money out of pocket on complementary and alternative medicine and then spend out of pocket on conventional care, that’s how big it is.
Dave: I believe it. Well I think there are so many people; I look at my wife and I don’t know how familiar you’ve gotten with my story and having had toxemia preeclampsia twice and horrible seizures with the birth of both of our daughters, our oldest was only 4lbs 9 ounces when she came into this world.
John McBurney: Oh my!
Dave: My youngest was only 12.4 ounces.
John McBurney: Oh my!
Dave: And so it’s I know that traditional medicine in her particular case to try and do something sort of prevention wasn’t helpful .
John McBurney: Right.
Dave: For her and I know obviously it’s not for everyone but I think there are certain cases where this can change somebody’s life by applying a different set of principles. I think physicians they are trained to cure something when there is a problem there. There’s not as much training in prevention.
John McBurney: Oh there’s not. Yeah have you seen the movie the documentary Escape Fire?
Dave: No! Never heard of it. I need to write that down.
John McBurney: Oh you really need to watch it. It’s escape fire the fight to rescue an American health care, it was-it came out about 3 years ago and the issues that are raised in it have only become more entranced and intense since it was since it went out, I forget the names of the two producers and directors but they both are previous academy award winners. I mean they tell the story through the voice of people that are involved in this movement including you know the former head of the center for Medicare Medicate studies, who talks about how you know we really don’t have a healthcare system that we or created emergency care but we’re lousy at everything else. They interview for example the head of women cardiology at Cleveland clinic who talks about the insanity of not being able to do a stent and get enormous re-imbursements, that they really spend time trying to find out why somebody need the stent and don’t get paid at all, and so there just got to be a different model and I think you know I think we can potentially be in a kind of a pre collapse phase for a lot of things in our society in particular for health care. You know people are gonna have to, to a degree find their own way and I think functional medicines for many people is a big part of that and I would say also I did the integrated medicine fellowship at the university of Arizona and what that really is-is a very much a broadening experience you know physicians are very guilty of being very narrowly trained and not knowing what they don’t know and when you go do the integrative medicine fellowship you get exposed to everything. And so I think that that broadening in terms of putting me in position to be able to access in a respectful and collaborative fashion those that community is going to be in valuable. I need to do a little bit more functional medicine training, I’m actually very excited to figure out how I’m going to go about doing that and to do the Breathiest protocol training but I think I was explaining it to a friend of mine who’s doing functional medicine training who hasn’t done integrated medicine I think it sort of like doing the integrated medicine is kinda like getting a masters before you get a PhD and certainly you can skip the masters and go straight to the PhD but you could wind up much more narrowly trained.
Dave: And I think this kinda bring me back home to how physicians are so- physicians in my opinion are best and brightest and it’s so unfortunate how financial training of some sort isn’t part of it. Whether it’s just some sort of how do you run a practice, what should that look like, some of those lessons that Pamela has been teaching you. One of the big questions I have for you John as we wrap up the conversation is if you were to talk to a younger you, if you’re talking to John that is entering residency
John McBurney: Yeah.
Dave: And you wanted to give him financial advice, what would you tell him, what would you talk to John a first year resident about?
John McBurney: Yeah I would say to try to get ahead of the cash flow curve and live small. You know when you’ve got when you no longer or having to live on your income, when you’re not live it you try to not live pay cheque to pay cheque as soon as you can. You know always have enough of a cushion that you’re- even if you didn’t get paid one month it’s not gonna be the end of the world and avoid leverage absolutely avoid being in debt.
Dave: Oh I think that great advice, and great mentorship and I just want thank you for your transparency in our conversation…
John McBurney: Sure.
Dave: And it’s been really, really great getting to know you. Is there anything that on my end as someone that does financial education that you think should be doing more of or less of in a way? What do you think would be helpful to the physician community?
John McBurney: I think, just continuing to have to talk real straight about and the way the things that I have looked at through LinkedIn that you thought about you know real specific things like only buy a car that you can pay cash for. You know, to avoid you know I mean the thing that physicians get trapped into is leasing a car as practice expense, that’s just such a stupid thing.
Dave: Oh I got it thanks. Thanks.
John McBurney: Seven hundred dollars a month for a seventy thousand dollar BMW Huber Sudan is just, you know there’s a line in Without Feathers Witty Evans book where it talks about spending money on pear nectar and gold hats so avoid spending money on pear nectar and gold hats and you’ll do fine.
Dave: Do you have any other closing thoughts John to pass on to your brothers and sister that are physicians as we look at your life and lessons we can learn from you?
John McBurney: Well the final thing that I would close with especially for physicians who are at a younger career that are staring to fell trap is that, that your never truly trapped and that as we transitioned through this period of time where re-imbursements are going down, down, down and with expenses are going up, up, up that locums is a very, very interesting model and that when an entity whether it’s a practice or health care system contracts with a locums agency, they understand that there’s a cost to that and the value that you bring is not necessarily based exclusively on the fees you collect minus your over head expenses. What I say is you know when they go to a locums company it will be like going to McDonalds and wanting to buy big Mac and you only had a dollar, you not gonna get the big Mac because it doesn’t cost a dollar. So with locums you get paid and you get paid not based on whether somebody gets a collection then taking off most of that as an over head you get paid as an hourly employee but you get paid really well and you have a way to control your expenses and for most physicians I think they can if they’re willing to do a little bit of travelling they can recapture a degree of control. You know most physicians spend you know their early evening doing chart work and answering phone calls. Well if you’re doing that as a locums doctor you getting paid.
Dave: Yes.
John McBurney: You know you getting $200 an hour to stay another couple of hours which isn’t a bad deal but if.
Dave: Right!
John McBurney: So I would encourage you know people if they really start to feel like there just being squeezed you know to think outside the box a little bit. Think about locums; think about Pamela Whipple’s ideal medical practice model, micro practices. Think about completely new paradigms other than just trying harder at the same prepared things that is not working. Well you have to check back in a year to see how it has worked out for me.
Dave: Well life is a journey and I think what a really appreciate about you and about this conversation we’ve had is in life we’ve all made mistakes and here you are someone that once grew up in a situation where there wasn’t a ton of resources.
John McBurney: Right.
Dave: And you’ve turned around in your life, served in our military, but again thank you for your service you went and set up yourself I think financially for the future during that time I’m sure there was many times things were tight, but now years later you got a perspective that I think is different than many other physicians having been on both sides of the river if you will, and so I just want to thank you for serving the community I am looking forward to be hearing more about this next chapter of your life and if there’s anything that we can be doing to better serve physicians please let me know. So thank you John for your time, thank you for transparency, and thank you for being a physician serving the community.
Dave: Hello my friends this is Dave Denniston and welcome back to the Freedom Formula for Physician Podcast. This is a podcast dedicated to helping doctors just like you slash your debts, slash your taxes and live a liberated life style. Oh well my friends I just wanna say I love connecting with so many of you the e-mails and the phone calls and people who have bought my book, I just wanna say thank you so, so much for listening to this podcast, spending a busy, busy time out of your compact schedule to tune in here. And I have to tell you we now have over 13 thousand downloads by the time this podcast comes out, so again thank you from the bottom of my heart for listening tuning in. And I just wanna encourage you hey connect, reach out to me I love hearing from you. One of the places that I am on is LinkedIn, so if you happen to go to LinkedIn look for David Denniston, cfa. So I love to connect with my audience or if you go to Doctor Freedom podcast.com I have my personal face book page link down there on the right hand bar as well as the LinkedIn, so reach out say hey. If you are a Physician and you love listening to this podcast and also I just want to do a few quick shout outs here, on iTunes, one of the most important thing for the podcast is to get reviews. So I’d like to thank Jeff Wandering, sexy nerds are us, Jena E Johnson, Glen Livingston and TBW 3406, Mark McAlister, Jessie, JK and Jimmer. Every single one of you mean so much to get comments like that at the podcast and I’d love to ask each one of you there listening to do that as well so we can get to know more and more people and get more and more downloads. And here in a moment my friends we are gonna have a conversation a fire side chat with a physician, this is a person that I was connected with LinkedIn and I think I had wished him a Happy birthday or something of that nature and we started a great conversation between the two of us and next thing you know we hop on the phone or actually it was on the computer and we recorded the conversation and this gentleman he is so special, he is a Physician, he’s a Neurologist who started with the military and he had a long career there for about twenty years, then he moved to private practice where he has a big pitfalls and things that really caused him to loose a little bit of hair and sleep and now he’s actually looking to start his own practice rather than working for someone else but in the mean time he’s doing locums fulltime. So it’s a really great journey I know you’re gonna enjoy these stories as much as I did. All together we talked for like one and a half hours and so I’ve cut down the content to try and be as concise as possible in so capturing his journey, so I cut it down to about an hour, so I’m splitting this up we’re gonna do like one hour this week and about thirty minutes next week. And also I’m not gonna have any commercials today so you can just roll on through it, just cause I enjoy this gentleman so much out of respect to him and him spending time with me, I want to make sure to honor that so with no further ado here is John McBurney.
Dave: So tell me a little bit about your back ground in medicine. How did you get started, what was that journey like?
John McBurney: Yeah you know sometimes I ask myself what the source of my motivation for going into medicine was really, you know I grew up in a small town in East Central Alabama, Opelika which is next to Auburn which is where the you know the university where all the football and all that stuff is.
Dave: Yes!
John McBurney: And I was the first person in my family to graduate from college, my parents were smart people but it was you know in an era as we’ve been talking about protocol skills and where you could certainly make a reasonable middle class living with a limited amount of education. So while my father went to college, he never finished, I think I came along and kinda derailed his educational plans. And I would think growing up in that small town that I just saw physicians as the main exemplars or role models that I would want to emulate, they weren’t- I was never around attorneys, I was never around you know really successful entrepreneurial class people, in fact I don’t think the word entrepreneurial was in even in the lexicon back in the 6os, certainly not in Opelika Alabama so, so- but you certainly go to the doctor and you know the doctor would be the most powerful, most accomplish person in the community by a wide margin you know. So I said well I want to be like that and you know I was a pretty good student, and anyway I-I, I worked my way through Auburn as a nursing assistant or an orderly at the hospital there in my home town the same hospital that I was born in fact; now called East Alabama Medical centre, it was called Lee County hospital back then and made a lot of contacts with positions there, came under the influence of some really, really accomplish physicians, who were all alumni of Emery which was so. Emery was so a reach for me when I applied to medical school, but I got in and having no idea how I would pay for it and back then it was pretty easy to get a military scholarship to go to medical school, so I got a help professional scholarship program fluoride scholarship to go to Emery. So I graduated from Emery without any debt and I graduated from Auburn because I worked my way through without any student loan debt and…
Dave: Was that was that uncommon John? You know as you’re growing up there or was it common just cause those cost was low enough that you could get a way without debt at that time?
John McBurney: Yeah I think cost were quite a bit lower especially in place like Auburn, I think when I started at Auburn the tuition was a flat fee it wasn’t by hour and if I remember correctly and I’m not a 100% sure that I do but I think it was $400 a quarter for tuition. And books were relatively inexpensive especially if you bought used books. So you know I could I could make my minimum wage job and you know a few 20s pass my grandparents and my parents when they could help me, yeah I was able to somehow just make it. I don’t understand how it worked honestly I think back and it seems like if somebody describe that’s how they were gonna do it I would describe it as a pretty shaky preposition you know so…
Dave: So what you, what do you make of today then where you know we have so many physicians coming out with 200 -250 I mean literally a mortgage.
John McBurney: Yes, yeah it’s horrible, it’s horrible and in fact I think it is one of the real causes or contributors to the epidemic of physician distress and the epidemic of suicide among young physicians they are absolutely trapped, if they get part way in and decide hey you know this isn’t really what I thought it was gonna be it isn’t what I want to do, they have this gigantic non-dischargeable debt and I’ve gotten involve through you know move on. Org and different organization to lobby for some, you know student debt relief at a legislative level, I really think that under some circumstances that student loan debt needs to be forgivable in bankruptcy you know …
Dave: Yes!
John McBurney: If somebody says I just want to go teach elementary school or I wanna go work I a bike shop or I just need to go just sort of steer you know at my navel and meditate for a while to preserve what’s left of my sanity, they need to be able to make that choice, that would not be an easy choice but they need to and you know it’s really bad for physicians but it’s not unique. I think that another group that is getting crush by debt are veterinarians.
Dave: Cause if they’re only making eighty or ninety or hundred thousand dollars max maybe then they’re not making…
John McBurney: Yeah that and the I’m sure that schools that a lot of them are being forced to go to cause there’s just aren’t that many slots in the US are unbelievably expensive. They’re unbelief…I mean I’ve read you know things of graduates of these off sure Caribbean veterinary colleges coming out of a million dollars of debt.
Dave: Do you think growing up was, what kind of like attitude did you have about money, was being debt free something that was important to you, instilled in you growing up. What was that journey of growing up in Alabama like as you started thinking about money and money decisions?
John McBurney: You know I think one of the weaknesses of my upbringing is that there was enough scarcity that money wasn’t something that I developed a very significant relationship with because there just wasn’t any. You know so I definitely went through a period of time where I and to a degree still treat money may be less intelligently than I could or should you know but in contrast my pairs I think I’ve been able to-probably because for twenty years I was in the army and I wasn’t making the big bux when it was still in Europe where physicians makes you know the same amount of money so I sort of avoided that track
Dave: This is interesting. Let’s talk about the army for a little bit, so I’m following your journey, you started out in Alabama you’re idolizing physicians, you see them as someone that you wanna aspire to be go to your undergraduate, you go to medical school. When does the army fit into this picture?
John McBurney: Yes! So as a health profession scholarship program or HPSP student your kinda owned by the military so you don’t apply for residency through the match, you apply through the military program and so it’s a completely separate thing and so I wind up getting selected initially for the psychiatry internship at Walter Reid in DC and then I switched to Neurology about half way through my internship and decided I wanted to be a Neurologist. Probably just because I wasn’t identically elective at Emery, that was really an amazing elective as a senior student I had two patients and weekly one hour a week for each of them inside oriented psychotherapy as a student and then I had an hour of supervision with a young psychiatrist who ran the drug and alcohol program at the VA and the cater and was himself training to a psychoanalyst. He would fly up to New York to Colombia University to get supervision a couple of times a month and so I had this experience that was unique. I doubt that there was anywhere in the country that offered students that kind of latitude and I would be surprised if they still offer that at Emery quite honestly, but by the end of that senior year I was beginning to have doubts that I just wanted to do that for the rest of my life and so I’ve done a lot of Neurology as a student anticipating that a psychiatrist would need to be well burst and a Neurologist, so I showed up to a-you know I showed up to Walter Reid and started. I actual started my internship on Neurology and I knew a lot more than the first set of Neurology residence did. They were just starting their residency so I got a lot of strokes, yeah just really had a good time and infuriated the psychiatric department when I could. I de-committed and signed with a different team, so-anyway so I did my internship and the my 3 years of residency at Walter Reid and then I was assigned as a solo Neurologist in a community hospital at Forth bin in Georgia with big like a training facility with infantry centers there, ranger schools there.
Dave: Yes! Let me just interrupt you for a second first.
John McBurney: Yeah.
Dave: Let me just interrupt you for second. Let me just say first of all thank you for your service, I think obviously…
John McBurney: I was-I was enjoying the great piece I really was, at the end of my time in the military was the first person going forward and we were expecting the worst, everybody was shipping out.
Dave: Well I would like to step back for a second.
John McBurney: Yeah.
Dave: So something that I didn’t capture, you served all this time. I didn’t capture why you decided to go for the military option you know as you were evaluating like how did that decision come about?
John McBurney: Yeah so I-I was really proud and excited I had gotten into Han marine I was horrified of the cost I made an appointment with the financial aid director at Emery University, I didn’t really understand how financial aid worked in that there was really no financial aid available to me at all, it wasn’t that I rejected financial aid. Back then there just wasn’t any there weren’t you know there weren’t these federal guaranteed or federal student loan, there weren’t programs, you just you know, you could either get private sources of loans or you just had to have the money, and so I had no idea how I was gonna come up with that. I think the tuition at Emery then was a little under ten thousand a year which sounds like such a joke now, but I was terrified I had no idea how I was going to be able to do that. I was weighing offers at state schools and where it would have been a lot less expensive and I met with this guy and he basically treated me like a [inaudible 17:02] he treated me like a complete unworthy human being because I was even having to you know try to understand how financial aid work, and he just sort of blew me off and so at the same time back then the scholarships were extremely… the military scholarship were extremely competitive now and back then the military was begging for people to consider you know applying for their program, so this army recruiter just made it super easy and the next thing I know I’m all accepted and I get books tuitions are four hundred a month, a non-taxable stipend.
Dave: Cause this was at the height of the Vietnam War I’m guessing.
John McBurney: No it was after Vietnam I graduated from Auburn in 77, so I just met I had to register with the draft the lottery rather and it ended when I was a senior in high school so…
Dave: Wow!
John McBurney: So there was defiantly still the post Vietnam after taste that instilled a lot of very, very strong anti-military sentiments. That was one of the things I had to confront when in was in medical school and that most of the you know junior faculty for sure were extremely anti-military.
Dave: Let me, can I get back to where, so your serving in the military and tell me about financial decisions obviously most physician get paid less for being in the military, so how were you thinking cause you said you served for twenty years, wow two decades…
John McBurney: Yeah.
Dave: In peace time but still you’re serving the military for twenty years taking a relative pay cut, you’re probably I’m guessing moving around the country, maybe the world. How was money kinda coming into play in this journey?
John McBurney: Yeah, so you know number one I made a lot more as a resident, than a residence typically made in civilian programs. I was a captain for four years I was on reserved status during medical school to launch over there. So when I started this intern I was the captain over 4, we got a huge-we got 17.3% pay raised from Ronald Ragan and so and you know in the early 80s I was making almost forty thousand dollars a year as an intern, which wasn’t bad money
Dave: That’s great money.
John McBurney: So my wife was working and we initially rented into a little house in Kensington, which was just north of the district and we got, we got, to think that we wanted to buy a house and this was Paul Broker, Heather Fed interest rates were you know the prime rate was at 1.22% then.
Dave: Yes!
John McBurney: We bought a house where the developer brought down the interest rate on our mortgage to a mere 12.9%. So we were house poor and then we lost a lot of money successively on buying and selling real estate with those moves. We made…
Dave: Cause you had to pretty much, you didn’t have much of a choice.
John McBurney: Yeah there was no- we could have continued to rent and that’s what we should have done but we didn’t want to do that you know we want to have these set of place and that’s what owning a home gives you just a sense of belong a sense of place. So we bought this town house out there in Chantilly which is out near the Dallas airport, we convinced ourselves that the community wouldn’t be bad based on going and looking at it on the weekend not realizing how what a nightmare it would be during rush hour, we paid you know an arm and a leg for-for our mortgage payment and then part way into that you know my wife gets pregnant with our son and we felt it’s really important for her to stay home after he was born, so you know we really couldn’t afford the house so we wind up basically just selling it to get rid of it and so yes so in contrast to a lot of military people I can more calm that arm’s where rotation is really frequent. You know as a physician in the military at least back then you know you could sort of get to a place and stay there; I was at Mattican for nine years.
Dave: That’s a long time in the military.
John McBurney: Yeah, and you know I got to do a lot of new things I-we started a Neurology residency there so I was involved with the start up of this Neurology residency I-we built a brand new hospital that was just shell when I got there, we were still in the old OR2area building when I got there but we got to be involved with designing the build out of the hospital, the equipment, the diagnostic suite, the Neurology program started an Epilepsy marching unit sleep lab, so that’s pretty heady stuff I mean you know 1989 my-I put in a request to buy equipment to go into our Neuro-dianostic each sleep lab for half a million dollars, that was a lot of money back then. You know so.
Dave: Do you think; So it sounds to me as I’m just listening to you talk that I’m really hearing you’re getting a lot of fulfillment
John McBurney: Oh yeah!
Dave: Out of helping to build a whole program and…
John McBurney: Yeah, yeah.
Dave: You’re staying around for that reason as well as I’m sure dedication to the country and were you very entertaining at this point, the idea of private practice or were you looking to get to the 20 years for a pension or what, what’s-what conflicts are you dealing with side as you’re evaluating financial retirements you know type decisions down the road.
John McBurney: Yeah so, you know you don’t go in thinking you’re gonna go for 20 but you going saying well I wanna do this and you just sort of break it down into bite size chance time lines and so the next think you know you get beyond some point where you go cheap, what-what’s the annuity value of a military retirement that’s 50% of your base pay and has cost of living built in and it starts paying as you retire in your 40s, that’s a lot cause right now I make about forty five thousand a year military retirement pay and I’ve been getting that for almost fifteen years and it will.
Dave: And is that-did you ever think about delaying that? Was there any advantage to delaying that pension?
John McBurney: It’s not an option.
Dave: Not an option. Ok, so interesting.
John McBurney: NO you could, you could if you were in a strong financial position I supposed just immediately put that in some other type of investment you know truth be told we lived on it, you know like what I found was, we did do some outside moonlighting type of work when I was in the military and probably added about 30-40% to the income that we received through the military, and-and one thing I should say in correction is when you’re in the military as a physician you know you’re not just getting paid by infantry, major mix, there are all these additional pays that you get and one of the thing is the longer you sign a contract for the bigger that money is, so that fully 50% of your compensation could be based on these there’s something called a more of a medical officer retention bonus, might want to be a thirty or forty thousand dollars a year depending on your specialty. So-so that’s another way its broken down into 5 years chumps , you go well I really want to take this more that they are offering me and so you wind up just a piece of the time going along and the next thing you know is like I said I would think the value of that if you were to just say if you’re gonna at age 43 a purchase and annuity that started paying you thirty five thousand dollars a year at age 43 and had cost of living built into it and survivorship for your spouse built into it, how much would that cost.
Dave: Yes.
John McBurney: It probably be at least a couple million dollars I would guess.
Dave: I would think so. Would have to crunch the numbers on that that would be an interesting exercise I’m sure you went through
John McBurney: Yes that becomes the draw you know it’s just can I get to twenty and also the lower of going on to do other things and I will tell you in retrospect I feel like the best time of my entire career was the time when was in the military I dealt with the most honorable and ethical and reasonable people of my entire career and honestly I feel like my post military experience has been a series of almost hostile abusive encounters.
Dave: Wow!
John McBurney: I could tell you some stories that would make you curl. You know I could tell you stories about being in Neurology practices where the senior partner re-keenly took a quarterly bonus of over two hundred thousand each, a quarterly bonus. So there is no ethical way that a Neurologist can make a million dollars a year from clinical work, there’s no way that you can do that ethically. I had a job where it was in a resort type of area, it seems like it was going to be like the answer to our dreams, it had exactly what I thought I wanted and my wife was also working with me kinda as my assistant and the first pay day came and we didn’t get pay and so I just very, I said I am not going to react to this, it’s probably just a mistake, there may be a problem with the direct deposit routing number who knows. So I called the office manager and I say was it today pay day and she started sobbing and confess that the what I’ve been told is fraudulent that the practice was under investigation, that money was disappearing and that she don’t know where it was and she couldn’t make payroll.
Dave: Oh my God.
John McBurney: And so you know we stuck around for a few more days we got an attorney to give me some advise, ultimately resign without giving notice and the next day actually went and sat down with a special investigator for the attorney general’s office for medicate fraud and gave them a tape account of what I’ve witness for four hours. And then had to pick up and figure out what to do after that again because of non competes and this particular individual was very lawsuit happy he actually had an attorney on retainer, they paid $5000 a month retainer just to harass people and intimidate people, so yeah I mean I’ve seen it I’ve seen some really, really bad things and I think that you know physicians coming out of training with the they need to be very, very discerning about what they get themselves mixed up with because people are going to any links fair or foul to try to preserve the big money days in medicine and I think they’re gone. I think that the money is descent it’s not great when you compare it to the opportunity cost and to the debt load that people come out of their education with but it’s you know it’s better than most folks can aspire to, but the lower of when it sounds to be too good to be true, it’s too good to be true.
Dave: It probably is. So what do you think in terms of you have your military experience John and you got the private practice. Along this path what has been some of the best financial advice that you’ve got and from whom?
John McBurney: Ok, long pause, I you know probably from my wife. My wife is very frugal she doesn’t believe in wasting money her mother; her mother and father raised two children successfully on a modest amount of money my father in law was a hair dresser in Atlanta. He was very successful you know he wind up I don’t know if you’ve seen the movie Driving Miss Daisy.
Dave: Oh yes.
John McBurney: He actually did miss Daisy’s hair. At a time that these wealth women would go to the beauty parlor once week to have their hair done, he did the governor’s wife Frank Saunders’s wife’s hair, there was a large department store in Atlanta called Riches, he did Mrs. Riches hair and those ladies absolutely loved Mr. Charles as he was known. And so you know but that’s-that’s definitely, you know just sort of middle class income and yet when my mother in law died she had an estate of about a million dollars.
Dave: Wow!
John McBurney: That’s just about pension pennies. She was able to build up and I think my wife and her did that from her and, so that’s the reason why we had any success that we have had.
Dave: Alright my friends this is Dave Denniston welcome back to the Freedom Formula for physicians Podcast. Well don’t know if you can tell or not but I’m a little bit under the weather, I’ve been having a bit of a sore throat going on but I wanted to make sure to get this out to you. So we’re doing here part two of the conversation with Dr. John McBurney and a Neurologist that lives in the state of Oregon, part one last week really kind of set everything up here, we talked about how he got to where he’s at right now, and now in part two of the episode, we really get into the financial stuff. So in this podcast today your gonna learn about his guilty pleasure of cars and what that had meant to the retirement, I tell you he wasn’t a popular guy at home for a little while. He also simplified his finance and so he’s gonna talk about that, you gonna learn about what kind of corporation he’s using for locums, you’re gonna learn about what he promised his kids financially and how that’s affecting his retirement. We are also gonna discover what kind of practice he will be establishing and the model he’s following and I’ll tell you a hint this involves a past podcast guest and a part of this that is really interesting he’s gonna talk about his past working with different healers and doctors. He’s been transitioned into locums and how he’s using locums as a bridge from his last job to his ideal clinic. So my friends there’s a lot of great financial advice in this part of the podcast as he talks about his financial journey, so I know you’re gonna love it, so with no further ado here is the podcast.
MUSIC BREAK [00:37:26=00:37:31]
Dave: So you learn these great lessons from your wife.
John McBurney: Yeah.
Dave: If you could boil that down to just two or three lessons, what do you think those were?
John McBurney: Yeah so avoid debt and don’t waste money.
Dave: Was there a point you guys ever had obviously other houses and something like that that was a little bit of an issue. Was there a point when you had to deal with that you think you got to stay off and stay on the straight and narrow path?
John McBurney: I had a real fixation on cars for a while and I ran through a bunch of ever escalating expensive cars for awhile, had a seventy thousand dollar BMW at one point. I was not a very popular guy at one point when I came home with that car and I eventually had to just weigh myself off the automobile, you know because unlike a house which you know and with the reasonable amount of degree you know likelihood can be a descent investment you know car unless you sell it, it’s just lost for the minute you start driving it’s recurring expenses you know depreciates rapidly you know the and you know the stereo type of the position of a physician driving a big expensive car is really an ugly stereo type to most people you know.
Dave: And do you think, were you buying into that stereo type , the kind a reason you wanted that car or…
John McBurney: Yeah.
Dave: Did you just love cars growing up or is it a little bit of jealousy you know some of your peers making more money at what point I mean what do you think was behind this?
John McBurney: Yeah I don’t now why I thought that I-I a new Maxima wasn’t good enough and that I needed a M5 BMW but I, you know the leather was a lot nicer in the BMW I don’t know, it was a lot more powerful, it was a lot faster, so it was just a sign of immaturity.
Dave: Interesting! Well now today one of the things I thought that was so unique you and I were conversing back and forth on LinkedIn and here you are today your working towards your own private practice, you’re doing locums you had shared with me earlier before we started recording and you say now you’re living in a small house.
John McBurney: Right.
Dave: And you’re living in a really great neighborhood in the pacific North West, you have a ten year old car and you use a bike to commute.
John McBurney: Right.
Dave: And you don’t have any credit card debts you don’t have anything like that and you’re starting your own practice, so that so exciting to be doing all of those things mow in this stage where you are, so congratulations on that but with all of these things going on how are you kinda tracking your progress to financial freedom?
John McBurney: I know what our remaining outstanding obligations are, and I know what our bank balance is and what our retirement balance is. You know I honestly worry about the longer term prospect, I don’t know how we can afford this little expensive house and if I decide at some point to not work you know so you’re the Portland real estate market is really, really dynamic; it’s not- Portland is still not as expensive as the Seattle, which I know your very familiar with but for most folks in the United States they would be truly blown away by how expensive Portland is. The thing that Portland has going for it is Real-estate investment area is it is still the least expensive major city on the west coast North of America. If you start walking down the west coast of North America starting the British Columbia in Seattle, Portland, San Francisco, LA, San Diageo, you know Portland is half as expensive as San Francisco but it’s still really expensive, it’s still really expensive compared to a lot of places so you know half a million doesn’t get you much in a poor- anyway what I’ve done is, I’ve incorporated I have an LLC my intent is to file my LLC taxes as an escarp working with an accountant who has a lot of experience working with decisions doing locums. We’re aiming for rupree tax retirement contributions out the LLC totaling 51 thousand for this 2017 we will have a remaining debt which were our daughters collage loans plus loans paid off at about this time next year.
Dave: Congratulations!
John McBurney: Yeah thanks. And we’re very proud of her she’s done an amazing work but if she doesn’t make a fortune and so we’ve basically promised our kids undergraduates college without debts at anywhere they could get in, a car and a savings account and so that’s what they got and we just finished helping her and also our son buy their first homes, so those are very meaningful thing to us. But in any case I’m gonna use my income from doing locums potentially as a bridge to self finance establishing a integrative and functional Neurology micro practice. And the goal of that to be not have big overhead because it will be cash based practice to really adopt a model. There’s a family doctor in Eugene, name Pamela Whipple, are you familiar with…
Dave: Pamela and I are friends. She’s been on the podcast.
John McBurney: Yeah. So it’s really very much what she talks about, I actually just got an email from a friend of mine who is an internist here who got contacts with a chiropractor and an energy healer who has a wellness center. It literally would be to try to do what Pam had did which is to wrap a room on a part time basis in a wellness center and to slowly try to develop that practice as a part time endeavor and as I get busier to start cutting back on travelling.
Dave: I think that sounds like a wonderful plan and this one I think that for your situation given some of the things that you’ve experienced; I think that you have this pension income that you can count on, you have the locums that you can certainly do as much or as little as you want and…
John McBurney: Right.
Dave: I think what’s so interesting about Pamela’s way of going about creating the ideal medical clinics is having the town hall meetings…
John McBurney: Yeah.
Dave: Is that something that you’ve started yet or what’s that process gonna look like is that something still a year away or what, when you’re gonna hold –or when are you gonna get started with that?
John McBurney: So my goal is to develop that over 2017 there’s some additional training that I wanna do I’m networking like crazy within sort of integrated complimentary alternative community here, if I have a meeting set up with one of the deans at the natural college of naturopathic medicine on Friday where I may do a little bit of volunteer teaching as a good road gesture and also too further network and the goal would be to roll this out by the beginning of 2018.
Dave: Wow. Good so about a year away, how exciting. It sounds like for and I think being in the pacific north west is a fantastic place to do this by the way..
John McBurney: Yeah.
Dave: And just because I think a lot more openness to alternative medicine than perhaps other places that sounds like, I typically think of Neurologist and I think of hanging your own Shingle out is much more difficult usually in today’s medical world because your usually depending on referrals from your colleagues in a hospital setting you know it’s not like Pamela who I believe is a primary physician, you know people would come and see her for almost anything. In your case being a specialist, I imagine what you’re doing of setting up your own referral network of some of the other people that are specializing in functional or alternative medicines like a chiropractor.
John McBurney: Right!
Dave: Is probably gonna be a great source for you.
John McBurney: Naturopaths, chiropractors, yoga teachers you know its- people actually spend more, people in the United States now spend more money out of pocket on complementary and alternative medicine and then spend out of pocket on conventional care, that’s how big it is.
Dave: I believe it. Well I think there are so many people; I look at my wife and I don’t know how familiar you’ve gotten with my story and having had toxemia preeclampsia twice and horrible seizures with the birth of both of our daughters, our oldest was only 4lbs 9 ounces when she came into this world.
John McBurney: Oh my!
Dave: My youngest was only 12.4 ounces.
John McBurney: Oh my!
Dave: And so it’s I know that traditional medicine in her particular case to try and do something sort of prevention wasn’t helpful .
John McBurney: Right.
Dave: For her and I know obviously it’s not for everyone but I think there are certain cases where this can change somebody’s life by applying a different set of principles. I think physicians they are trained to cure something when there is a problem there. There’s not as much training in prevention.
John McBurney: Oh there’s not. Yeah have you seen the movie the documentary Escape Fire?
Dave: No! Never heard of it. I need to write that down.
John McBurney: Oh you really need to watch it. It’s escape fire the fight to rescue an American health care, it was-it came out about 3 years ago and the issues that are raised in it have only become more entranced and intense since it was since it went out, I forget the names of the two producers and directors but they both are previous academy award winners. I mean they tell the story through the voice of people that are involved in this movement including you know the former head of the center for Medicare Medicate studies, who talks about how you know we really don’t have a healthcare system that we or created emergency care but we’re lousy at everything else. They interview for example the head of women cardiology at Cleveland clinic who talks about the insanity of not being able to do a stent and get enormous re-imbursements, that they really spend time trying to find out why somebody need the stent and don’t get paid at all, and so there just got to be a different model and I think you know I think we can potentially be in a kind of a pre collapse phase for a lot of things in our society in particular for health care. You know people are gonna have to, to a degree find their own way and I think functional medicines for many people is a big part of that and I would say also I did the integrated medicine fellowship at the university of Arizona and what that really is-is a very much a broadening experience you know physicians are very guilty of being very narrowly trained and not knowing what they don’t know and when you go do the integrative medicine fellowship you get exposed to everything. And so I think that that broadening in terms of putting me in position to be able to access in a respectful and collaborative fashion those that community is going to be in valuable. I need to do a little bit more functional medicine training, I’m actually very excited to figure out how I’m going to go about doing that and to do the Breathiest protocol training but I think I was explaining it to a friend of mine who’s doing functional medicine training who hasn’t done integrated medicine I think it sort of like doing the integrated medicine is kinda like getting a masters before you get a PhD and certainly you can skip the masters and go straight to the PhD but you could wind up much more narrowly trained.
Dave: And I think this kinda bring me back home to how physicians are so- physicians in my opinion are best and brightest and it’s so unfortunate how financial training of some sort isn’t part of it. Whether it’s just some sort of how do you run a practice, what should that look like, some of those lessons that Pamela has been teaching you. One of the big questions I have for you John as we wrap up the conversation is if you were to talk to a younger you, if you’re talking to John that is entering residency
John McBurney: Yeah.
Dave: And you wanted to give him financial advice, what would you tell him, what would you talk to John a first year resident about?
John McBurney: Yeah I would say to try to get ahead of the cash flow curve and live small. You know when you’ve got when you no longer or having to live on your income, when you’re not live it you try to not live pay cheque to pay cheque as soon as you can. You know always have enough of a cushion that you’re- even if you didn’t get paid one month it’s not gonna be the end of the world and avoid leverage absolutely avoid being in debt.
Dave: Oh I think that great advice, and great mentorship and I just want thank you for your transparency in our conversation…
John McBurney: Sure.
Dave: And it’s been really, really great getting to know you. Is there anything that on my end as someone that does financial education that you think should be doing more of or less of in a way? What do you think would be helpful to the physician community?
John McBurney: I think, just continuing to have to talk real straight about and the way the things that I have looked at through LinkedIn that you thought about you know real specific things like only buy a car that you can pay cash for. You know, to avoid you know I mean the thing that physicians get trapped into is leasing a car as practice expense, that’s just such a stupid thing.
Dave: Oh I got it thanks. Thanks.
John McBurney: Seven hundred dollars a month for a seventy thousand dollar BMW Huber Sudan is just, you know there’s a line in Without Feathers Witty Evans book where it talks about spending money on pear nectar and gold hats so avoid spending money on pear nectar and gold hats and you’ll do fine.
Dave: Do you have any other closing thoughts John to pass on to your brothers and sister that are physicians as we look at your life and lessons we can learn from you?
John McBurney: Well the final thing that I would close with especially for physicians who are at a younger career that are staring to fell trap is that, that your never truly trapped and that as we transitioned through this period of time where re-imbursements are going down, down, down and with expenses are going up, up, up that locums is a very, very interesting model and that when an entity whether it’s a practice or health care system contracts with a locums agency, they understand that there’s a cost to that and the value that you bring is not necessarily based exclusively on the fees you collect minus your over head expenses. What I say is you know when they go to a locums company it will be like going to McDonalds and wanting to buy big Mac and you only had a dollar, you not gonna get the big Mac because it doesn’t cost a dollar. So with locums you get paid and you get paid not based on whether somebody gets a collection then taking off most of that as an over head you get paid as an hourly employee but you get paid really well and you have a way to control your expenses and for most physicians I think they can if they’re willing to do a little bit of travelling they can recapture a degree of control. You know most physicians spend you know their early evening doing chart work and answering phone calls. Well if you’re doing that as a locums doctor you getting paid.
Dave: Yes.
John McBurney: You know you getting $200 an hour to stay another couple of hours which isn’t a bad deal but if.
Dave: Right!
John McBurney: So I would encourage you know people if they really start to feel like there just being squeezed you know to think outside the box a little bit. Think about locums; think about Pamela Whipple’s ideal medical practice model, micro practices. Think about completely new paradigms other than just trying harder at the same prepared things that is not working. Well you have to check back in a year to see how it has worked out for me.
Dave: Well life is a journey and I think what a really appreciate about you and about this conversation we’ve had is in life we’ve all made mistakes and here you are someone that once grew up in a situation where there wasn’t a ton of resources.
John McBurney: Right.
Dave: And you’ve turned around in your life, served in our military, but again thank you for your service you went and set up yourself I think financially for the future during that time I’m sure there was many times things were tight, but now years later you got a perspective that I think is different than many other physicians having been on both sides of the river if you will, and so I just want to thank you for serving the community I am looking forward to be hearing more about this next chapter of your life and if there’s anything that we can be doing to better serve physicians please let me know. So thank you John for your time, thank you for transparency, and thank you for being a physician serving the community.
