WCI #178: Practicing Medicine in Australia

This is the White Coat Investor Podcast where we help those who wear the white coat get a fair shake on Wall Street. We've been helping doctors and other high income professionals stop doing dumb things with their money since 2011. Here's your host, Dr. Jim Dali. This is White Coat Investor podcast 178 practicing medicine in Australia. I estimate that 80% of doctors need, want and should use a financial advisor and or an investment manager. Some investment gurus such as Dr. William Bernstein think my estimate is way too low. At any rate, if you want to use an advisor temporarily or for your entire life, there's no reason to feel guilty about it. Just make sure you are getting good advice at a fair price. If you need help updating your financial plan or just getting one in place, check out our list of recommended financial advisors@whitecoatinvestor.com financial advisors. You can do this and the White Coat Investor can help. It is September 21st. We're recording this to run on October 1st. It's going to be a great episode. I think you're really going to enjoy it. You know, we, from time to time we've brought on doctors from other countries. The White Coat Investor, both the blog and the podcast does have an international readership and viewership. It's the vast majority is US docs, but there are people from other countries that read and listen to the White Coat Investor. So it's a lot of fun, I think, to bring people on from other countries every now and then and give you a sense for what it's like to practice medicine in another country. In the past we've had a doc from the UK on here, we've had a doc from Venezuela on here. And today we're going to have a doc from Australia on here, which I think it would be particularly interesting, especially since a lot of docs look into Locum's opportunities to go to Australia and practice themselves. But before we get into that, I wanted to talk about a couple of other things. First of all, let's give you the quote of the day this one comes from. George Goodman says if you don't know who you are, the stock market is an expensive place to find out. And I think that is talking a little bit about behavior and what kind of an investor you are. In a lot of ways, the investor matters a lot more than the investment. And although we're all busy seeing patients working our butts off, taking call, working night shifts, you know, you still got to put a little bit of time in to taking care of your finances. So thank you for what you do. Don't drop the ball with the last 5% of your life, which is taking care of the money that you're making and you'll be successful. Also, if you need help, it's okay to need help. You know, we recognize that most docs are going to need help from some type of financial professional at some time, and that's why we keep the recommended list at the White Coat Investor that we do. For example, I estimate that about 80% of docs want and need a financial advisor. So we keep a list of financial advisors that we think are fantastic. It's under our recommended tab@whitecoatinvestor.com that's whitecoatinvestor.com financial advisors. And we keep a list there of dozens of advisors that we've vetted that our readers and listeners are continually vetting that give good advice at a fair price. And if you need to use them temporarily or for the rest of your life, that's a place you can know you're not going to be ripped off. So feel free to check out that recommendation page as well as our other recommendations pages if you need help with something. All right, I think it's about time to get into this interview. Let's get this doc on the phone. And I think you're really going to enjoy learning a little bit about how medicine is practiced in Australia. Okay. We have got our Australian doc on the line here. He's going to remain anonymous today, but welcome to the White Coat Investor podcast.

Thank you very much, Jim, for having me.

It's wonderful to have you on. Let's start with just learning a little bit more about you. Tell us a little bit about your background and how that affected your views on money.

Yeah. So I was actually born in India, but I came to Australia as a child about 7 years old with mum and dad and elder brother. So most of what I remember and most of my life has been in Australia. I don't really remember much of my life in India actually. We were an average middle class family in the early 90s in a town called Adelaide, or City, which is one of the capital cities of a state here in Australia. And I've always grown up with frugality mindset. I've always been very careful with money, even during my high school years and medical school years when I had a job and certainly my internship and training years. And one of the biggest sort of mindset that I had, I always wanted to be financially secure. And this is going to sound a bit weird But I always wanted to go into a shop and not really think about money. When I wanted to buy a tv, that was the thing, because I remember when I was growing up, plasma TVs were just coming on and the very first plasma TV was like $40,000 in Australia back in the 90s. And I thought, imagine walking into a shop and not having to think about money because I wanted to buy a TV and I didn't have to worry about it. So that sort of financial security was always very, very important. And that sort of carried through to my high school and my medical school. Then I sort of used a 50% rule, which is basically whenever I had a job, I tried to save 50% of my money to put it aside. And that over the years has sort of dwindled down to 20% when you have a family and kids, but basically coming from an average middle class family. Although money wasn't the most important thing, it was constantly a feature during my childhood. And I think that sort of relationship brought in it a frugality mindset.

Thanks for sharing that. You know, it's interesting, this idea of not having to think about the price when you buy something is a wonderful aspect. I think that's a point beyond financial independence. You know, financial independence is obviously when you don't have to work for money, when it ceases to be a factor in your life, that's usually an even higher level of wealth than that. But an interesting goal nonetheless, that I don't think we hear verbalized very often.

Yeah, I'm sort of learning obviously more about finances now than I did back in the day. But I say, I think even as much as, I mean, I'm more wealthy now and make more money than I ever have before, but I still think about it when I walk into shops, that's for sure.

Yeah. So I wanted to split this podcast into two halves really. And the first half I wanted to talk about medicine in Australia because it's fascinating to see how it's done somewhere else, especially when we stare at our own dysfunctional system here in the States. And then the second half to talk a little bit about finances in Australia, both among doctors and others. So let's start with just learning about the process of becoming a doctor in Australia. How do you become a doctor in Australia?

Yeah, there's two. There's two main ways of becoming a doctor in Australia. So overall the process here is quite competitive. It's obviously a very well sought after degree, and that's probably because of the financial aspect of it as Much as it is about helping people. To be honest, doctors here make a pretty good living. But the two mainstreams is you can do the undergraduate way, which is the way that I did it. So you do kindergarten to year 12, you do your year 12 exams, and part of that you do an entrance exam for medical school, which is a nationalized process. And then based on your year 12 marks and your aptitude test entrance examination, you might get selected for an interview and you go and sit the interview amongst a panel of people and you might get into medicine that way. And that's the undergraduate process. That's direct entry into med school. After year 12. That was the most common way that people did medicine in the 90s and 2000s. We can also do medicine here through what's called postgraduate entry. So this is very similar to the US system, where after year 12, you might want to do a undergraduate degree, such as biomedical sciences or medical sciences or really any degree, and then you sit the aptitude test to get into postgraduate medicine and then you have to sit the interview process for postgraduate medical degrees. So not all universities offer undergraduate and postgraduate degrees, although we are moving towards more postgraduate degrees in the MD system in Australia over the last five years. And most of our medical school placements are based on merit and that means that it is Commonwealth supported. So most of your education is paid by the taxpayer. But there are some full fee paying medical schools in Australia that is relatively rare for the Australian graduate. It would be very unusual for an Aussie graduate to do year 12 and gun for full fee paying medical school because it is quite expensive. But most of the full fee paying medical school places are for international students that come from overseas. So those are the two mainstreams of just the process of becoming a doctor. And of course you got to sit your exams at the end of your medical school, et cetera.

But most people that become doctors in Australia basically decided at 18, it sounds like, to go to medical school.

Yeah, that's right, yeah. So like certainly that was certainly the case in the 90s and 2000s. Nowadays we have a little bit more choice because more and more postgraduate medical schools are around and you have that option of doing something else with a hope of doing medicine. But it would make sense for postgraduate students to think about doing something in the health sciences field before getting into postgraduate medicine. So you kind of have to plan your entrance to medical school relatively early on.

And most of these Australian doctors, it sounds like, are basically going to school for free, is that right? Yeah, no tuition, no student loans, et.

CETERA well, there is student loans. So basically why that it works is that if you get the marks and you get into medical school, then the cost of becoming a doctor per year is around 30 to $40,000. That is the actual cost of becoming a doctor, but the actual student doesn't have to pay that much. So to give you an example, my medical school, I went to Medical School from 2001 to 2006. I graduated with student loans of $36,000. After six years to become a doctor, I didn't have to pay any of that upfront. And each year my yearly fees, which gets added to the student debt was capped at $6,000. Now that has increased now. So nowadays it's capped at around nine, nine and a half thousand dollars for medical school per year. And at the end of medical school, four years postgraduate or six years, then you may graduate with a student loan debt of around sort of 40 to 70,000, depending on which university that you go to. So at the point of study, so when you get into medical school, you don't have to pay that yearly fee, but you pay it when you graduate and you get a job and it's automatically linked up to your taxation account. So when you get a job and you earn a certain amount. So if you earn 45 to $50,000 a year, which every single doctor in Australia, including the newly graduated medical student, earns, then it automatically gets deducted from your taxation. So it's money that you kind of never see. And one day you get a letter or email from the government saying, congratulations, you've paid your student loans off. But it's a subsidized education, so if 6,000 or 9,000 is added to the student loans, the rest of the 30 to 40 grand comes from the taxpayer.

Does anybody ever pay it off early by writing a check?

No, actually it's encouraged not to pay it off early. And this is why, and this is why I think most Aussies are very proud of the university system here because they don't charge any interest. So all these loans come from the federal government and the federal government policy is that it's not privatized. So at the end of your medical school, your loan is only indexed to inflation. There is no interest on the loan, so it makes no sense to pay it off upfront. It makes sense to earn a living and invest outside of that. And just one day, the, the bills just get paid automatically.

Interesting difference, isn't it?

Yeah. So I think the cost of medical school certainly here to the actual individual person is Quite affordable in the sense that you kind of don't need to have the money up front to study medicine. So it's a fairly equitable system from an Aussie point of view.

So you go into medical school at 18, you come out, it's six years. Right. You come out at 24.

Correct.

Then what happens?

Yeah, so then you got to, at the end of your medical training, halfway through, you have to apply for internship. Every doctor has to do an internship which is kind of your training year and you apply for it at your designated hospital that you want to go to. And that's a sort of a state, state based system and it's a relatively competitive process. So if you want to get to a particular hospital, then you have to go and sit the interviews for that particular hospital. But most people stick around the hospital that they've trained the most. So with your undergraduate training, three years might be pre clinical, three years might be clinical and you might be attached to a particular hospital. If they know you and like you, then they'll just employ you as an intern. It just makes sense. Now if you did internship in Adelaide versus if you did internship in Melbourne versus Sydney, there are some basic things that you need to do. So you need to do basic general surgery, basic general medicine, emergency medicine, nights relieving and elective rotation. So those are the basic things that you need to do across the board nationally. So you can't just do internship in cardiology, for example, and call it a day. Then during internship you get assessed during each rotation and you gotta pass that rotation and you finish the internship and your provisional registration as a doctor becomes a general registration as a doctor. That means you're a fully fledged doctor now, you still get paid during internship and we can talk about the financial aspect of it later, but at the end of that you get a general registration, then you become a resident. And generally most doctors in Australia do a one or two year residency in their chosen field. So for example, you can do internship and say I want to do neurosurgery, so I can do a surgical specialty resident year. And part of that might be neurosurgery, ophthalmology, ent, plastics, orthopedics, and then during that year you may wish to apply for neurosurgical specialty training as a registrar. And a registrar here is basically the actual training process of becoming a, let's say a neurosurgeon, for example. And that takes about five or six years. And you're assessed every six months during that time. And then at the end of that six years, you write an exam and you become a neurosurgeon. So the whole process, you know, six years plus another six to 10 years, looking about sort of 15 years. If you wanted to do a surgical specialty now that process is the same for most specialties. If you want to do general practice, which is also a specialty here, a family physician specialty, you might want to do internship and do a general resident year, obstetric psychiatry, et cetera, because that's all sort of compulsory. Then apply to the general practice training program and that's another two to three years in community general practice and then sit your fellowship exams.

It sounds like the postgraduate training is not dramatically different from the us.

No.

So, and our combinations of internships, residencies and fellowships, it all ends up being about the same length. We just call them different things for different years.

Correct. I think the length of training is anywhere between sort of eight, nine to sort of 15 years, depending on whether you pass the exam straight up. So it's very, very similar in terms of the length of training. Yes.

Have you ever practiced in another country?

So no, I haven't done paid practice in another country. I actually went back to India for about four months and did an elective term in a 2000 plus bed hospital just to see how things are as part of my medical student training. And that was a bit of an eye opener because as a med student there I worked, I didn't get paid, it was six days a week and I did various rotations in those four months. So every few weeks I'd change rotations. But I haven't lived in another country as a doctor, paid doctor, but I've just worked as a medical student for four months as part of a team in southern India and boy, that was a very interesting experience. I learned a lot.

Just because it was more underdeveloped than Australia.

Absolutely, yeah. I mean the pathology, the health system, the hours is completely different.

Tell us about the Australian medical system. Can you describe it for us? Yeah.

So we have what's called a two tier health system. So the primary healthcare system in Australia is public and we have a very expansive public health care system which is I think the equivalent of single payer, I think you guys call it in the States. So essentially public hospitals exist, public outpatients exists, you get doctors, nurses, pretty good standard of, actually pretty fantastic standard of care for public health. And then we have a private system in Australia as well which also has private hospitals, you can see specialists privately, et cetera. Now generally speaking, that's the Hospital systems, the outpatient systems are general practice. For example, most general practitioners have their own small businesses that they see patients through. So general practice is federally funded and the GP charges a fee to see the patient and the patient gets a rebate back from the government. So it is also heavily subsidised by the government. And also you've got your private specialist again, you can go see a cardiologist and pay upfront and then you get a rebate back from the government as well. We also have what's called a pharmaceutical benefit scheme, which a lot of people sort of forget as part of the health system. And what that means is when I prescribe something like a heart medication, for example, that medication, the actual cost of the taxpayer might be, let's say $500 or whatever it is per script, but the average Australian may only pay $40. So they cap it at the pharmacy. So you're not expected to pay the full price. And you don't need to have private health insurance to be able to buy the medication. So bizoprolol, if I wanted it, I can go to the chemist, hand over the script, it's for heart failure and they, I pay 40 bucks and they give me the script and that's the end of story. If you're a low income earner, that $40 capping is actually even less. It's about $6 Aussie to get the same medication. So the pharmaceutical benefits scheme is sort of designed as a sort of capping on pharmaceutical prices so that generally people are able to afford it. And we also have allied health which is mainly in the, mainly in the public system, but also there's a vibrant private allied health system here as well. So if you wanted to go see a physio, occupational therapist, etc. Then you can do that as well. And the dental system, that's probably the biggest gap in Australia. We don't really have a very robust public dental system. So most of the dentists here are private. Except if you're a child or a low income earner, then there are public dentist system available, but there's a bit of a wait for that. And lastly we have national programs like immunizations and colorectal cancer screening and breast screening and Pap smears and things like that, cervical screening, that's all national and that's all just free and that's administered by the general practice.

So do most people buy private health insurance or do most people not buy it?

Most people actually don't have private health insurance. Private health insurance only became popular in the 90s to try and take the load off the public system. So most Australians don't have private health insurance, but a lot of Australians do, because for non urgent, elective stuff in the public system, like a hernia repair or gore bag or something like that, you know, the waits can be long. So, you know, you might be waiting up to sort of three months to get your gallbladder out, or even four months, sometimes even longer, particularly your hip surgeries, your, you know, arthroplasties, et cetera, there might be a bit of a wait. So a lot of Aussies might have private health insurance for those purposes, but if it's emergency, like cancer surgery, heart surgery, brain surgery, yeah, most people just use the public system. I actually, as a medical student and as a doctor, I've used the public system myself and I just go to the ER and get seen by a doctor and go home. It's not the world's best healthcare system. There's a lot of deficiencies in it, but at the core, at the point of treatment in the public system, it doesn't cost the patient any money.

How does the private system work? I mean, you go see a private doctor, you pay him cash, cash out of pocket to get your care and then you get some money back from the government. Is that most of the money of what that private doctor charged? Some tiny percentage of that money, all of the money, what does it work out to be?

Usually? Yeah, so that's highly variable and that depends also on the type of consultation. So probably easier if I explain it as an example. Right, so let's say a patient comes in and they need a tonsillectomy. So it's a child that needs a tonsillectomy. So as a family physician, I can say to the parent, look, I can refer you to the public system, which is completely free. There might be a bit of a waiting list to get into the outpatients and there's a waiting list to get onto the operating table, but there's no cost to you, or I can give you a referral to see Dr. So and so who's an ENT specialist, and they may charge you a fee to see them privately. And if you've got private health insurance, then they can take you to theatre a little bit quicker and you may be charged an out of pocket cost as part of the procedure. Now, the charges that the ENT doctor does and the charges that they do for the operation, et cetera, is completely sort of up to the doctor. So ENT specialist one can charge you $100 for a consult. ENT Specialist 2 might charge you 500 bucks, et cetera, et cetera. So that's completely. That's basically free market. But the government, you have to put an item number for a consultation. So the item number might be, let's say 104, which is, I think, the item number for specialists. And that 104. That rebate is government set. So that rebate might be, let's say, $50, for example. I don't know exactly what the rebate is. I'm just making this up. So the mum pays $100. She gets $50 back from the government, which is all sort of electronic. And the gap fee is the $50 that the mother has to pay for the consultation. And likewise, when they go to the operating theater, if they went to the private hospital, then the hospital and the health insurance have a very similar system, and that's relatively standardized. It's not a huge sort of discrepancy between ENT specialists 1 and 2 because it's all sort of market forces. But that really depends on the health insurance and the type of operation that they do and the ENT surgeon, what sort of fees they charge. And that's called a gap fee. So in the private system, just because you have a private health insurance doesn't mean that your entire care is fully covered by private. Some surgeons choose a gap fee. Other surgeons say, nah, I don't want to charge a gap fee. Just pay me whatever the private health insurance sets their rebate at, basically.

So is the main difference between the public system and the private system how long you wait for care? Or do you feel like there's a difference in the quality of care that the best doctors and the best hospitals are in the private system?

Yeah, that's an interesting question. I think the actual quality of care is exactly the same, if not very, very similar. So a ST elevation myocardial infarction treated in the private system versus a public system, I think you get the exact same care. The difference is probably the waiting time and the cost. So in the public system, of course, it's free. In the private system, then you pay whatever the gap fees are. But generally speaking, the quality of care is pretty much the same because a lot of doctors work across both sites. So a lot of the doctors work in public hospitals and also work in their private practice. In fact, to have a public appointment is seen as revered if you're a physician or a surgeon or a ER specialist that works in the public system and the private system. On your resume, on your curriculum vitae, that looks great to be affiliated with a public hospital because most of the research, most of the guidelines, most of the procedures, the standard of care is set by the public system.

Do you find that there's a big issue with maldistribution of services? I mean, the vast majority of Australia is very rural. Is there a big difference in the care you get if you live in some tiny town in the outback versus in Sydney?

Yeah. The biggest tyranny in Australia is distance. What was interesting that I actually didn't know this, having lived here for many, many, many years, is the size of Australia is actually almost the same as the size of the United States. We're a very vast country in terms of the geographical size. And the biggest problem for us is the tyranny of distance. The advantage for Australia is that we're a very urbanized country. So about 90% of the population live in major cities, capital cities of each state, and about 40% of the population live in Melbourne and Sydney. So that's a considerable advantage. Which means 90% of the population get the care that they need, pretty much most things that they need in their own city. There is a maldistribution in terms of regional and rural areas. So we have regional centres, we have rural centres and we have remote centres and we also have indigenous population, Indigenous communities in rural and remote Australia. There's definitely a maldistribution there. So if you are in the middle of Australia, in Alice Springs with a head injury and need neurosurgical services that are a little bit more complex, you will need to be flown down four hours south to Adelaide to get that service. So certainly living in a rural town puts you at a risk, not because of the cost of healthcare, although the cost of healthcare is embedded in your travel distance and your specialty availability, et cetera. But certainly the tyranny of distance is a big factor and there are sort of partnerships between public sectors. So your public hospital in 150km north of Melbourne might have a relationship with a tertiary hospital in Melbourne. So they have that sort of, okay, look, if we get a complex cardiac patient, you will accept our patients. So that sort of is done via state based agreements, but absolutely maldistribution. The distance is a big problem in Australia.

Now you mentioned before that the system has some deficiencies. And you know, here in the us I would say the majority of doctors are at least a little bit embarrassed about our medical system. It's embarrassing to be a part of sometimes. Do Australian doctors feel embarrassed about their medical system or what's the deal with the deficiencies you mentioned?

Yeah, look, I actually asked this question in a Aussie doctor forum recently and as expected, most people said they're very proud of the Australian health system. There's probably only one or two people that said, no, no, things could be a lot better, things are a lot worse now than they were before. So the vast majority of Aussie doctors and nurses, I would say, are very, very proud of our health system because, generally speaking, we would consider healthcare as a human right. So, because it's not something that you don't choose to be sick in the sense that if you're a child born with a deficiency or developmental delay, it's not the child's fault. So we would sort of say that sort of human right element is definitely there. And I think most doctors would agree that public health system should exist, and most doctors would also agree that the private health system also should exist. And each of their respective sort of health systems can partner with each other to sort of help out. Of course, with the private health system, you need private health insurance in Australia. If you don't have private health insurance in Australia, you can still go to a private hospital, but the cost would be quite prohibitive and most private hospitals would probably say, look, the cost is just too much for you to get your surgery here. So we recommend you go to a public system. And that sort of transfer of patients happens quite a lot in the public system. It is a public system, so you don't get access to the doctor of your choice. So that's a bit of a deficiency in the private system. You can say, I want to see Dr. Jim Daly in the private system. I want to see him because he's the best at the surgery that I want to have. Whereas if you go to the er, you don't get that choice. And if you go to the public outpatients, you don't get that choice. It's whoever that you get. And mostly it's registrars and consultants and residents. So all of the training positions, well, most of the training positions, I beg your pardon, is in the public system, although there are some training positions in the private system now. But most of the medical specialty training system is in the public system. So you kind of need to know the public system to be able to become a doctor and, and then become a fully fledged fellow. And surprisingly, I think in terms of efficiency, I think they did a study and the Australian healthcare system, surprisingly, is quite efficient. From a cost benefit analysis, we're able to do things relatively cheaply compared to some of the other countries. Except obviously in the developing countries it's much cheaper. But to have hip surgery in Australia is relatively cheaper than perhaps in most of North America.

I've heard that the triage nurses in the emergency department simply send people home if they don't think they have an emergency without ever having seen the doctor. Is that true?

That's actually not true. So what happens is patients can go to the emergency department for whatever they want. So, and I've worked in EDS and people have rocked up with rashes for like 10 years and decided to rock up at midnight because they're worried about the rash. So the triage nurse has to triage them based on the guidelines. And there's triage category one, which is trauma immediately seen, triage category two within 10 minutes, triage category three, within 30 minutes, four, which is one hour, I think it is, and five, which is within two hours. Now, you know, technically a rash would be categorized as Category 5 and they need to be seen within two hours, but in reality they probably will wait much longer because of the workload, but they're not allowed to send people away. What they may do is they give patient the option. So obviously if it's a non urgent issue, a lot of the emergency departments might have an after hours general practice clinic attached to them. So they may say, look, you're welcome to wait here, it's free of cost, or you might want to go to an after hours GP centre nearby. They may choose to charge you, most don't. So they give you that sort of options. But know that they are not allowed to send people away. Every patient that presents must be seen or given the option and if it's a non urgent thing, they may be given the option. And some of them wait to be seen. I've seen patients when I was training in the emergency department who've patiently waited for five, six hours for a skin spot that they're worried about, which is always interesting. And I've always found it interesting that people are happy to wait that long. But yeah, if you wait then you will be seen at some stage.

So lots of American doctors are terrified of a single payer system, thinking it'll lead to less access to quality care and low doctor pay. Are they right to be afraid or do you think this is a boogeyman that they've designed and that it's really nothing to worry about?

That's a very interesting, perplexing thing to me and I think that would be quite perplexing to a lot of Aussie doctors about this sort of fear about a single payer system. So in Australia doctors are pretty well paid and the quality of care is actually pretty good. So the life Expectancy here is 82, which is, I think it's higher than North America. And most of our research comes from public system here and we've got world class research institutions attached to universities and hospitals here. And pay wise, if you're in the public system, then your pay is quite transparent. So it's called the enterprise bargaining agreement which basically the statewide doctor union bargains with the state government and they sort of say, okay, if you're a consultant emergency physician, year three, this is your pay and that's statewide. So if you went to hospital two somewhere in rural area and they're part of that EBA agreement, then that hospital can't say, oh, you're a consultant year three rural, sorry, emergency position, we will pay you this much, we'll pay you less than the eba. They can't say that. So there's sort of a transparent process. And of course in the private sector that's all sort of fee for service. So there's no sort of standardized sort of pay rate in the private sector. So I think it's interesting why some people may be a little bit afraid of the sort of single pay system, this sort of control of health care, etc. But when I see patients in the public system, I don't have to ask for permission to do an X ray or do a blood test or prescribe a certain medication. I've got complete medical autonomy to do that, to make sure the patient gets the best care they need. There's no hospital executive telling me what to do in terms of my clinical practice and the nurse is not told to do something by executives. It's all sort of, it's autonomous. So I can practice within guidelines, within policies and procedures without being interrogated.

And how much do, or how often, if ever do people go bankrupt due to medical bills in Australia is essentially a non event. It never happens. Nobody goes bankrupt due to medical bills.

Yeah, no. So it's a very. Look, I'm sure there are some cases where people have gone bankrupt in, you know, due to medical bills in the private sector, but in the public sector it's free. So it would be extremely rare for anyone to go bankrupt from a medical bill in Australia. It's actually something that most people don't worry about and certainly I've never worried about it growing up here. And I've Been to the emergency department, you know, a few times. It's not in our mind constantly. We don't worry about medical bills as a such in the public sector, in the private sector, of course, because if I'm going To see an ENT specialist who charges $500, I mean, that's a lot of money for a lot of Australians. So yeah, money would be a problem, but to go bankrupt would be extremely rare. I haven't heard of it in my own personal medical experience, but I'm sure somewhere in Australia someone has gone bankrupt. But, but it's certainly not common.

Let's talk about medical legal liability. How much do you worry about getting sued by a patient?

So I asked this question again in the forum because personally I'm not worried at all. And the response that I got was most doctors are not constantly worried about being sued by a patient. Medical litigation in Australia has risen in the last sort of 20 years or so and it really depends on the specialty. But generally overall, most doctors wouldn't be worried constantly about it. Now the interesting thing about medical indemnity is public doctors get free medical indemnity by the statewide insurance scheme. So it's actually free. If you work in the public system, then you are protected by that. Having said that, most hospital, sorry, most doctors, whether public or private, will have their own indemnity as well, just in case the public system indemnity is not enough. And in terms of specialties, I think emergency medicine would probably be a place where indemnity is an issue, where, you know, patients are more likely to sue for malpractice. Surgery and obstetrics would probably be the highest and general practice because you're dealing with a lot of undifferentiated patients. But on the whole most people don't worry about it constantly, but it is something that we all have. So I've got my public insurance and I've got my private indemnity insurance. So I've got my own policy because I need to make sure that in the rare event that I get a complaint or get sued, I've got that back up. So every doctor here has medical indemnity for sure.

What does it cost? What do you pay for your premium each year?

So again, depends on the specialties. If you're a family physician, so these numbers are in US dollars, I've converted it. If you're a general practitioner, between 2 and 4,000 a year. If you're a non procedural specialist, then you're probably around 2 and 6,000 a year. If you're A procedural specialist, but non surgical. So let's say if you're a cardiologist, that puts stents in looking at between 7 and 14,000 a year. And if you're a surgical specialist, somewhere between sort of seven and 36,000 US dollars per year. And those costs are rising, unfortunately. If you're a medical student, medical indemnity is free. If you're a training doctor in Australia, it's about 100 bucks.

Now, you guys also have a national electronic health record. How did you pull that off? This seems amazing to us. I can't get records from across town without three phone calls and a couple of faxes in order to get records from another hospital. Did Australia's government just mandate an electronic health record or how did that happen?

They kind of did and they didn't. Actually, the electronic health record is not something that Australians are very proud of because not many of us actually use it. So what happened was there was a sort of push towards electronic medical records in 2000, 16, 17, and there was a federally funded My Health Record, which is a fantastic system at its core because it has your medications, health summaries, scans, prescriptions, allergies, advanced care plans, all that sort of stuff. And the aim then was to get that system to talk to all the health services, public, private, outpatients, general practice and specialists as well. But it needs a lot of work and the public faith in it is actually quite low. They spent about 2 billion Aussie dollars on it and they spend about 400 to $500 million on it every year. But a lot of public actually don't know about it. It's been poorly sort of advertised and a lot of doctors and practitioners don't actively use it. Now that is changing. So what's happening is security has been beefed up because there's been a lot of health security issues. Last year we had a, you know, some, some states got hacked by overseas hackers and medical information was stolen. So security is a major issue and the system is relatively scattered. So, for example, you know, one health service might be automatically linked up to my health record, whereas other health services may not be. But I think what's happening is they are recruiting health services. For example, my health service has just signed up to my health record, which means that I'm able to access and upload. A lot of the public hospitals have electronic medical records within the hospital and it's a matter of electronically linking that up to my health record. And I think over time it will happen, but it's certainly not a Great system at the moment. I think there needs to be a lot of work that needs to be done to get the faith of the public and get the faith of the doctors and nurses who use that system on a daily basis. Now, what's interesting about it is that compare that to the financial sector where the Australian ATO, the Australian Taxation Office, automatically cross references over 800 million transactions a year. So almost all Australians use MyGov, which is the online sort of system for Medicare and Australian Taxation Office and they submit their claims online. The accountants do the same. We've completely gone, well, I shouldn't say completely, but 99% completely gone paperless system for the taxation, for electronics and financial systems. But when it comes to health, we're very much still a paper based health system. And I think over time that will change as more and more people have faith. So the Australian Tax office knows exactly how much I earn before I get a help. I get a pay summary at the end of the year, whereas my health record needs a lot of work. But in principle, I think we all agree that we need to move forward with that.

So what opportunities are there for us licensed doctors to practice medicine in Australia, either short term or long term?

There are two main ways that US doctors can practice in Australia. You can either apply for a permanent residency and migrate here as a skilled migrant. Which is quite tricky in the sense that there's a bit of a wait, there's a waiting list. And unfortunately, Australia has become a very popular country in the last sort of 20 years, so there's a big wait list for that. And you come here, you get your permanent residency and then you apply for a job. But you would need to have completed some entrance processes to be able to make sure that your qualification is accredited and credentialed locally. So the Australian Health Practitioners Board and the Medical Board may ask you for evidence as to what training you've done, et cetera, and that gets assessed. The other route, which is probably a little bit easier, is that you directly apply for a job in Australia from the United States. So again, if you're an emergency physician, you may apply to a hospital for an ER position job. If the hospital wants to employ someone from overseas and then they do their credentialing checks, then when you come, you may need to do some additional training in order to sort of, you know, quote unquote, get your credentialings done for the Australian system. And that may mean, unfortunately, going back as a registrar, as a trainee doctor or, you know, doing a few more years of fellowship, et cetera, depending on the experience that you bring. Again, it's a fairly competitive process because we do have a lot of overseas trained doctors that are in Australia and they have come here over many years. It's a very, very tough road. They don't make it very easy. Unfortunately for overseas trained graduates in Australia, they tend to prefer local graduates. So the hospital really has to have a pretty good reason why they are not advertising the position for local doctors as opposed to getting someone from overseas. And you would be paid exactly the same as the local graduate. So the overseas graduate working in a public system would not be paid anything lower than what the average Aussie doctor is. So the process is relatively transparent.

What about short term? Something like coming there to do a locum tenens stint for three or six months in a rural area? Would that be hard to line up, do you think, or relatively easy?

I think the biggest issue would be credentialing. I'm not sure whether you can come and do a three to six month term in Australia without having your credentials assessed and the hospital would do that for you. You may not need to do additional training just for those three months. And it really depends on the specialty. Emergency medicine probably a little bit easier because it's a sort of a hospital based. But if you're doing like obstetrics or surgery or something like that, even if it's hospital based, I think you still would need to go through the college to make sure that the credentials are okay. I'm not sure about the locum opportunities. Certainly Trans Tasman. So if you're from New Zealand, it would be a lot easier because the Australian New Zealand system is very, very similar. But any other country, I think they don't make it very easy.

All right, let's turn the page now let's talk a little bit about money, finances, etc. What kind of money do Australian doctors earn both during training and afterward? And whether you convert them to US dollars or not? For those who don't know, a US dollar is worth about a buck 37 in Australia. So what Australian doctors earn both during training, after training, in the public system, in the private system, et cetera, what do they make?

There's a term here is you're on a very good wicket. That means that Aussie doctors get paid pretty well compared to global standards. And that's despite having sort of public and private. So running through some figures. Obviously as a medical student you don't get paid. And as an intern, your first year out, your base salary, depending on the state, because if you work in a state that doesn't have much population, so if you work in South Australia, which is capital city is Adelaide, you might get paid a little bit more than if you work in a more popular state like New South Wales or Victoria in terms of popularity of trying to get intern positions. But generally the salaries range from 51,000 US to 73,000 US base. And that again depends on the state and cities. As an intern, generally if you work in a rural area, you get paid a little bit more. If you work in a major, major city, you get paid a little bit less because we want to attract more doctors to go to rural areas. So that's sort of a supply demand issue. After internship, you're turned hospital medical officer or a resident, and that's year one. After internship, you're looking at anywhere between 60,000 US to 90,000 US and depending on the specialties. So the surgical specialties generally tend to get paid a little bit more because your hours are a little bit more. Your medical specialties are probably in the 60 to 70,000 range as a first year after internship, and that increases every year based on the state award the enterprise bargaining agreement. As a registrar, so you're in a training program that changes, income sort of dramatically improves, becomes 88,000 to about 150,000 or more US dollars based on the specialty. So if you're a surgical specialty, your hours are a lot more, so you probably earn closer to 150 to $200,000. But if you're a medical specialty, ours are not that much. So you might earn between sort of 80,000 to 120,000 as a registrar, as a consultant. So that's your fully fledged fellow doctor after all of your exams. If you do public and a bit of private as a family physician, pretty good 150 to 300,000 US dollars. As a non GP specialist who's not a proceduralist, you're looking at about 150 to 350,000 US as a non GP specialist proceduralist. So for example, cardiology, you're looking at about $250,000 to 400,000 as a surgical proceduralist. So general surgery, neurosurgery, orthopaedics, et cetera. Huge variability there. You're looking at about 300,000 to 750,000 US per year. And I say variable because if you just work in the public practice, if you're an emergency physician and you work in the public sector full time, you're looking at between 300,000 to 400,000. You're not going to be earning more than $400,000 in the public system for most specialties, but in the private system, completely up to how much you work and how much you make because it's all fee for service. So, interestingly, I actually spoke to one of my anesthetic colleagues who'd been in the surgical proceduralist category, and he makes over a million dollars US a year and he thought that was normal. So I decided to float this idea to the doctors forum online and I thought, well, surely not every doctor makes a million dollars. Yeah, so that's the sort of rough figures in terms of training, registrarship, residency, internship and consultancy.

Okay, so that's pretty good. You just made a lot of my listeners very, very jealous. I mean, to come out of medical school only owing, you know, $50,000 in loans and then go and make, you know, 150 to $700,000 compares very favorably to the US system.

Yeah, so that was something. You know, what's interesting about this is that Aussie doctors are probably one of the highest paid in the world. I was actually quite surprised myself. We sort of. Well, when I say we, I've sort of reflected on my earnings over the last 12 years as a doctor here and I've sort of whinged a little bit. Oh, you know, I work so hard, I don't make much money and blah, blah, blah. And. And then when I did some research about it, I went, oh, wow, we're actually quite lucky. So I think we're very fortunate, very lucky to be able to earn that sort of income. And I mean, there's always orthopedic surgeons and neurosurgeons that earn over $3 million in every country. And there are some in Australia as well. The average here is actually pretty good. So I was speaking to an intern last week and she said, in Victoria, which is sort of a southern state, so Melbourne, the base salary for an intern is 76,000 Australian dollars, which is around sort of 55,000 base. So she'll probably walk away as an intern with about sort of 60,000 US. That's base working 76 to 80 hours a fortnight. And I thought that's actually pretty good.

Does the general population view doctors in Australia as being rich?

Yes. So the average person would consider the perception is that doctors in Australia are rich. So the average income in Australia is around 80 to 84,000 Aussie dollars. So when you graduate from medical school, that could be your salary. So you're well and truly above average in Australia. And to Be honest, most doctors, and again, I asked this question in the online forum, do you consider yourself to be lucky to be working in Australia as a doctor? It was pretty much a unanimous answer, and that is yes. I think most of us would consider ourselves very lucky to earn and work here reasonably comfortably compared to the average population. Yeah.

How much of that high income do you think is due to the unionization of doctors?

I think probably a lot of it. So a lot of the fees are set by the Australian Medical association in conjunction with liaison with the government. Obviously, a lot of the state public hospital systems, their pay is enterprise bargaining. So we have a union. So the union is Australian Medical association and they have state representatives in each state. And every three years for consultants and doctors in training, they bargain with the government to either keep wages the same or increase wages. So in 2018, we had the largest increase in wages in doctors in a very long time. So they gave 9% increase for the first year, then every year after that they're going to give 3% increase. So overall the increase became like something like 19% pay increase with all sorts of shift penalties and all that sort of stuff. So the advantage of having a union is that you have a bit of a voice and that voice gets taken up to the higher powers in government to try and make sure that you get good candidates that apply for medicine. Because let's face it, one of the factors that people consider in university is what sort of job opportunities they're going to get at the end of university and what sort of pay they get. And if they don't get paid, well, then it's going to be very hard to attract good candidates for medicine.

So how much do doctors in Australia pay in taxes? If you had to estimate the percentage of your gross income that goes toward income taxes, how much would it be?

Yeah, so if I'm working in the public system, I would certainly be in the highest tax bracket. So the highest tax bracket marginal tax rate is 45%. So the first 18,000 you get charged no tax and then it sort of incrementally rises. Most doctors would probably be in the 30 to 40% tax range. And the reason for that is we have a reasonably generous tax deduction system in Australia. So no one would be paying always the 45% tax rate, which is the highest tax bracket. So if I have investments, if I have investment properties, if I have margin loans, anything that I invest in that produces income, the cost of that investment I can then tax deduct from my income in the private sector. Because you have your own business, business tax rates are Quite low here, 25% to 30%. Then you can route your money via your business and your family trust. So you pay a lot less taxes. But we are a relatively high tax nation and part of that is because health education is relatively cheap, if not free.

So how do Australian doctors save for retirement?

Just like any other Aussie. Basically, our biggest savings for most Australians is retirement funds. So I think the equivalent would be the roth IRA or 401k in the US. So our retirement funds are called superannuation funds, and the reason why they're tax effective is that if you are an employee, your employer has to pay 9.5% of your gross wages on behalf of you to the superannuation fund of your choosing. So if you earn $100,000 as a doctor in the public system, then the hospital has to pay $9,500 on top of that to the superannuation system. And it's tax effective because that money gets taxed at a flat rate of 15% when it hits your superannuation account. So superannuation is probably one of the major ways that we save for retirement property. So outside of super investments, Aussies love property. It's something that we all aspire to buy, and property prices and values in Australia are quite high. So a lot of our net worth at the time of retirement may be engrossed in the personal property that we own. So property is definitely something that we would all invest in, and that includes residential property or commercial property, and that includes your principal place of residence that you stay in, but also investment property. So, for example, myself, I live in a house, but also have homes that I invest in and I rent it out. And any interest, any cost associated with that investment I can then deduct out of my taxable income and of course the stock market as well. That's the other main avenue that doctors may invest in. And lastly, they'll invest in their personal business. If you're a private orthopaedic physician, or, sorry, orthopedic physician, that's an oxymoron. If you're a private orthopedic surgeon, then, yeah, you invest in your business and hopefully grow your business, or if you're a gp, grow your business and then hopefully sell it off to a corporate GP clinic or something like that.

So you mentioned the taxation on the superannuation that you get a 15% tax rate on money as it goes in, which obviously is better than 45% and then it grows tax free. And comes out tax free in retirement. Or how does that work?

Yeah, up to $1.6 million. So you can accumulate up to $1.6 million in superannuation funds and then withdraw it at the other end completely tax free.

And what is that money invested in?

So basically a superannuation has investment portfolio structured based on your need. So that could be invested in the stock market, index funds, international stocks, local stocks, bonds, ETFs, commodities, cash property, REITs, et cetera. So there's a whole portfolio. So for example, when I log into my superannuation account, I've got variable options. So I've just selected. I want 50% of my money invested in the stock market and I want 50% of my money invested in what's called a balanced fund. And the balanced fund might be a combination of the stock market. So these are all sort of pre made, pre portfolio made. You don't have to individually select the exact index fund that you want to invest in. When it comes to superannuation, if you wanted that sort of level of personalized control, there's something called self managed super fund where you don't need to go through one of the big retirement funds. You can just create your own self managed super funds. And there are regulations for that. And then you can sort of say, okay, I want to go buy the Vanguard S&P 500 or ASX 300 index and that's going to be my retirement and that's going to be my superannuation. And that's completely fine as well.

Awesome. Now you have a finance podcast that you started. The idea wasn't necessarily to podcast, only to doctors, but I think you ended up with mostly doctors listening to you. Can you tell us about your podcast?

Yeah, so actually I started my podcast about two and a bit years ago because I wanted to leave a blueprint for my two young children in the rare event that dad was not around or was not able to support them, learn about finances. So I did a 10 episode series for them and I just uploaded it and I floated it to a couple of my friends and family and said, have a listen to this, these are 10 episodes. And really that's all you need to do for your finances. And that was about pay yourself first, invest and max out superannuation, get rid of debt, get personal insurance, et cetera, et cetera. Then they came back to me and said, hey look, these are some of the things that we didn't know about. We've never heard of pay yourself first. So why don't you do more episodes and it sort of became a bit of a hobby. So I mainly podcast about financial principles, economic principles. And I'm not a financial advisor, of course, I don't advise people personally, but basic things that they could do in their life in order to get their finances sort of more organized. And that's sort of grown into mainly medical listeners, but also I have a lot of non medical listeners and my podcast episodes are aimed at principles to apply in your life. And yeah, so that's sort of grown over the sort of two years and I sort of release an episode once every week or once every fortnight and people ask me questions and I just respond to their questions. And the aim is to make sure that this information really should be taught in our school curriculum, which it isn't and really should be taught in every university's before people become doctors or lawyers or doctors, sorry, or dentists. But it isn't. So it tries to equalize the knowledge as much as possible. So it just turns out a lot of my colleagues started spreading the message and a lot of the listeners are doctors because we're very vulnerable. Medical professionals are so vulnerable to making silly mistakes, as you say, Jim, doctors do dumb things with their money and hopefully this helps avoid that.

So where can people find your podcast?

So my website is devragar.com,-E-V-R-A g a.com which has got all my episodes on it. I'm available on most podcasts or all podcasting apps. So Apple and Google, et cetera. And it's free, you can just download it, share it, post it, whatever you want to do. And I encourage everyone if you've got time my podcast episodes around sort of 30 to 40 minutes. So for that sort of drive time, listening and always happy to have feedback.

So we're looking to wrap up here, but you've got the year of somewhere between 30 and 40,000 high income professionals, mostly doctors. What else haven't we talked about today that they should know?

So I think finances and medicine. It's almost as if you're a doctor. I mean most doctors are smart, have a high iq, but what I've found is that those skills are not transferable to the domain of finances. So number one, learn about money and number two, it's okay to talk and discuss about money. There's a lot of taboo about it, but it's okay to do that and it's okay to work hard for your patients and it's okay to make money as a result of it. So there's nothing wrong with being wealthy. There's nothing wrong with working hard. There's nothing wrong with learning about finances. So that's number one. Number two is skills are not transferable. If you're a great neurosurgeon, that doesn't mean that you'll be a great investor. So doctors are very vulnerable for doing silly things with their money. And because we make so much money, we think that we can sort of out earn knowledge deficit and we can't. So you need to be financially literate and you need to sort of empower yourself with that knowledge. And I think, Jim, your podcast series, you have big fans in Australia. Hope you know that. But you do. Listening to your podcast and similar podcasts is very useful because it really does highlight how important this topic really, really is. And can I suggest maybe one time you can all come down to Australia for a white curse investor conference, hopefully in the future and we can all catch up. And the last thing is, it really does astound me, certainly in Australia, in terms of the incomes that doctors make, why every doctor in Australia doesn't retire with a seven figure portfolio, that's quite astounding. Because we make a decent amount of money, it's just a matter of simple things that we need to do to protect it so that it grows over time.

All right, you heard it here first. WCicon 23 in Australia.

Absolutely. It's a beautiful, crispy Melbourne morning and would love to have you guys over.

Awesome. Well, thank you so much for coming on the podcast and sharing your thoughts and your wisdom with us. We appreciate it. It's wonderful to look into how things work in other countries because especially in the US we get these almost blinders on and think we're the only country in the world. And so we, we don't really realize that there are a lot of lessons that could be learned from other countries and how they've done it that we could really apply in our own lives to simplify both our medical system and our financial system. So thank you so much for being on the White Coat Investor podcast.

Thank you very much for having me, Jim, and absolute privilege. And have a great day.

I hope you enjoyed that as much as I did. That's a lot of fun. One of the best parts of podcasting is bringing people on that you want to learn something from and just bringing the listener along on the journey. Journey. So I hope you enjoyed that as much as I did. Maybe a little bit longer as our episodes go, but I hope it was worth it to you. I estimate that 80% of doctors need, want and should use a financial advisor and or an investment manager. Some investment gurus, such as Dr. William Bernstein, think my estimate is way too low. At any rate, if you want to use an advisor temporarily or for your entire life, there's no reason to feel guilty about it. Just make sure you're getting good advice at a fair price. If you need help updating your financial plan or just getting one in place, check out our list of recommended financial advisors@whitecoatinvestor.com financial advisors. You can do this and the White Coat Investor can help. Thanks for those of you leaving us a five star review and those telling your friends about the podcast. Our most recent review came in from an MS.4 who said must listen even if you don't care about the game. I got the White Coat Investor from a friend for Christmas last year. Said friend is not in the medical field, but he likes finance and wanted to help me out. I guess I kind of turned my nose up to it at first, but then I decided to give it a read. Since then I read all of your books and several you recommend for beginners from your page. Opened a Roth IRA and have some savings. You've helped change my life around and I feel as if I have a head start because I was able to get your information. In medical school. You always bring down the financial speak to a beginner's level and the topics of your podcast are always interesting. Thank you WCI for all you and your team does. Thanks for the kind words. Thank you for the five star review. It really does help spread the word. Keep your head up, your shoulders back. You've got this and we can help stay safe in the pandemic. And we'll see you next week on the White Coat Investor with a fabulous episode. We're going to be talking about some of the benefits and risks of when you become a partner. My dad, your host, Dr. Dahlia, is a practicing emergency physician, blogger, author and podcaster. He is not a licensed accountant, attorney or financial advisor. So this podcast is for your entertainment and information only and should not be considered official personalized financial advice.