Find Freedom By Downshifting Your W-2 Job

A Personal Journey from Employment to Self-Employment

Many of you find yourselves constrained by the demands of full-time W-2 employment, impacting both the personal and professional aspects of your lives.

Growing up in a working-class family, my path to livelihood was shaped by the norm of working for someone else. Factory jobs and small businesses defined my pre-professional days, making working for others as the only way I knew to earn a living. As I emerged from residency in the 1990’s without any business or personal financial training, the landscape of healthcare was rapidly changing.

The logical step seemed to be signing up for a W-2 employment job with the local hospital. In exchange for relinquishing professional control, I was enticed with a signing bonus, a predictable paycheck with benefits, and the promise of not having to manage the business. This "safe harbor" of medical practice was crafted by corporate employers aiming to woo private practice doctors facing declining reimbursements, escalating overhead, and mounting compliance challenges.

Initially, I marveled at being well-compensated for doing what I loved. Our small two-man group eventually expanded to eight primary care doctors, essentially running our rural hospital. It was a symbiotic relationship, with downstream revenue from our large patient panels contributing to the hospital's financial success.

However, the tide turned with the advent of Electronic Health Records (EHR) and a merger with a larger regional hospital. Suddenly, we found ourselves grappling with nightly charting, understaffing, clinic inefficiencies, and the unwelcome request for a pay cut. Feeling like controlled cogs in the corporate wheel, most of the group sought new opportunities.

During this pivotal moment, I explored various options with business consultants who prompted me to assess my assets and introduced me to innovative business models for physicians. Opting to remain with the hospital but as a long-term independent contractor through an employment lite agreement, the change was subtle to the community and other physician employees, but transformative behind the scenes.

This shift to self-employment removed the compensation ceiling, boosting my income by nearly $130,000 annually. The tax efficiency from establishing my micro-business allowed me to retain an additional $70,000 in income yearly. The net household benefit exceeded $200,000. More importantly, the restoration of my professional autonomy became the cornerstone of my newfound independence.

Reflecting on my journey, transitioning from a traditional employee to a self-employed professional through a micro-corporation not only restored my autonomy but also significantly improved my well-being and financial outlook. It's a change I advocate for every traditionally employed doctor, despite the perceived barriers.

Reflecting on this experience, I witnessed significant improvements in both well-being and professional autonomy after transitioning from W-2 employment to self-employment. I passionately advocate for every traditionally employed doctor to contemplate a similar change, acknowledging the barriers that may exist.

In navigating these barriers, my hope is to inspire fellow physicians to reclaim control incrementally, empowering themselves to redefine their professional trajectories. The journey from employment to self-employment is not without challenges, but the rewards in autonomy and well-being are worth the pursuit.

Control

The US Department of Labor defines an employee as an individual whose employer has the right to control and direct the work, not only in terms of the final result but also in the details of how the work is performed.

In exchange for financial incentives and the promise of predictable paychecks, the overwhelming majority of doctors are giving up one of their most precious earned assets that is associated with their medical training: their professional autonomy.

Self-employment through their micro-corporation preserves a doctor’s professional autonomy.

Traditional employment erodes your autonomy, it’s built into the definition of employment.

In my opinion, doctors weren’t made to be controlled as employees, and they suffer from moral injury when they are forced into indentured servants to large corporations. The consequences are tragic for doctors and patients alike as medical care cogs in a large corporate wheel.

As a fellow physician, I empathize with the challenges doctors encounter when trying to find their way through the marketplace. Based on my personal experience, I strongly advocate for every doctor to incorporate themself and enter the market as a micro-business rather than as an individual taxpayer.

But as I see it, there are three primary mindset obstacles that young doctors face when considering self-employment.

Obstacles to Overcome:

All or Nothing Mentality: Many of you believe you must either be a W-2 employee or a self-employed 1099 worker, but the reality is that you can do both simultaneously. This false dilemma erroneously imposes limitations on your available options.

The Fear of Managing A Business. Choosing to be a professional micro-corporation does not necessarily mean you have to navigate the complexities of managing multiple employees and insurance contracts like in private practice. It's much simpler than that. The good news is there is a high demand for your small business professional services, and your professional specialty products, thus your business can start out with a robust business plan. On the bright side, your overhead expenses are minimal, and you only have to manage yourself.

Your Business Knowledge Deficit: Your training has led to a deficit in business knowledge, which compels you to rely on large corporate employers who dominate the marketplace. They ultimately exploit your minimal business acumen for their gain. This leaves you co-dependently under their control. However, the time has come for individual physicians to be empowered and set free in the marketplace through micro-business competency. Achieving this freedom doesn't require an MBA; instead, you simply need access to practical, self-directed micro-business resources.

Downshifting for Empowerment:

To break free from corporate control, consider downshifting your W-2 position to less than a full-time equivalent (FTE) to 0.7 or 0.8 FTE. This strategic move creates space for self-employment through a professional micro-corporation, known as job stacking. Job stacking involves keeping your primary W-2 job while also earning professional income from self-employed sources. Job stacking breaks through the "all or nothing barrier," mindset for doctors and dispels the myth that it’s best to loyally work 1 job in 1 location for all of your life.

In the end, you have to advocate for yourself in the marketplace because you can’t depend on large corporations to point you in this direction. It’s up to you to empower yourself. Here are 4 steps that can help you.

Four Steps to Self-Employment Empowerment:

Create Margin for Self-Employment and Well-Being: Negotiate downshifting with employers to create a margin for self-employment. This margin can be strategically utilized for self-employed endeavors, prioritizing personal well-being.

Establish Your Micro-Corporation: Start and utilize your professional micro-corporation to channel self-employed side jobs, maximizing the small business tax advantages and creating an enhanced financial structure through multiple streams of income.

Easing into Self-Employment: I understand that leaping into self-employment can be daunting, especially if you feel you have knowledge deficits in the business realm. However, this is a way to ease into the world of entrepreneurship without jumping in full force. By gradually downshifting and incorporating self-employed opportunities into your professional micro-corporation, you can navigate the transition more comfortably.

Future Adjustments: Over time, you can make further adjustments to reduce reliance on W-2 income channels and increase 1099 income channels, gaining greater control over your professional destiny.

Regain Control Incrementally:

Every employed physician has the potential to redefine their professional trajectory. A micro-change, like downshifting from a 1.0 FTE, can be the catalyst for transformative professional freedom, enhancing job satisfaction, reducing burnout, and allowing you to thrive in your career while maintaining overall well-being.

Consider making this small change—it could be the key to unlocking your potential and thriving in the evolving landscape of healthcare.

A great step to take is to become a member of our SimpliMD community where for less than the cost of a dinner, you will receive discounted access to over $2500 in small business products. Take that step today!