About half of the physicians in the country are independent. We are small business owners, job creators and, by necessity rather than desire, we have become experts in finance and debt management. But there is a common misconception that doctors have poor judgment when it comes to money. Perhaps we are too focused on the complexities of medicine to spend time learning about stock projections or bond markets. Or perhaps we are so used to providing services ahead of payment, we are by definition a bad business model. However, the truth is doctors are better than most at weighing risks and benefits. So why shouldn’t we be good at investing in start-ups? Are doctors really bad investors?
Until recently, physicians had few opportunities to invest in early stage medical technologies. Instead we have relied on building a diverse retirement portfolio or investing in real estate. My father was a solo practice thoracic surgeon who actually bought swamp land in Florida that turned out to be a part of the Everglades. He was also an inventor with a number of patents for surgical devices he developed with the help of industry partners and for which he received royalties (only slightly better than his real estate deals). However my father was passionate about his inventions, and was driven to find solutions to problems or simple improvements that made it easier for doctors and patients.
Today more and more physicians are becoming entrepreneurs. Faced with a rising tide of inefficient technology designed without the end user in mind, doctors have taken the lead in developing a wide variety of innovations ranging from medical devices to software solutions to artificial intelligence. Biotechnology has grown exponentially and with it, a vast amount of data in need of interpretation. Physicians understand and know how to select technologies that are useful and necessary; it’s why our opinions are sought after by industry and why many doctors become advisors or chief medical officers.
It hasn’t always been easy to invest in companies before a technology takes off or a drug gains approval. In fact often we are limited because of conflicts of interest, but opportunities do exist. Investing in startups requires a knowledge of the marketplace along with experience in money management. As physicians, we know our business and challenges better than anyone else. But when we turn to those outside our profession for funding, priorities change and early stage companies may have to pivot away from what was intended in order to satisfy investors’ demands. That is why physician syndicates and physician founded funds are a good place to start. They offer diversified investments that are often synergistic and are usually run by physicians with business degrees and a track record in private equity. Most importantly, physicians have a shared mission to invest in what makes good sense for patients and doctors.
If my father were alive, he would have welcomed the chance to support new innovation, especially when so many younger physicians don’t have the resources to develop an idea on their own. Doctors are smart and well informed. As a community, together with our colleagues, we are committed to successful outcomes and investing in a better future for healthcare!