Whenever I do an article about doctors somebody makes this comment. It is just innumeracy of the doctors and the patients that leads to such amazingly stupid comments. Let us see the numbers….

A doctor works real hard in India, but I am assuming that nobody can work efficiently beyond 2500 hours a year. Surely Indian doctors work much more than that, but for my calculations I am assuming that a doctor works for about 2700 hours a year.

Let us assume that his place of work costs – salary, rent, maintenance, car, petrol,  all business oriented expenses are about Rs. 16, 14,000 per month. These are the expenses of a doctor who has no equipment costs. If there are equipment costs, then the interest costs, the emi, etc. have to be added to the costs. In this case interest paid is nil, but I have taken the rent that should be incurred for the space that the doctor uses. Extremely low numbers have been considered – but it is the reality of a doc working in a single location.

So doctor has to cover his expenses, plus about 25% taxation. So the MINIMUM that a doctor has to earn is about Rs. 35,00,000 a year. From this amount he will deduct his expenses, pay taxes (assumed 25%), and be left with Rs. 14,14,500. This is about Rs. 1.20 Lakhs per month. For this he has to charge your Rs. 35,00,000/ 2700 PER HOUR. This comes to about Rs. 1300 per hour.

Assuming you meed this doc for about 15 minutes (I know it is tough) then he/she should be charging you approximately Rs. 325. Most doctors charge around that much – but I have seen and paid Rs. 1500 too, but that in an environment which is different.

This cost is simple, basic minimum.

Now come to the fun part.

I met one head of department in a hospital who said “our hospital over charges for medicines that we buy. She said one medicine bought for Rs. 800 is billed to the client at Rs. 1600 EFFECTIVELY.

I said “it just means that you don’t understand costing”.

When a hospital buys medicines, it has a lot of work. Medicines have to be entered in the godown, records made and stored properly. Stored could mean in a temperature controlled environment (that costs money), inwarding costs money (salary), record keeping, and MOST importantly, it is not administered as it is. So if a strip of medicine costs Rs. 800 it does not mean it Rs. 80 per tablet. No. That is not possible. Even when you go to a chemist…he CANNOT afford to sell it at Rs. 80 a tablet. He may just refuse or charge you Rs. 100 per tablet. Or Rs. 120…it has to be a number different from Rs. 80. This is exactly how she was calculating.

Another young doc (she is just passed her specialization, and not decided whether to be employed or take up a job)…she said “hospitals charge Rs. 1500 for seeing a patient”. I said “you do not understand math”. It is innumeracy.

I said “how much do you wish to earn” she said…Rs. 100,000 per month…ATLEAST…. I said take the above number and add your salary…15,00,000/2000 (employee doctors will surely take Sat and Sun off)…that itself came to Rs. 750. So she said “so why Rs. 1500”.

I gave up.

I am surprised that no doctors group, or pharma company, or pharma colleges think it is necessary for doctors to understand business maths and business accounting.

By the way a friends son just joined a bank. A first attempt CA he was taken on a salary of Rs. 25,00,000.

By the way this is MORE THAN THE SALARY of a head of a specialization in a big hospital in a hospital about 40 km from the city center.

Docs, you need my sessions FAR MORE THAN me needing to make money teaching you about money.

About 30 minutes on business finance and about 150 minutes on personal finance, financial mistakes,….etc.

What say?