The Financial Impact of COVID-19

Even before the COVID-19 pandemic, physicians were already under tremendous strain from a variety of angles.
Sources of stress came from any one of the following:

  • Worrying about providing adequate patient care.
  • Ethical dilemmas.
  • Paperwork.
  • Regulatory requirements.
  • Insurance reimbursement rates.
  • Working too many hours.
  • Worrying about online reputation (new development).

Now with the COVID-19-induced recession, the one saving grace about being a physician – the great pay – is in serious jeopardy.

In the early days of the pandemic, no one was sure how physicians would be affected financially. One school of thought predicted an increase in demand for physician services due to the outbreak but as lockdowns were imposed and persisted, it was clear physicians would not be spared from the economic fallout of the pandemic.

Here are some startling statistics:

It turns out that the nationwide lockdown orders didn’t just shut down restaurants and schools, but they led people to avoid medical services as well.

Most elective surgeries nationwide were postponed beginning around mid-March. Dentist’s offices were closed and physicians stopped seeing all but the sickest patients in their offices.

The economic toll from COVID-19 has been devastating but it turns out that many physicians were already in precarious financial circumstances even before the pandemic.

In 2019, in a private survey, 43% of physicians said they suffered financial losses due to poor investments, practice challenges, and other setbacks.

I don’t want to sound like a broken record, but I have been advocating physicians finding additional streams of income for the longest time.

Before the pandemic, I had no idea what 2020 had in store, but physicians are always a misfortune away from losing their ability to earn a living and I’ve been preaching for physicians to shield themselves from potential disaster for years.

This year, that misfortune just so happened to be COVID-19 and its far-reaching effects, but in any other year, it could be any of a number of other misfortunes including accidents, lawsuits, family tragedies, etc.

Of the physicians who have suffered financial losses, what are some common pitfalls or mistakes these physicians fall into?


A medical degree doesn’t guarantee financial literacy. People on the outside looking in assume physicians have everything figured out – including all things financial. Nothing could be further than the truth.

Many are financially illiterate, especially when it comes to the need to create other income streams and investing. Unless you make your money work for you, you will always be working for it.

In other words, unless you put your money into productive assets instead of destructive assets, you will always be working to make ends meet. Without income generated from passive investments – income that works for you 24 hours a day – you will never achieve financial independence.

Do you think the 64% of the physicians surveyed by the California Medical Association who said they urgently needed financial assistance are financially independent? No. Financially independent physicians can maintain their lifestyles – even as their incomes are reduced or eliminated.

The first step to avoiding financial dire straits is to gain financial literacy. Learn about and explore passive income investment options.

The first baby step to all this is to learn to respect money as a productive asset and its awesome power to build and create wealth. The way forward is to save up as much as you can to put into productive assets by increasing active income (wages) while reducing expenses and frivolous spending.

If you put money into destructive assets that are used to buy and pay for things that just drain your resources like big homes, expensive cars, fancy clothes, and exotic vacations, you’ll deprive yourself of productive assets that can create wealth and grant you financial independence.


Physicians often make the mistake of indulging the two-headed snake of acquiring unproductive assets with debt. Not only are resources diverted from productive assets, but it’s done with the added cost of interest on the debt.

Instead of compounding wealth and assets, you would be compounding liabilities in this scenario. Eliminate non-investment debt as much as you can.


Due to time constraints, physicians often make the mistake of making bad investments or engaging a financial advisor. Through online brokerages like E*Trade, Charles Schwab, Robinhood, etc., it’s easy and convenient for physicians to “play” the stock market. I say “play” because that is what stock investing is for most retail investors – gambling.

Over the past 20 years, retail investors have averaged a 2% return on the stock market, not even enough to cover inflation. Financial advisors are no better. With conflicting interests of selling products and recommending churning transactions that investors don’t need, more than 90% of financial advisors do no better than an index fund.

For time-constrained physicians, I get it. Online trading and financial advisors are the paths of least resistance but unfortunately, they are not the paths to wealth or financial freedom.


Generating multiple streams of passive income is the only way for physicians to free themselves or their financial dependence on their jobs.

As we’ve seen with COVID-19, a medical degree doesn’t guarantee an income. The only way to ensure uninterrupted income in good times and bad is to create multiple streams of cash flow from recession-proof assets.

Passive income is the difference between physicians who prosper and those who continually suffer financial setbacks due to financial illiteracy, mistakes, and pitfalls. Avoid speculating on Wall Street and relying on financial advisors. Those paths will not help you achieve reliable and consistent income streams.

Passive income is what sets millionaires apart from everyone else. Take for instance an article from Business Insider written by Thomas C. Corley.

Corley studied the habits of self-made millionaires for five years and discovered the key distinction between the wealthy and everyone else. That distinction is that the wealthy put their money to work for them and not the other way around.

They use their salaries and reduce their expenses for investment to generate additional streams of income. They use their earnings to amass productive assets, not destructive liabilities.

Corley found that most self-made millionaires generated multiple streams of income. Here are the key stats:

  • 65% had three streams of income.
  • 45% had four streams of income.
  • 29% had five or more streams of income.

To avoid being another statistic in a downturn, look to passive income opportunities to avoid Wall Street speculation and volatility and to build wealth.