Medical Students: The Anti-Millionaires

A few months ago, CBS Moneywatch published an article entitled “$1 million mistake: Becoming a doctor.” Aside from the possibility that devoting one’s life to helping others might be considered a mistake, I was struck by the “$1 million” figure.

Was it actually that much? I mean, $1 million is a lot of money. When I was younger, millionaires seemed a rarefied breed. They drove expensive cars and had houses with names like “Le Troquet” or “Brandywine Vale.” The figure was supposedly calculated using the following factors:

  • The cost of school, inclusive of tuition, fees and insurance
  • The interest on the loans incurred to pay for the above items
  • The income lost by not working full-time for 10 years, assuming an average income of $50,000 per year

Before coming to medical school, I worked in the pharmaceutical industry. I even turned down a hefty promotion to start my education as soon as possible, rather than defer for a year or two.

Thus, my back-of-the-envelope calculations made it fairly obvious that, including benefits, bonuses, and potential promotions, my medical decision was not a $1 million mistake, but was more like a $1.3 million dollar disaster.

Of course, people tell me that I’ll be profitable and that I’m a good credit risk, but what I really am is one of a rarefied breed that drive economy cars and have houses with names like “Apt. #203.” What I really am is an anti-millionaire.

Tuition comprises the vast majority of what we pay out as medical students. According to the Association of American Medical Colleges (AAMC), the average 2013-14 tuition for a non-resident student is $50,566, with additional school-related fees running another couple thousand dollars.

Essentially, without outside help, medical students are paying out roughly $53,000 every year, with a principle burden of over $200,000 after graduation.

Luckily, most students have some sort of assistance and owe an average pittance of $169,901, while a significant minority are pinned with debts of over $250,000. Obviously, it depends on which school you attend and residency status (i.e. attending your respective state school will be far less than attending an out-of-state private school), but I think we can all agree that it is expensive.

The real question, however, is whether it really costs that much to mint a new doctor.  To put it another way, are we getting a dollar of education for every dollar we pay?  Unfortunately, the answer is murky at best.

In 1997, a study at Virginia Commonwealth University concluded that the average cost to educate a single medical student for a year was $69,992, including instructional and educational resource costs. Accounting for inflation, that number is equivalent to $91,473 in 2013 dollars. As far as I know, there are no medical schools charging over $90,000 per year, and if there are, those students have my deepest sympathy.

Other turn-of-millennium numbers from the American Medical Student Association (AMSA) suggest the figure is somewhere between $80,000 and $105,000 per year.  In either case, it seems as though we are actually underpaying for our education, with other institutional revenue streams making up the difference.  There are, however, a few things to consider with regards to tuition, as noted by William Toffler:

  • Are these numbers an accurate reflection of medical education, or are we being billed at a higher price for what is considered a “better brand” of education?
  • How can we know that this full amount is being devoted to education, particularly when administrative decisions about tuition are kept somewhat secret?

One has only to glance at any continuing education catalog to see that graduate credit is billed at a higher rate than undergraduate credit, even within the same class. With a quick review of its courses, the extension arm of one well-known Cantabrigian university shows a reliable mark-up of 66%. Higher education obviously carries a premium price, but when it comes to medical school the final mark-up is unclear.

We all learned thermodynamics, biochemistry, and physiology in college—we don’t know how much more we are paying to re-learn the same material in medical school. Yes, this is an unfair example considering that other subjects, such as physical diagnosis, are specific to medical education and necessary for clinical practice, but for the sake of comparison, it is worth the exercise.

With regards to Toffler’s second point, a 2000 report from the AMA Council on Medical Education indicated that only 50% of medical schools fully retain tuition monies, while others feed it into a central university fund for various initiatives or capital projects, overhead costs, or various fees.

Furthermore, at 66% of institutions, tuition is set by the university and its board of trustees or some state authority—entities only loosely involved in the medical curricula. At best, it seems there could be only a vague connection between tuition and the actual cost of medical education.

An important point is that only 3% to 8% of total medical school revenue is derived from student tuition. The other, more significant revenue streams include practice plans (revenue generated by the medical practice of faculty and students), various hospital or school programs, and state and federal subsidies.

Thus, tuition is a relative drop in the bucket compared to the overall “business.” Taking a naïve look back at my previous life in pharmaceuticals, budget fluctuations under 10% were relatively inconsequential, not even requiring senior management approval. Why then, is there such an emphasis on maintaining tuition as a comparatively minor, albeit ballooning, revenue stream?

Why can’t the cost burden be foisted onto activities that are already making the big bucks? Why can’t we take a page from the indentured servant model, working enough years under our alma mater to pay our passage across the medical education ocean? Why do we, the young and impecunious, pay so much?  The answer, of course, is that we are willing—nay, happy—to pay for it.

Even today, as we stare down the barrel of the Affordable Care Act, being a doctor is a very desirable job. We may not be famous, but we will be well-respected. We may not be rich, but we will certainly live comfortably. We may work a lot, but we will never be out of work.

Despite the fact that rises in medical school tuition have far outstripped inflation over the past 30 years, the demand for that education continues to outstrip the supply. In 2012, 45,266 hopeful student doctors applied to medical school. Of those, only 19,517 matriculated. And these numbers do not even including the 16,454 individuals who vied for 5,577 osteopathic slots during the 2013 cycle.

Even with the AAMC’s recommendation to expand medical school classes by 30%, we will never see a school that is unable to fill every single one of its slots. To us, the future doctors, the young and impecunious, the anti-millionaires, tuition is a mere afterthought. All that matters is the MD.

Ode to the Anti-Millionaires

We are medical students.
We are young, proud, and righteous.
We have made the hard choice (medicine), but we have cleared the high hurdle (getting into school).
We know healthcare is a difficult, imperfect art, but we are devoted.
We arm ourselves with the weapons of knowledge and compassion, prepared to defend against the onslaught of trauma, disease, and time.
We are here to the bitter end, for our patients and ourselves.
And above all, we know the cost of our choice.

And if we’re lucky, it will stay under 6% interest through graduation.

Daniel Coleman is a first-year medical student at the Georgetown University School of Medicine and contributing writer to In-Training, where this piece originally appeared.

17 replies »

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  2. So you mean medical schools have a black box method of charging for services that seems totally out of line with the value delivered?

    Sounds like they’re doing a great job preparing you for life in America’s medical industrial complex.

  3. Great discussion, all. One additional point worth discussing is the dearth of loan repayment and assistance programs offered by medical schools, particularly in comparison with their law counterparts. While leading law schools make available robust loan aid programs geared towards students pursuing public service (e.g., http://www.law.stanford.edu/tuition/assistance), such options are all but nonexistent for those on the MD track. Given that academic medical centers are often major profit centers for a university there’s really no obvious reason for this inequity to exist.

  4. Very interesting post. If we could only get everyone (myself included) to take a better look at the quantitative side of education costs and ultimate net worth. In a response to a previous comment I wrote, “it becomes very easy to ‘do the time,’ and know that, at some point, all the bills will be paid.” When will my bills be paid? How much will I need to make to pay them off in 10 years? Personally, these answers wouldn’t change my drive to be a doctor, but no one should step into the wild without a map.

    A very effective way to increase NPV would be eliminating the cost of medical education all together, subsequently requiring students to be a part of the school’s practice plan until their debt was paid off. This isn’t even a new idea, as private companies commonly fund other professional, albeit less expensive, degrees in return for years of “required loyalty.”

  5. Agreed. During my relatively short relationship with medical education, I’ve lost count of the activities that will most likely not improve my skills as a clinician. I understand that schools want to build well-rounded MDs, but at what point does it become unnecessary bloating?

  6. Hi Jim,

    Thank you for such an excellent and articulate comment! It induced much head nodding.

    During a recent healthcare policy class, I floated the idea that, if we want more primary care physicians, medical school should be free. The comment was met with a round of laughter, but the idea has merit. Eliminate debt and you eliminate a major “excuse” to not go into primary care; neutralize the “I deserve X because I spent Y to get here” argument. The cost could be recouped by requiring additional years spent contributing to the schools medical practice plan.

    This year, we’ve had 6 snow days (one of which did not even include any snow). Rather than reschedule lectures, they just post the lecture video from last year. Essentially, I am paying the same amount of money for work that has already been done. So why not eliminate the in-class element all together? As you say, academia is a messy place, where things like legacy and tenure perhaps carry more weight than they should. People often speak of corporate efficiency like it’s a bad thing, but I can’t imagine any company paying someone to do the exact same assignment year after year, when it’s employees could easily just click on a hyperlink.

  7. While I agree that we as a society lose due to the current incentive structure, I don’t necessarily agree with the mechanism.

    The AAMC is always quoted as saying there is an extreme physician shortage, especially in primary care, that will grow to a magnitude of as high as 10 to the 5th if we don’t expand classes – but the AAMC should be expected to want as much as it’s there job as a lobbying group. With their suggestions would come increased government grants to help with expansion of the medical profession, helping them to achieve their goals.

    While the Director of Policy at the AAMC has suggested that redistribution of physicians would only solve up to 5% of the issue, as his job dictates he should suggest, I question that and have seen little evidence from non-AAMC sources to suggest it is true (though, admittedly, I haven’t search extensively for it). Is the issue not enough primary care physicians everywhere, or is it concentrated in poor/rural areas? If it is the latter, couldn’t targeted incentive programs aimed at increasing geographic distribution, not simply an increase in the absolute number of primary care docs, be helpful? If the AAMC really is overblowing physician shortages as a whole, simply pumping more doctors out could turn medicine into law – that is, too much competition over the long run, decreasing the desirability of the field to top talent.

    Of course, much of this argument is predicated upon the idea that AAMC, which may have ulterior motives, is the one often quoted as suggesting physician shortages – if they are correct or if a number of other bodies suggest the same phenomenon is at play and to the same degree, then I think I’d agree more with the mechanism behind your first point (that society loses due to debt). However, I know from sitting in on meetings with advisory councils to the federal government that there is a lot of debate between the experts as to the extent of the physician shortage and how much could be solved more easily with geographic incentives (loan forgiveness for going into rural medicine, etc) rather than simply increasing physician numbers overall.

    However, as I mentioned agreeing with the overall point about society losing, where one of the real issues is, to me, is the staggering amount of money the government pays to internal medicine residency programs. There was a paper that came out within the past couple of years that showed how much the government pays to the “top/large” internal medicine residency programs and how many of those grads go on to further specialize. In that case, if primary care is what we need most of all, it would seem that our money isn’t being spent where it needs to be. Perhaps there needs to be a change to the structure/rules of the residency-to-fellowship progression, specifically as internal medicine-to-specialty is concerned.

    As for your second point, I completely agree. Universities on the whole are inefficient. It’s part of the reason edx and coursera are becoming so popular, and I’m sure when the ideas gain credibility in medicine the field will catch up. Hopefully that is sooner versus later.

  8. Hi Abraar,

    Thanks for your comments. With that sentence, my goal was not to say that we are happy to pay high tuition, but we are happy to become doctors, no matter the cost.

    I’ve thought a lot about tuition advocacy lately (obviously), and there are actually a few instances of schools either freezing or limiting the increases on their tuition based on student-led efforts (http://www.amsa.org/AMSA/Libraries/Committee_Docs/UTstory.sflb.ashx). Unfortunately, these stories are few and far between. It think it’s just very difficult to organize when students are busy with classes, rotations, interest groups, and grabbing the occasional moment for social interaction. Ultimately, it becomes very easy to “do the time,’ and know that, at some point, all the bills will be paid.

    But if the drive is there to effect change, AMSA has a guide to tuition advocacy on their website (http://www.amsa.org/AMSA/Homepage/About/Committees/StudentLife/TuitionGuide.aspx). It involves students identifying the entity responsible for setting tuition and understanding the rationale behind the hikes (even if that rationale is “just because”). Building a coalition is essential, and enlisting a few members of the faculty, administration, or professional organizations certainly adds weight.

    However, it is important to temper expectations. Most likely, we will never be able to “demand lower tuition,” but I think that the goals of awareness and transparency (i.e. what EXACTLY am I paying for?) are sufficiently admirable, and provide a good base on which future classes can build. We’re playing the long game; it’s just tough to maintain interest with it when “our side” has a 100% turnover rate every four years.

  9. August 10, 2012 — Most women would be financially better off earning a physician assistant (PA) rather than a medical doctor (MD) degree in a primary care field, according to a new report.

    According to the researchers, although both an MD and a PA degree require a specialized professional degree program, and well above average undergraduate performance, a PA program represents a much shorter up-front investment than a medical school program, generally involving only 2 years vs 4 years of education plus residency.

    For women, an economic measure known as the net present value (NPV) of becoming a primary care physician was about $1.67 million during a lifetime, and the NPV of becoming a PA was about $1.68 million. In contrast, the NPV of male primary care physicians was about $2.3 million compared with that of male PAs, which reached $1.9 million.

    This difference was attributable mostly to earlier entry by PAs into the workforce and more part-time opportunities for PAs. Most female physicians did not accumulate enough total billable hours of experience to justify the higher up-front investment in education.

    Male and female physicians work similar hours early in their careers, but between the ages of 31 and 35 years, the median male physician works 50 hours per week whereas the median female physician works 40 hours per week. A gap in hours worked persists until age 55 years.

    “Our results suggest that many, if not most, women primary-care physicians do not work enough hours to fully amortize their up-front investments in medical education versus the plausible alternative career of becoming a physician assistant,” the authors conclude.

    J Hum Cap. 2012;6:124-149.

  10. Medical education cost complaints mirror costs for non-med degrees except maybe the additional length of time. Many institutions charge high prices only because people wrongly think they’ll get a better, more respected education there, with fantastic “professors”, when in fact many professors fob off lectures to their assistants while they pursue publishing. Schools market their winning sports teams – the sizzle not the steak.

    If we need transparency in med costs we also need that in education costs.

  11. MD class of ’79.

    Daughter presently in Physician Assistant training, 27 month program (as opposed to 84 months for family practice).

    My EM group employes 13 PA’s. Their education and capabilities are amazing. We get them fresh and make them awesome. Makes traditional med ed look archaic.

    Ed. plus Med. = perfect storm of gov’t mangling and bungling. Several of my PAs owe in excess of 100k. They are making it with incomes and benefits north of 100k per year.

    Primary care docs are severely underpaid for the current investment. It is not a ministry. You cannot retire on fulfillment.

  12. Some will read Mr. Coleman’s thoughts and say, “suck it up, of course it is expensive, you are going to be a doctor,” and most will simply blur past his observation’s as just part of the sacrifice that physician’s must make. However, this misses the point. The massive cost of a medical education is not born just by the doctor and his family, it is born by all of us, and it has a perverse affect on access to care, cost and quality.

    Because it is nearly impossible, without stipends or military service, to repay the cost of a medical education by practicing primary care specialties, such as family medicine, general gynecology, internal medicine or geriatrics, almost no one graduating from medical school is planning those career paths. Instead, they are going into high dollar per hour or per procedure specialties such as radiology, dermatology, orthopedic surgery, plastic surgery or invasive cardiology. It makes very little sense to work 80-90 hours a week for $100,000 dollars a year (which is unlikely to pay off massive loans), when you can work 50 hours a week for $300,000+ a year. Attempts to switch reimbursement to primary care have been largely unsuccessful, although may be part of the solution.

    Thus, we lose access to primary docs, who would practice less expensive, less procedure oriented medicine with an emphasis on service, prevention and early intervention, and instead healthcare is dominated by expensive, high tech, tertiary care. The primary docs that are in practice are forced to work for large providers, such as hospitals, so we also lose the personal touch, which the independent physician can provide. This is another way we pay more, in America, to get less.

    There are two general changes needed if we are going to continue to encourage the best, brightest and most compassionate to practice high quality medicine. First, as a society we need to realize that we can demand more from our physicians and they will be more willing to sacrifice for us, if we do not put myriad obstacles in the way of just trying to help. Certainly “rewarding” young docs with a debt load several times the average cost of a new home, before we have even paid them a cent, does not engender a desire to help others. Rather it focuses each doctor on how to feed his or her family. Communities, States, Legislators and educators need to commit to cutting costs and provide real financial support to students.

    Second, as Mr. Coleman alludes to in his article, Medical Schools are generally inefficient businesses with significant waste. Just as they do not teach students the fundamentals of efficient business, they do not practice them. Often they lack internal standards for productivity and are poor money managers.

    In addition, they, like all of healthcare, have been slow to incorporate digital teaching, which has the potential for great savings. Why does every medical school in the Country having someone give a lecture to first year students on the valves of the heart? The myocardium is the same in California and New Jersey. The perfect lecture, digitized, should be universal, as should the review of hundreds of other topics. Medical Schools, and their associated Universities, need to produce inexpensive and efficient education, and not balance their books on the backs of students.

    Medicine continues to be the finest career. Physicians should focus on our health, not their financial survival. We want doctors who will stop our bleeding, and we must stop bleeding them.

  13. “Why do we, the young and impecunious, pay so much? The answer, of course, is that we are willing—nay, happy—to pay for it.” I don’t agree that many students are “happy” to pay for this. Given that the revenue from tuition is as low as you state, the question would be what we as medical students can do to demand lower tuition strategically. I’m not sure if you’ve thought about this or had ideas regarding how this might be done.

  14. I think the estimates of what it costs to educate a medical student are mostly inaccurate, inflated and self serving. I went to Medical School from 1975 to 1979 at my state medical school.

    During the first 2 years, I sat in a classroom with (initially) 200+ other Medical Students listening to lectures that ranged from the sublime to the ridiculous. We had some excellent lectures – we had some terrible lectures. Attendance during the first week was 100%. By the end of the second year, attendance was down to less than 20%. Some of the top students in my class never went to class! That is correct – they stayed home, read the books, read the notes and did very well. In light of the lack of correlation between attending class and test scores what was the value of the lectures? And yet I guarantee you that in the calculation of the “cost of educating a medical student” those lectures were given a very high value.

    During the last 2 years, we rotated around the hospitals doing various rotations; Medicine, Peds, Surgery, OB/GYN, etc. And in each of those rotations we were mostly the “scut dogs”. As Medical Students our jobs were to start IVs, take specimens down to the lab, get results from the lab, etc. – in essence – unpaid labor. But we did get lectures, practical advice, etc. from the attendings and residents. What was the net of the labor we performed and the lectures (etc.) we received? Hard to say, but likely a lot less than what the accountants (who work for the hospital) claim.

    But why would a teaching hospital “fudge” how much it costs to educate medical students? Why would a dog lick his b#lls – because they can. And because they are trying to get more money from the State and the Feds.

    So any time you see an estimate of what it costs to educate a Medical Student – have some healthy skepticism.

  15. Think you’re pretty fair in your assessment…what you put in will likely continue to pay out in some way, if not in a monetarily profitable manner, than certainly a fulfilling one (If you’re in this for the right reasons, anyway.).

    What we shouldn’t forget: Medicine is more often than not one of at least a few career options available to the very same individuals worried about bang for their buck, as your own personal story evidences…

    There’s an overlooked privilege/bias in this fact…one that likely makes its presence known in the culture of medicine we find ourselves in the midst of today.