The December issue of Money Magazine has an article about a young couple, both in the residency stage of their medical training. Meg and Chris are 28 and 29, and happily expecting their first child. From the details in the article, it appears that they are a pretty frugal couple, living with few extravagances or extras. They each work about 70 hours a week, and their combined income is about $91,000/year. For 70+ hour weeks, that’s not a lot of cash. The couple also has $483,000 in student loans. Meg had no student loans for her undergrad schooling, and Chris owed only $17,000 after finishing his masters. But medical school gave them a combined debt of nearly half a million dollars. Meg hopes to work part-time as a pediatrician, so that she can be with their baby more – but that could mean that her salary might only be $40,000/year. Chris, with anesthesia as his specialty, could earn up to $250,000/year, but those days are on the somewhat distant horizon.
With all the talk about national health care and eliminating waste and excess spending in our broken health care system, some people assume that doctors are overpaid. On first glance, $250,000/year for an anesthesiologist does seem extravagant. But if we want to cut back on medical spending, we need to take a closer look at how doctors are trained and who pays for their education. The vast majority of new doctors are saddled with huge student loans. And almost without exception medical residents work ridiculous hours for very low pay (Chris and Meg work for about $12/hour if you look at their salaries and the number of hours they work). Once a doctor has been practicing for 20 years, the picture is obviously going to be rosier – higher pay, better hours that come with more seniority, and medical school loans probably paid off. But the price to break into the profession is a steep. According to a current US News and World Report listing, the average medical school loan is now $100,000. Closer to home, Graduates of the University of Colorado Health Sciences Center can expect to have over $118,000 in medical school loans.
If we want to cut health care spending, perhaps one of the things we need to look at is how we train doctors. If new doctors didn’t graduate with hundreds of thousands of dollars in loans and work for peanuts for their first few years after med school, maybe they wouldn’t need $250,000 salaries.
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This is the hidden cost of medical salaries. The education debts, opportunity cost, long training should all be factored in when considering a doctor’s salary.
I do NOT agree that the cost of education should factor into what a physician is paid. Consider: veterinarians graduate with equivalent educational debt (current average $100K+). About half of veterinarians go on to complete specialty training, equivalent to a medical residency. But the average salary for all veterinarians (around $84K) is lower than the average salary of a physician, dentist, podiatrist, optometrist, pharmacist (we beat psychologists by a hair). The average starting salary for a new graduate veterinarian is around $50K, but it won’t spike like that of a new graduate physician after completion of a residency.
Most veterinarians didn’t enter this profession for the money, obviously. And most don’t have any expectation that their clients will pay $20,000 for a c/s in a dog, even though that’s what it cost one of my human friends.
So I have no sympathy for physicians with educational debt, “struggling” to survive on $250K. They chose their profession, just as I chose mine. Stop whining!
The couple described above managed to accrue more than twice the average educational debt (almost $250K each vs. $100K each). How, I do not know, and I do not care. And I’d love to know why they think it’s a fine idea to have a child immediately (rather than work and pay down some debt). That was also their choice. Live with it.
Outrider:
I don’t think anyone is suggesting we feel sorry for doctors. The problem is with demonizing them for their supposedly massive profits and using that falsehood to convince American citizens to bring the force of government to bear on these people. Are you in a job where the government sets your salary? Does the government penalize you by lowering your expected compensation if you try to please your customer instead of the government?
This is what is being proposed for doctors, and when it happens, they won’t just whine; they will exit the medical profession en masse as well they should.
Outrider.
Not a good comparison. My father is a veterinarian. I am a physician, and I have the utmost respect for what veterinarians do. Veterinarians make a good living; I know the market. The stress is lower. You don’t have to deal with insurance companies, medicaire, or the constant threat of getting sued. The training is NOT comparable, with the veterinarian training model much closer to dentistry than human medicine. Residencies are not required, and fellowships aren’t expected.
Your comments on medical student loan debt are misguided. My wife and I are physicians, who went to an AVERAGELY priced medical school, and have a combined debt of over $400K. This is the norm, and we are not outliers. Moreover, how long do you expect the 28 year old wife to delay having a baby? I’m impressed that you have so much respect for modern medicine, but modern medicine can’t change the fact that fertility drops sharply after 30. This is just another hidden cost of medical training — the difficulty in starting a family.
Salaries in human medicine range from $80K to $250K (average), with the lower paying specialties requiring less training BUT still years more training than what is required for veterinarians. These are some of the reasons why my father wanted me to go into veterinary medicine. I often regret not listening to his advice.
More than 70% of healthcare costs are administration related. The physician’s salary and equipment together make up less than 20% of total costs. Chris’s $250 000 salary may seem like it’s “on the distant horizon”, but an anasthesia residency lasts 3-5 years. Meg is wasting her time with a 10 year education and high risk debts to be making only $40 000 a year. Meg and Chris should probably not be having a child, but will be putting serious money in the bank by the time they turn 36.
Dicks, could you link to your source on those numbers? New England Journal of Medicine shows the opposite:
http://www.nejm.org/doi/full/10.1056/NEJMsa022033
“administration accounted for 31.0 percent of health care expenditures in the United States”