Medical School Debt: A Path Out?

29 Jul

It’s no secret that training to become a physician is enormously expensive. For starters you’re looking at at least 8 years of undergraduate and medical education before any money starts coming in. While some people are fortunate enough to receive scholarships or come from families with the financial resources to pay the rather daunting tuition bills each semester, many are not so lucky. For these would-be doctors, educational loans are the default option (no pun intended). Sure, some people want to “save the world” and work in underserved areas, and these people can apply for a position with the National Health Service Corps, wherein the federal government pays a significant portion of their loan debt in exchange for a commitment to work in an area where health professionals are in short supply. But for most medical students, the high paycheck and the prestige associated with entering a specialty field is more attractive than being a “lowly” primary care doc and getting shipped to Nowhere, America just to have less debt to show for it.

One reason that people choose high paying specialties is that they face large loan amounts that they have to repay after graduation. We’re talking amounts that average anywhere from $150,000 to $200,000. In many parts of the country, that’s a house. The NHSC system attempts to provide an incentive for physicians to enter primary care and work in an underserved area, but it does nothing to provide disincentives for physicians who choose to pursue a specialty. The same is true of other strategies that aim to restore the primary care-specialist balance by increasing reimbursement rates for primary care docs.

But according to an article in the American Journal of Obstetrics and Gynecology profiled in the Wall Street Journal, there’s a new proposal that might work to provide the needed incentives and disincentives. How does the proposal work? Simple. Eliminate tuition and fees at medical schools and then let the medical schools take a cut of the physicians’ income for the first decade after their training is complete. For public medical schools, doctors would hand over 5% of their annual income. For private medical schools, the figure is double that. There are other elements to the proposal, but that’s the key.

So would it work? I’m not so sure. Yes, it removes educational debt from the medical student’s consideration
of which field to enter–if they make more they pay more, if they make less they pay less. Seems fair. But, and I think this is important, it would encourage medical schools to steer students into the highest paying fields to maximize the school’s revenue. What’s more, there’s an issue of the time lag involved. If a school starts a program like this, it will essentially go at least five years before it begins collecting any revenue. That’s a pretty lengthy cash advance. And I don’t know about the percentages, either. Say a year’s tuition and fees at Harvard Medical School is $45,000. Using the 10% figure, a physician would have to earn $450,000 a year (after taxes) for the school to break even. Sure, some doctors make that much money, but most don’t–especially not straight out of their training. For a family practitioner making $100,000 a year, Harvard would only get $10,000–or, conversely, if they wished to break even, the physician would have to pay 45% of his or her income to the school. It seems like a proposal with some promise, but it’s clear that a lot of kinks remain to be straightened out.

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Posted by on July 29, 2010 in Uncategorized


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