It's Not Funny
DOCTORED MONEY typically uses a casual and light-hearted touch with respect to our writing, which is peppered liberally with jokes, which we almost certainly find funnier than our readers do. After all, one should try to have fun when choosing to work for free!
Yet we can’t bring ourselves to take the same approach with this particular topic. This is serious stuff! On the other hand, some things are so sad all one can do is attempt to laugh.
Is It True?
DOCTORED MONEY has the following sentence in our purpose statement: “Education costs have increased and physician compensation has not kept pace.” We recently attempted to find high-quality, specific data or research to support and illustrate our claim (and essentially just to find a nice chart someone else had made that we could ‘borrow’). But we came up empty-handed.
Therefore, we dug into the best available data set we had access to and performed our own analysis. We focused on primary care physicians for three reasons: 1) Primary care physicians represent the largest percentage of all physicians 2) Primary care salaries are among the lowest, and thus primary care physicians are most affected by changes in medical school costs and 3) Useful wage data is not publicly available for higher-earning specialties due to “top-coding”.
What We Found
The graph below plots the percent change since 2002 of medical school costs, primary care hourly wages, and national wages for all US workers. As you can see, only family medicine has kept pace with overall US wages, and primary care has certainly not kept up with the dramatic increase in medical school costs.
It’s quite clear that in a span of just 15 years, the financial outlook for graduating primary care physicians has markedly worsened. Some (possibly biased) sources like to highlight the fact that physician debt has not risen as fast as medical school costs and cite this observation as somewhat reassuring. But because grant and scholarship awards have been level, this difference in the rates of increase between costs and debt implies that medical students are (at least in part) increasingly coming from wealthier families, which is not necessarily a positive development.
For those without substantial family resources, individual educational debt rises in tandem with the cost. This requires that an ever increasing percentage of lifetime physician compensation be diverted towards debt repayment. Debt must of course be repaid with interest, and is repaid with after-tax dollars. Thus, even a small increase in relative debt load can lead to a substantial reduction in net physician financial outcome.
In addition, the rapid change in tuition means that older mentors, educators, and counselors who are not directly familiar with this data may not understand or appreciate the financial environment in which newer graduates find themselves.
More to Come
We wonder how this may be affecting career counseling and overall financial advice, whether formal or informal, which new MDs (and pre-medical undergraduate students!) are receiving. We will certainly have more analysis and commentary on this topic in the future.
Methodology and Additional Information
- Wage data is taken from the hourly median wages as categorized and estimated by the US Department of Labor (Bureau of Labor Statistics, U.S. Department of Labor, Occupational Employment Statistics, [June 17, 2018] [www.bls.gov/oes/]). Hourly wages were used to account for changes in hours worked over time, or changes in the proportion of part-time to full-time workers. Wage data does not consider benefits, such as employer retirement contributions or employer provided insurance. Family medicine data for 2007 is not available.
- Tuition data is taken from the annual AAMC medical school surveys (American Association of Medical Colleges, Tuition and Student Fees, [June 16, 2018] [www.aamc.org/data/tuitionandstudentfees/]). Costs include tuition, fees, and health insurance for private schools and public schools (in-state or resident tuition). Costs or estimates for living expenses are not included.
- All data is normalized to a base year of 2002.
- The 2017 national median is missing because this value is not released until late in 2018 (Social Security Administration, [June 16, 2018] [https://www.ssa.gov/oact/COLA/central.html])