What Does Med School Really Cost?

I've heard many times that medical students, even at private institutions or out-of-state, only pay a fraction of the total cost of their training.

How is that possible? Here I sit as a lowly MS1, and I fail to see, gross waste aside, where our money is going. Tuition + Fees here is now $36,514. If you multiply that times 150 students (MD/PhDs and scholarships excluded) that gives $5,477,100. That's $5.4 Million dollars for the first year class alone. Multiply $5.4771M times 4 years and you get an annual intake of $21.9 Million dollars!

Let's look at major expenses:
Administration -- I realize that this is a big and necessary cost. With an office staff of around 20, with an average salary of $50k/year (an overestimate, I think), you end up with $1M.

Teaching -- Most of the professors I know here are either obligated to teach or teach for free. There are some paid people, like anatomy lab teachers, but not a great deal. This adds maybe another $1M? I doubt it adds up to that much. Of course you also have the expenses of the equipment in Histology and Anatomy. We pay for the microscopes in Histology, so that one is out. There's also a nice technology fee that I assume pays for the computers. Cadavers (38 of them?) cost how much exactly? At $10,000 a piece to pay for them and their care, that's $380,000.

Facilities -- I realize that this is also a major expense. However, our medical school's lectures halls are crammed and uncomfortable. The law and business schools enjoy lecture halls where everyone has some desk space. What do we get? The old stadium style seating with fold out desktops and not enough leg room. Further, all of the medical school buildings are mostly used for research. This is evidenced by our difficulty in scheduling space for classes, sections, etc. I don't know what the research faculty have to pay out of their grants here these days, but I'm sure it's >50% of their intake. Last time I checked, we're bringing in well over $200M in NIH grant money. Take 1/2 of that, and isn't this enough money to support facilities?

Clinical Training -- I've been told this is where the biggest expense comes in. I still fail to realize how. Maybe I'll see when I get to clinics. Med students end up doing so much scut that I believe they are subsidizing themselves since the healthcare system needs less paid workers. Of course there's expense here, but does that comprise the additional $18M I've forgotten to account for? Does this mean each student costs over $120,000 in the clinics?

Please someone enlighten me. I'm not in Wharton, so I need someone to tell me where the heck all the money seems to be going.

Actually, tuition is a small part of most medical schools operating budgets.

"Despite these increases, tuition continues to make up only a small percentage of total revenue at the majority of American medical schools. During the 1997-1998 academic year, tuition accounted for an average of 2.8% and 5.1% of the operating budgets of allopathic public and
private medical schools respectively. These percentages have remained relatively constant over the past thirty years.8 Tuition accounts for a higher percentage of the operating budgets at osteopathic schools, approximately 47%, due to these institutions? smaller operating budgets.
Nevertheless, the majority of all American medical schools? budgets are derived from nontuition sources, including federal and state governments, research grants, philanthropic support, and the ?Dean?s tax?." (from the AMA Medical Student Section Debt Report http://www.ama-assn.org/ama1/pub/upload/mm/15/debt_report.pdf).

N-
Okay, look, I'm not Wharton either, nor in medical school. But I do have passing familiarity with the business side of healthcare. So, for what it's worth, here are my thoughts...
1) There is the very real possibility that the school is making a good profit. By that statement, you're math may be right on.
2) If any of the institutions are not non-for-profit, they are likely paying a fair piece in taxes.
3) ANY labor will result in workers comp, and benefit packages. These vary tremendously...where I work now, we use a .13 x hourly rate to give us the cost per hour for each employee. The hospital that I will be working at in July uses a .30 benefit adder.
4) it's cliche, but true: overhead will kill ya.
5) there's insurance that these places have for EVERYTHING: directors and officers liability, malpractice for everyone, fire, pension. Not cheap.
6) I know that healthcare pros bill the hell out of everything, but so much of that is cut down by the payers (this you know). Medicare, which helps fund resident stipends/salaries, for example, will accept my bill for electric stimulation to a muscle (our charge is $36/15 min) but they will return me a check for $15.24. And Medicaid? Scary. We typically bill $72 bucks for a 30 minute treatment of PT/OT/Speech...we get $48.67. And as an outpatient clinic, we're lucky - the hospitals in the area get less than 5 bucks for that same treatment.
7) any organization with a lot of administration is going to be top heavy, in that it usually has tons of salaries spent on people that don't generate revenue.
8) lawyers ain't cheap, and neither are lawsuits. Our lawyer, who has a unique sense of humor, doesn't fail to remind us that the second he answers his phone, the clock starts - at $165 an hour. Look at this new form - $165. Can we say this to a patient? $165. And metro areas are much worse...up to $400/hr in Philadelphia, I've been told.

Food for thought...

Don't forget the library. Let's say a typical medical academic journal subscription costs $3,000 per year (some cost less, but some cost $10-20,000, and I'm talking quarterly publications here). Let's say you have 700 titles. (And let's join the librarians in a rousing chorus of, "Publishers are pigs!") Then you have monographs (books), librarians, shelvers, catalogers, online database subscriptions, network maintenance, etc.

Student affairs and financial aid office staff.

Custodial staff. Those crowded, dinky little lecture halls don't clean themselves.

Lights, heat, cooling, repairs. Think about the size of your institution and multiply your home electric bill accordingly.

Does your school have access to uptodate.com? The institutional subscription for that site is very expensive (in the hundreds of thousands of dollars) if you have a large population (med students, biomedical grad students, research staff and faculty, residents, fellows, etc) that could potentially use that site. What other electronic resources are available that could cost a pretty penny?

Is your campus wired? Do you get powerpoints from lectures available on blackboard? What about streaming video of lectures that you've missed? They all require bandwidth, which requires $$$

Is your building nice and cool during the summer, and warm during the winter? Electricity and gas/oil aren't cheap (esp now with the price of oil)

Support staff - custodial to clean the lecture halls and hallways and ensure the bathrooms are clean. IT people to fix computer viruses that have run wild. People to remove the snow/leaves in the winter/fall.

Security - yep, gotta worry about security, esp if you're in a bad neighborhood. If you have a lot of research equipment, there is potential for multi-million dollar damages if ONE crazy teenager gets inside and decides to vandalize (happens quite often in the Philly area to K-12 schools and school bus depots)

I understand most of the expenses being presented. Most of these things (security, utilities, etc) I included in the facilities budget, which again must be well over $100M/yr from all the basic science labs in the medical school. The utilization of space, climate control, and other resources used by the medical students are only a small fraction compared to all of the basic science facilities that the medical school contains.

The hospital and medical school is self-insured (nobody will insure it) and it has its own full-time legal team. I'm not sure how much that the medical school contributes to this for its medical students.

I agree that the library is a big expense. Part of that is for the hospital and part of that is for the medical school, but I don't know who pays for it. I do know that our Uptodate is provided by Astra Zeneca.

I forgot about all of our electronic resources and how much money they consume. As far as medical schools go, we are high-tech with recordings made of every lecture and online access available for every lecture. Personally, I wish they'd expand our lecture hall so I'd actually want to sit there, but who knows if that will ever happen.

Even with these additions, I'm still far from making up for that $18M figure I proposed earlier. If one modifies it for the other things presented here, I'm up to what... $15M/yr missing? Am I just thinking things are less costly than they really are? Maybe the medical students are stuck making up losses from other areas. If this is the case, than that is truly sad.

N-
Sad fact (or positive fact, I guess) is that it is a business, and if run right, a profit is made. I'd say that's where the "missing" money may be...

dc

Neuronix,
Im not some financial whiz either, but I have a few ideas which may or may not be what you are looking for. Each university (or medical school) has an endowment. The endowment is invested or put in a bank. The goal of any university is to have the yearly interest/dividends from the endowment pay for operating costs.

Also, the endowment helps pay directly for construction, which is becoming more and more expensive as labs become more sophisticated and as construction crews are limited by surrounding buildings.

Some schools have said their tuition will not increase faster than the rate of inflation, which is the noblest thing you can do as a school. I think private schools like Penn, which can't rely on government funding, are basically trying to grow their endowment to such a high level for the above reasons as well as to weather any financial storms or whatnot.

These are all just guesses though. Think about it this way though, we (as MDs) have it better off than some DOs whose schools are run for an actual profit (any "profit" a university makes simply goes back into its endowment for reinvestment). So while tuition may be going up to an annoying level at private MD schools, we can pretty much rest assured that it will be reinvested in the school itself as opposed to going to the administrators. So while tuition is getting unwieldly, things could be a lot worse (not that that should be any consolation when youre looking at 250k accruing interest).

I have no doubt that large university hospital systems make huge profits, but not from medical student tuition. In fact, according to this Q & A page from AMCAS, medical schools take a substantial hit per student:

"There have been several studies conducted over the last 3 decades investigating the annual costs of educating a medical student, both in terms of instructional costs and educational resources costs. These studies have found that instructional costs range anywhere from about $48,000 to $51,000 per student per year, and educational resources costs from about $80,000 to $105,000 per student per year (adjusted for 2002 constant dollars).(4) Instructional costs are primarily comprised of professor salaries and costs that relate directly to the teaching program, while total educational resources include all activities of teaching, research, scholarship, patient care, and maintenance of facilities.(5) Therefore, tuition does NOT cover all costs to fund your medical education. This inherently means that medical schools must derive funds from other sources."

the full page can be found here