Debt Be Gone

[jubb]

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Just curious what kind of offers are made to soon to be graduating residents where they'll pay your loans back for you. Are there rural programs or inner city programs? Are some practices desperate enough to offer to pay your debts? I've heard recruiting for people to go to alaska in other fields. I think it would be fun to live in alaska for a couple years so I was wondering if anyone has heard of any alaskan recruiting programs for general surgery.

Justin

 

[Pilot Doc]

Any practice will pay your loans off. From a practice's standpoint, a new grad is a business expense like toner and file folders.

Say your total cost for the first two years including recruitment costs, salary, benefits, taxes, insurance, etc is $600,000. The practice figures you'll bring in $800,000. There's no reason why a practice wouldn't be willing to structure some part of your compensation package as loan repayment - it's just going to come out of the budget for your benefits and salary.

In that respect, this is no different from seeking a good paying job. Look for an area with good reimbursement/low competition, low malpractice and a low cost of living.

 

[Winged Scapula]

The general rules are:

- loan payoff in surgery is much less frequent than in other specialties
- when you do see it, it is often associated with a job that is otherwise somewhat less desirable

I am not aware of any of my colleages who even got offers and only a couple that got signing bonuses. I know one who is making ginormous dollars but he is in the middle of no-where, only game in town.

While Alaska may sound fun, remember that any loan repayment, ginormous salary, guaranteed salary will almost certainly require an employment commitment of several years. That is, if they are giving you $100K or more to pay off your loans, you'd better be sure that they are going to try and recoup that from you...usually requiring that you stay for X number of years (5 would be more common), or that a certain percentage of your incoming billing will go towards paying that "loan" for your student loans back. Free money is exceedingly rare...although I'm sure someone here will come up with a, "I know a guy" story.

I posted the above while Pilot was posting...I agree with Blade (below), these opportunities in general surgery are pretty rare. However, if its done as Pilot describes where essentially the practice is loaning you the money to pay off you student debt, then yes...sure its possible (especially with hospital backing...although if you get a guaranteed salary, it is almost assuredly less than what you are billing for), but is something that would need to be negotiated because it is certainly not something that is offered as part of a standard recruitment package.

Well established practices or hospitals can offer you such loans for mortgage downpayment, student debt reduction, etc. but in general, they are not giving you the money as you sometimes see in other fields, but rather loaning it to you. The terms can often be better than what you would get from a bank but in turn, require you to practice in the area for a certain amount of time.

 

[Blade28]

Most people in surgery don't have these opportunities.

 

[Leforte]

I'm looking now for a job in ENT, but I would guess that it would be similar for other surgical fields.

The big factor when looking at student loan reimbursement is the hospital's recruitment initiative. What the above poster wrote is correct - any money you get for student loans, bonus, etc from a practice come from their revenue of your production. Which essentially becomes you paying yourself for these benefits. The benefit that you bring to a practice is your ability to pay part of the overhead and take call. That's it. So why would a practice pay you $200k for student loans and a nice signing bonus from THEIR money? Most will not.

Now the hospital is a whole different beast. I've heard estimates that an ENT (and likely other surgeons) bring a hospital close to $1-$1.25 MILLION in revenue a year that would otherwise go someplace else. This not only comes from the surgery revenue, especially in high turnover outpatient surgery (which they prefer) but also from the $1,000 CT, $2,000 MRI, PET scans, preop labs, etc. that you are ordering on your patients. So a hospital wants to recruit you to practice with them. Plus the benefit of adding you to taking call for the ED, of course.

Now the IRS has very specific rules regarding recruitment incentives for physicians. These are somewhat less stringent if you are a hospital employee, but that comes with its own set of headaches - less autonomy, less $$$ in the end, plus a bunch of others probably best left for another thread. As a private practitioner, who is subsidized to come into a community with hospital recruitment support, certain conditions have to be met in order for the hospital to provide these incentives (st loan reimbursement, bonus, etc) - 1) there has to be a demonstrated need in the community that they have had difficulty with filling, 2) the recruited person must come outside of the community (ie the hospital cannot steal a physician from another hospital in town since this would not fill the communities need, only shift it from one place to another), plus a few other rules/requirements.

Because of this, many of these opportunities are in smaller towns, with one hospital. I suppose this is why many people consider these "less desirable" places. Personally, I feel they are really the best places. As a new surgeon, there would be less wok in building up your practice, there would be more breadth to your practice, more autonomy, less overhead, increased reimbursement and lower cost of living. Plus there are really few places in the continental US that you wouldn't be a short drive to a major metropolitan area to get your shopping/arts/dining fix when the need arises.

If you are willing to at least look at these practices, many are gems. Personally, I've had several already approach with offers of student loan reimbursement (nearly $200k for me), chief year monthly stipend ($2k per month), pay all moving expenses, low time to partnership, opportunity to buy into the surgi-center, etc. Oh, these were not advertised positions either, but the private guys approaching the residents who will be graduating and asking what they were looking for.

As with all things, buyer beware. In my small field, everyone knows everyone - and certain practice's partners personalities and practice doctrine are more respected than others. And if you choose to go to a smaller place, it can be very difficult (financially) to leave, for many of the reasons listed previously. Most recruitment incentives do come with a time commitment (I agree with the 5-years previously said) - should you leave, a pro-rated portion would need to be paid back, on top of trying to sell your home, relocate family, etc. Our academy says that the average new ENT grad has 1.8 jobs their first 5-years out. Or a better way of looking at it is that 4/5 grads will take a second job (although I am not sure if they count fellowships into this, which would obviously skew things).

Regardless, the choice on where to practice is very difficult and many factors come into place. Don't just focus on the financial aspect as this is only one small piece of it all. It you enjoy big surgeries, likely smaller places won't offer the complexity to keep you interested and a larger academic place would be better. Similarly, if you enjoy breadth, close relationships, more autonomy, less competition and lower cost of living than perhaps a smaller community is best.

As far as students loans, etc - with the 2.85% rate I've locked in on my consolidation, the $800 monthly payment is very low on my list of priorities at this time in choosing a practice - I know of no surgeon who can't live comfortably due to their student loan obligations.

Good luck!

 

[Winged Scapula]

Thanks for the input LeForte. Just another reason why I should have chosen ENT!

Again, those opportunties for general surgery are pretty rare; however, you do not have to be in the middle of nowhere to at least get some of the type of things LeForte is discussing. General Surgery in particular is hurting, as more and more residents go into fellowship training and refuse to take gen surg call, so hospitals and communities are working harder than ever to recruit them.

If you have a skill, a community need and a non-saturated market, they will recruit you, which is essentially how I got hired, in Scottsdale/Phoenix...hardly BFE. Hospitals aren't dumb...they realize, as LeForte notes, we bring in so much more than the actual OR costs, especially in fields where you are referring patients for expensive tests, chemo, radiation, etc. Of course, they will pay you (including any benes) far less than what you bring in, but there is a fair bit of room to play. Private practices can also get assistance from hospitals to bring in a new partner...which is sort of a quasi independent practitioner/employee model.

At any rate, I see the sort of deals that LeForte describes as much more common in PRS, ENT, Ortho etc than in Gen Surg, but they are increasing in the latter.

 

[Miami_med]

I suspect that if you can get good general surgery training (which may be difficult today) in a wide variety of procedures and are willing to move, that money would be there, no? I heard that the average age of a general surgeon is now 50 something, which will start to leave some holes in the not too distant future. I also suspect that financial incentives for taking night call will start to increase, so anyone willing to take call might be a commodity. It's hard to find a good general surgeon to take night call, and it's frankly a royal pain to figure out which specialist surgeon to call in the middle of the night. I'm not a G surg, so I don't know for sure.

Anyone heard of this sort of thing?

What I do know, is that the new breed of graduating students hasn't seen a 2.8% rate, and making financial decisions regarding student loans is much more significant. I'll owe in the neighborhood of $200k on graduation, and my average rate (with no private loans) will be around 7%. Rapid interest accrual will put me at over $230k 3 years out, probably over $260k five years out. It's a lot easier to bleed green these days, and a loan repayment program that effectively stops the interest damage would be huge.

 

[Leforte]

Re: St loan interest - point taken. It's amazing how tuition keeps going up near 10% a year, yet reimbursement continues to either level off or decline. Unfortunately, we control neither.

As an aside, I just looked at some financial aid calculators - it's pretty jaw dropping what the interest rate change in recent years has done in addition to increased graduating debt:
$200k, 30 years, 2.85% interest = $827/month
$250k, 30 years, 7% interest = $1663/month
http://www.finaid.org/calculators/scripts/loanpayments.cgi

If you saved the other $836/mo at 9% x 30 years = $1,100,045 difference between graduating now vs 4 years ago. http://cgi.money.cnn.com/tools/savingscalc/savingscalc.html

Wow - is all I can say.

One thing that I have been told from former residents and attendings is to negotiate with the hospital with call. Fortunately, our Orthopedist colleagues have really taken the lead in this area. It is not unheard of for a group to charge $1000+ per night to have someone take call for the hospital in areas. Once you open the door, other surgeons are sure to say, "Well if the orthopedic surgeons are getting reimbursed, then we should be reimbursed, too!" Granted the call for an ENT/Urologist is far less than an Orthopod/GS. However, I know of several graduates in my field who get $400 a night to carry the pager. Q3 call = 120 calls/yr = an extra $48k per year. Even if a hospital is not paying your student loans, this will obviously go a long way to help mitigate that debt.

Obviously, as Dr Cox has previously said, this is all area and saturation dependent - In highly desirable areas, my guess is they would pay nothing,

Unfortunately, no one can have everything. While I would love to have student loan repayment, sign-on bonus, final year stipend, reimbursed call, buy-in rights to a surgicenter, practice owned CT-scanner, 12 months to partnership with a practice in San Diego, on the beach and with resident coverage, too. Reality tells me that medicine, like any other business, is supply and demand driven. Where the demand is high, certain concessions are made to bring providers in. Where there are more surgeons than the populations needs, one is lucky to get into a group, much less ask for the fringe benefits.

When the time comes to look at groups - look broadly. If you need to be in a specific area d/t family, spouses job, etc than your options will be far more limited. If you are more flexible, I'm sure you can find something that works out more favorably.

Good luck!

Leforte

 

[becool5]

Re: St loan interest - point taken. It's amazing how tuition keeps going up near 10% a year, yet reimbursement continues to either level off or decline. Unfortunately, we control neither.

As an aside, I just looked at some financial aid calculators - it's pretty jaw dropping what the interest rate change in recent years has done in addition to increased graduating debt:
$200k, 30 years, 2.85% interest = $827/month
$250k, 30 years, 7% interest = $1663/month
http://www.finaid.org/calculators/scripts/loanpayments.cgi

If you saved the other $836/mo at 9% x 30 years = $1,100,045 difference between graduating now vs 4 years ago. http://cgi.money.cnn.com/tools/savingscalc/savingscalc.html

Wow - is all I can say.

One thing that I have been told from former residents and attendings is to negotiate with the hospital with call. Fortunately, our Orthopedist colleagues have really taken the lead in this area. It is not unheard of for a group to charge $1000+ per night to have someone take call for the hospital in areas. Once you open the door, other surgeons are sure to say, "Well if the orthopedic surgeons are getting reimbursed, then we should be reimbursed, too!" Granted the call for an ENT/Urologist is far less than an Orthopod/GS. However, I know of several graduates in my field who get $400 a night to carry the pager. Q3 call = 120 calls/yr = an extra $48k per year. Even if a hospital is not paying your student loans, this will obviously go a long way to help mitigate that debt.

Obviously, as Dr Cox has previously said, this is all area and saturation dependent - In highly desirable areas, my guess is they would pay nothing,

Unfortunately, no one can have everything. While I would love to have student loan repayment, sign-on bonus, final year stipend, reimbursed call, buy-in rights to a surgicenter, practice owned CT-scanner, 12 months to partnership with a practice in San Diego, on the beach and with resident coverage, too. Reality tells me that medicine, like any other business, is supply and demand driven. Where the demand is high, certain concessions are made to bring providers in. Where there are more surgeons than the populations needs, one is lucky to get into a group, much less ask for the fringe benefits.

When the time comes to look at groups - look broadly. If you need to be in a specific area d/t family, spouses job, etc than your options will be far more limited. If you are more flexible, I'm sure you can find something that works out more favorably.

Good luck!

Leforte

Interesting post, Leforte. That is quite a difference when comparing interest rates.

I had a question for anyone who can answer (forgive my ignorance here) but I was wondering if you have a loan at say 7% now and the average interest drops to 2.1% in 5 years, can you re-finance your student re-loan at a lower interest rate?

Thanks.

 

[Miami_med]

Interesting post, Leforte. That is quite a difference when comparing interest rates.

I had a question for anyone who can answer (forgive my ignorance here) but I was wondering if you have a loan at say 7% now and the average interest drops to 2.1% in 5 years, can you re-finance your student re-loan at a lower interest rate?

Thanks.

I suspect not, because current rates are fixed and will not adjust. It also seems that no one is trying to make things more favorable in the interest rate department. I would expect to pay the interest at your current rates.