Doctor's Going Broke - CNN article

[btown8908]

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Tangent (I apologize):

*The ER is not a good business model and needs to be remodeled.

**Honestly, I would like to think that doctors do their job for the love of helping others rather than the $ that comes with it. Got to have faith in humanity.

 

[RogueUnicorn]

Does everyone see the graph below?

yea, and can you see that part where it says ADJUSTED FOR PURCHASING POWER?

 

[futuredoc911]

The only way to make a lot (this number is different for everyone) as a doctor in the future is to go into certain specialized surgery or certain specialized non surgical fields and to be top notch at it also. The trend is moving away from private practice however it would still be possible if you have a "unique" practice or take payment and then bill to the patient to give to their insurance for the patients reimbursement. Otherwise the trend is to be an employee of a hospital or a medical group where you are paid on a salary and they usually cover your malpractice insurance as well. A number of doctors are now doing this and making a great salary and the hospital pays all of the overhead costs for the doctors in the group. The downside is you are an employee and it is not your own business if that is what you want but that is going to only get tougher to do in the future.

In the end the doctors who are smart business men/women tend to be pretty successful. Unfortunately most doctors are not the most business and financial savvy people.

 

[Law2Doc]

yea, and can you see that part where it says ADJUSTED FOR PURCHASING POWER?

This kind of chart doesn't mean US doctors are earning too much for their labors but that Germans are earning too little. It even hints that that's the take home message you are supposed to take -- it says Germans poor doctors, not the US's rich ones. I think you have to realize that to go into medicine you don't just have to invest loan money, but you have to invest time -- you will be in school and training for over a decade, working as an apprentice for 80 hours per week for peanuts for years, staying up all night taking care of patients regularly, not just once in a while. Having worked in a profession with long hours without the kind of initial training and hours but with pretty good pay, I have to say that doctors earn much of what they get. Remember you aren't just getting paid for the 80 hours per week, you are getting paid for the pretty substantial amount of tine and effort you have been putting in since college to get to this point. The guy at Wallmart didn't put in that kind of effort and thus his hour of work is not as valuable.

But you guys are missing the Forrest for the trees -- you skipped a relatively informed article and focused in on the largely uninformed comments. The article pretty aptly demonstrates that medicine is not so well insulated from the economy as some of the preallo mantras of steady six digit pay and job security seem to think. That's the take home message here, not that *****s think doctors are piggy.

 

[Law2Doc]

...

In the end the doctors who are smart business men/women tend to be pretty successful. ...

I think you are banking on truisms that made sense in prior years, before there were midlevels out there willing to do the work cheaper, and before you depended on declining reimbursements to earn your keep, and back when healthcare wasn't nearly as expensive and nobody realistically in this country thought of healthcare as a right. A lot of that has changed, and the "just be a smart business person" notion doesn't hold as much water. In a bad economy if your fixed costs are higher (than eg a midlevel with half the debt and training) and you have no ability to raise prices (as is the case in a reimbursement setting), you can be the smartest businessman in the world but you are still not going to make payroll. This issue has been brewing for a while, but is really becoming more obvious in the bad economy.

Anyway, the take home message of the article is that it's a scary new world for doctors, not that the comments have any credence.

 

[Knocked Up]

This kind of chart doesn't mean US doctors are earning too much for their labors but that Germans are earning too little. It even hints that that's the take home message you are supposed to take -- it says Germans poor doctors, not the US's rich ones. I think you have to realize that to go into medicine you don't just have to invest loan money, but you have to invest time -- you will be in school and training for over a decade, working as an apprentice for 80 hours per week for peanuts for years, staying up all night taking care of patients regularly, not just once in a while. Having worked in a profession with long hours without the kind of initial training and hours but with pretty good pay, I have to say that doctors earn much of what they get. Remember you aren't just getting paid for the 80 hours per week, you are getting paid for the pretty substantial amount of tine and effort you have been putting in since college to get to this point. The guy at Wallmart didn't put in that kind of effort and thus his hour of work is not as valuable.

But you guys are missing the Forrest for the trees -- you skipped a relatively informed article and focused in on the largely uninformed comments. The article pretty aptly demonstrates that medicine is not so well insulated from the economy as some of the preallo mantras of steady six digit pay and job security seem to think. That's the take home message here, not that *****s think doctors are piggy.

Nurses seem to be doing fine. More and more DNP programs are opening every year. Notice how all the backlash is focused on physicians and not Dr. Nurses. Maybe because people can sympathize with Noctors and Dr. CNA?

PS. I am counting down the minutes now until I get a thorough verbal from Law2Doc, Medicinesux, and Taurus (he still around here anymore...?).

 

[notbobtrustme]

Tangent (I apologize):

*The ER is not a good business model and needs to be remodeled.

**Honestly, I would like to think that doctors do their job for the love of helping others rather than the $ that comes with it. Got to have faith in humanity.

That's not how society works. Otherwise, you could generalize to everyone. Firefighters should protect people for the love of helping others. Policemen should protect people for the love of helping others. Pharmaceuticals should donate their drugs to help others.

We simply don't live in a society like that. A doctor is a job, first and foremost, and one that people spend a dozen years, if not more, to train for. Yes, the primary responsibility of most physicians to help and heal others, but at the same time, they have to be compensated for the abilities commiserate with their experience and need. No one bats an eye when an I-banker makes a million dollars (classified as capital gains so they don't even pay that many taxes on it) bankrupting people but when a doctor makes a decent living, then people come out with the pitchforks and I frankly can't understand why.

 

[btown8908]

That's not how society works. Otherwise, you could generalize to everyone. Firefighters should protect people for the love of helping others. Policemen should protect people for the love of helping others. Pharmaceuticals should donate their drugs to help others.

We simply don't live in a society like that. A doctor is a job, first and foremost, and one that people spend a dozen years, if not more, to train for. Yes, the primary responsibility of most physicians to help and heal others, but at the same time, they have to be compensated for the abilities commiserate with their experience and need. No one bats an eye when an I-banker makes a million dollars (classified as capital gains so they don't even pay that many taxes on it) bankrupting people but when a doctor makes a decent living, then people come out with the pitchforks and I frankly can't understand why.

I agree with your sentiments. I did say "I would like to think" as in I would hope that's how it should be some day. You're right: the society we live in permits that our services should be well compensated, but if you were to go to another country as some others have pointed out, that is not the case. For instance, the UST article that cites Europeans make (on avg.) less than U.S. MDs. Why? Different political/economic structure and maybe some other variables tossed in there. I don't disagree with making that much $ but I don't think my skills are any more valuable than an engineer or lawyer (albeit they have just as high of salaries). In short (not sure where i'm going with this), I guess I am hoping that we can move towards a society where money is not valued first.

 

[deleted393595]

If the "lowest paid" doctor is still making twice, maybe even three times as much as the average person, people are still going to be upset. People will pay $9 a beer while watching Michael Vick rake in $100 million, but god forbid you fork over $20 for a ****in co-pay. 😡

And the average doc spends many times more than the average person slaving away in school and residency.

Tangent (I apologize):

*The ER is not a good business model and needs to be remodeled.

Although it would be nice to be paid for seeing those patients, what's good business is not necessarily what's right.

 

[Dr Love]

But you guys are missing the Forrest for the trees -- you skipped a relatively informed article and focused in on the largely uninformed comments. The article pretty aptly demonstrates that medicine is not so well insulated from the economy as some of the preallo mantras of steady six digit pay and job security seem to think. That's the take home message here, not that *****s think doctors are piggy.

You speak the truth.👍

Unfortunately, I think medical students are shooting themselves in the foot by supporting legislation that will ultimately hurt both them and patients (such as expanding Medicare, supporting an individual mandate, etc).

 

[notbobtrustme]

You speak the truth.👍

Unfortunately, I think medical students are shooting themselves in the foot by supporting legislation that will ultimately hurt both them and patients (such as expanding Medicare, supporting an individual mandate, etc).

Medicare is absolutely necessary, as private insurance for older people, especially with regard to those with chronic conditions, is fairly unaffordable. As people near retirement, their income drops and they have to rely more on SS/retirement savings which are prone to fluctuations based on the market. This is at a time when their medical expenses will rise. What we need is sensible medicare reform, involving means-testing, reformation of the disbursement schedule, etc etc. We shouldn't be so blinded by greed that a substantial portion of the population suffers greatly for it. Healthcare is one product that everyone will need. This isn't toothpaste or an Xbox. We are talking about people's quality and quantity of life. That should remain at the forefront of any talk of healthcare reform.

Doctors will always be well compensated, however, we are witnessing the demise of private practice as it currently stands.

 

[Lilpip]

It always tickles my funny bone that the public expects doctors and lawyers to do the most pro-bono work and then flips right around and calls them the most greedy the first chance they get. Where did the whole expectation for free treatment/work come from anyway?

 

[BOSS Man]

How was that a personal attack? All things must be considered when evaluating someone's credibility. Seems very trollish to me...

I REPEAT

1) I backed up my claim with genuine sources and graphs

2) I named my handle after my grandfather - nothing more nothing less. Please don't try to read any ideology into it. If you know anything about Hitler, then the 1st thing you would realize was that the military betrayed him!

SS, don't listen to people like this, when they make such remarks. Some stuff you just have to let slide. They're just some people that must try their all to make a point, whether valid or invalid.

 

[johnisles2011]

If what you're saying is true, I literally don't understand how German doctors aren't ALL bankrupt. I also don't understand why any German chooses to go into medicine. Two things must be true if everything else you're saying is true: med education must be incredibly heavily subsidized, and malpractice must be dealt with much more efficiently than it is in this country.

Consider other professions with considerable post-college training, IE, lawyers, MBAs, and doctors. Doctors should be able to make similar amounts of money to them. THe difference is the doctors all fall in closer to a certain average, while MBAs and lawyers can vary very far across the spectrum (spectacularly wealthy to middle class). Now add in the incredible legal exposure doctors have and the price of their education...

 

[Lexdiamondz]

Do the math - a 200K tuition debt does not call for a 6X salary for LIFE!

It's not just the debt, its the debt + the opportunity cost of not being able to really earn a living until you're in your 30's at the very earliest.

200k debt plus 8% interest essentially adds 16k to that debt every year you don't reduce the principal. Even if you pay it off in 10 years ( a remarkably short time) you end up paying, after interest, almost 300k.

Add to that the fact that as a new physician, you haven't been able to actually accumulate money in the last 8-10 years you were in undergrad, medical school or if you took a year or two off and you're looking at anywhere from 300-400k in lost salary that you would have earned if you were working an entry-level job making 30-40k a year out of high school or even out of undergrad. Add to that your student loans from Undergrad and you essentially missed out on anywhere from 500-750 thousand dollars of income before you even have had a job.

THAT is why doctors in the US are paid 5 times more than doctors in Germany. Because for alot of us, we start off half a million dollars in the hole before we even see a paycheck.

 

[Charles Darwin]

SS, don't listen to people like this, when they make such remarks. Some stuff you just have to let slide. They're just some people that must try their all to make a point, whether valid or invalid.

The SDN community has already established that SS is a troll. Had you continued to read you would've realized that. 😉


Anyway, I agree with L2D. The economy affects everyone regardless of profession; primary care physicians in private practice are especially not protected by economic downturns...

 

[mishaS]

Back to the topic, the cost of healthcare treatment has been growing at unsustainable rates for far too long. This has far more to do with the combination of over-treatment on the side of physicians for both personal monetary gain, as well as use new/expensive tools and the near need for their use on patients who demand the very best treatment rather than a cheaper, adequate, treatment. I saw an article a while ago discussing the steadily decreasing auscultation skills of physicians as a result of reliance on echocardiography; despite the much higher cost of the echo, it's more accurate, has better reimbursement with insurance, and will let the physician avoid a costly malpractice suit, so it only makes sense to send every patient with a suspicious sound to get one rather than learning to distinguish murmurs and diagnose with the scope.

This is only a sign that it's finally coming to a head, with the government simply being unable to pay for the ever increasing costs of healthcare. There will be some difficult questions which will need to be answered in regards to things like end of life care, cancer treatments, among other things soon enough. The adjustments to come will be painful, but necessary, and unavoidable.

 

[45408]

In the end the doctors who are smart business men/women tend to be pretty successful.

Yeah, back in the day before the Stark Laws. Good business sense still helps, of course, but this isn't your dad's private practice.

 

[boggvir]

THAT is why doctors in the US are paid 5 times more than doctors in Germany. Because for alot of us, we start off half a million dollars in the hole before we even see a paycheck.

No that's not why. No such calculation was ever made by anyone who was in charge of deciding payments.

You can argue doctors are way underpaid or way overpaid (I'm totally not venturing there) but reimbursement is not, and has never been decided in that way. For any profession. That's why a longer residency doesn't always pay more than a shorter one. Let alone comparisons between entirely different professions.

 

[Lexdiamondz]

No that's not why. No such calculation was ever made by anyone who was in charge of deciding payments.

You can argue doctors are way underpaid or way overpaid (I'm totally not venturing there) but reimbursement is not, and has never been decided in that way. For any profession. That's why a longer residency doesn't always pay more than a shorter one. Let alone comparisons between entirely different professions.

Honestly if physicians were not well compensated then you wouldn't have anybody becoming doctors given how much people invest their time, effort and talent into becoming one. Passion aside, if someone told you that you had to go through a decade of schooling and an additional 3-5 years of training to be paid the same amount of money as a bus driver while working more hours a week and having the added stress of dealing with peoples lives and well-being, the overwhelming majority of people wouldn't do it. Ultimately the salary is an incentive for people to undergo the 12 year hazing that is pre-med undergrad, med school and residency.

 

[cyanide12345678]

If German physicians are being paid around 50K for medical work then they are being under paid. That does NOT mean that American doctors are being over paid. Sure someone working at mcdonalds straight out of highschool may feel that we're making a lot of money, but they took the easier path in life and didn't have to go through 4 years of college + 4 years of medical school + 3 - 5 years of residency (working 80 hours a week being paid about what the person in mcdonalds makes if you standardize for number of hours worked).

Yes being a doctor is a noble profession, and there should in theory be some indifference towards what we make. But, after investing so many years of our lives and countless sleepless nights and hours and hours of work, I think we deserve a little stability in our lives where we can atleast give our children with the best possible in life.

And heres a simple analysis between an engineer and a doctor just to show that we don't quite make ridiculous amounts of money. So, an engineer will head to work and make an average of 80K in 4 years (starting salary avg is 70K but I'm accounting for the sign up bonus and the 5% annual pay increase). At the end of 4 years the engineer will make about 300K. The medical student will have 200K of debt. Net difference = 500K

In the next 3 years, engineer makes around another 270K (assuming 90K salary after 4 years experience...and this is a low estimate considering I know chemical engineers with a starting salary of 100K ). So, 270K in 3 years at 40 hrs a week (47 dollars/hr). The residents will make 150K in 3 years at 80 hours a week (oh and thats 13 dollars/hr 🙂..after 8 years of higher secondary education the poor residents make 13 dollars an hour 😛 ).

So the difference is $34/hr and the amount of wage a resident was paid less than an engineer if the number of hours a resident works is accounted for then becomes 34/hr x 80 hrs/week x 48 weeks/yr x 3 years = about 400K (lots of gross approximations going on but you get the idea)

Net difference for value of work = 900K

Now throw in interest from our student loans 🙂 and throw in the fact that we get sued. oh and throw in the fact that we're working 60 hours a week for 200K which is only marginally different when normalized for the number of hours we work. And throw in the fact that we pay higher taxes because we're in a different tax bracket 🙂 I'd say we'd even up with an engineer after atleast about 15 years of practice. And in the process we essentially give up our entire youth to hard work (and we sacrifice valuable time we could be spending with our families). I think for the price we pay, we deserve a pretty damn good compensation.

Sorry for the extensive belaboring.

 

[boggvir]

LOL @ 'give up youth'. Working in a cubicle in your 20s is not much of a youth. I'd rather be in medical school.

 

[Signifier]

For residents like Prowler and Law2Doc, what are you guys most concerned with in the coming years?

 

[boggvir]

Honestly if physicians were not well compensated then you wouldn't have anybody becoming doctors given how much people invest their time, effort and talent into becoming one. Passion aside, if someone told you that you had to go through a decade of schooling and an additional 3-5 years of training to be paid the same amount of money as a bus driver while working more hours a week and having the added stress of dealing with peoples lives and well-being, the overwhelming majority of people wouldn't do it. Ultimately the salary is an incentive for people to undergo the 12 year hazing that is pre-med undergrad, med school and residency.

Believe it or not, they would because that's why people still want to be doctors in countries where they are underpaid. There are plenty of premeds who would and if not there are plenty of IMGs who will come and do the job with outcomes just as good or better than American educated grads. The moral of the story is, plenty of people want to be doctors for many reasons (not least that even where doctors are underpaid, it is still considered a pretty prestigious thing to be, and a LOT of people are attracted to that) and that's not going to change.

In any case, my post was simply commenting on the fact that people who decide reimbursement don't use the reasoning mentioned by the post I quoted. It's an absurd way to look at it. Otherwise an art history major would be paid the same as an engineer or a computer science major, and all longer residencies would be paid more than all shorter residencies.

 

[cyanide12345678]

Believe it or not, they would because that's why people still want to be doctors in countries where they are underpaid.

Not true. I have lived 19 years in Pakistan and have some 10 or 15 friends in medical schools in Pakistan. Each and everyone of them wants to take the USMLE and eventually wants to practice in America (or australia or canada or where ever the payoff is higher).

But nonetheless I do agree with you in that people become doctors because of several reasons including social prestige, financial security, helping humanity etc.

 

[cyanide12345678]

LOL @ 'give up youth'. Working in a cubicle in your 20s is not much of a youth. I'd rather be in medical school.

Being home by 5 pm is what I meant. 9 - 5 is not that bad. They have time for other things in life. Have you ever had an engineer or someone else ask questions about when it would be the best time to have children and have a family. But when your working 80 hours a week (not to mention when your working over the weekends and holidays as well), there is little else you can do in life. So my point was that doctors deserve the compensation they get!

 

[Lexdiamondz]

Believe it or not, they would because that's why people still want to be doctors in countries where they are underpaid. There are plenty of premeds who would and if not there are plenty of IMGs who will come and do the job with outcomes just as good or better than American educated grads. The moral of the story is, plenty of people want to be doctors for many reasons (not least that even where doctors are underpaid, it is still considered a pretty prestigious thing to be, and a LOT of people are attracted to that) and that's not going to change.

1) Not true about doctors in countries which are underpaid. In fact, I know PLENTY of physicians from Latin America, the Caribbean and Africa who got the hell out the second they were able to leave their homelands and come to the US and Canada. The desire of people to be well-compensated for their efforts is a fundamental characteristic of people who seek higher education, period. Hell, the fact that many of them have impoverished families makes money an even bigger factor than we would think in the United States.

2) Even if it were the case (which it isn't), people in other countries don't have the same opportunity costs as Americans when it comes to medical school. In most other countries, one can be a doctor 6 years out of High School (or 6th form or whatever their equivalent is) and they haven't got to go hundreds of thousands of dollars into debt to do so.


People do want to become doctors for a diverse number of reasons, but money is in many cases a huge motivating factor.

 

[pooker]

I sometimes think people wouldn't be satisfied until doctors became slaves of the state.

 

[Law2Doc]

For residents like Prowler and Law2Doc, what are you guys most concerned with in the coming years?

Right now we are seeing folks coming out of residency and fellowship in fields like radiology and pathology and having a hard time finding jobs, mainly because the old timers can no longer afford to retire and so their spots don't open up. I expect this issue to expand to additional specialties before long if the economy doesn't do an about face, and as more midlevels get utilized. That's the most pressing concern for those of us only a few years away from looking for employment.

 

[One Hip Guy]

I don't know why there are so many doomsday threads on this board, it's not logical at all.

1.) This article is kind of bogus. It paints this portrait that a large percentage of doctors are struggling and that's just not true. Sure, A LOT of doctors might be going broke but that doesn't mean that as a large the field is suffering.

2.) I mean, do you guys seriously think doctors will ever not make good money? Sure, it might happen for a small period of time but as some people have already mentioned, the cost to become a doctor is so great that I can hardly imagine doctors ever standing for mediocre salaries. Jobs are just like commodities; if factors decrease the supply, the demand goes up and as a result more profit is made. Stay thirsty, my friends.

 

[NickNaylor]

I don't know why there are so many doomsday threads on this board, it's not logical at all.

1.) This article is kind of bogus. It paints this portrait that a large percentage of doctors are struggling and that's just not true. Sure, A LOT of doctors might be going broke but that doesn't mean that as a large the field is suffering.

2.) I mean, do you guys seriously think doctors will ever not make good money? Sure, it might happen for a small period of time but as some people have already mentioned, the cost to become a doctor is so great that I can hardly imagine doctors ever standing for mediocre salaries. Jobs are just like commodities; if factors decrease the supply, the demand goes up and as a result more profit is made. Stay thirsty, my friends.

Keep drinkin the Koolaid.

 

[IMSingular]

It's not just the debt, its the debt + the opportunity cost of not being able to really earn a living until you're in your 30's at the very earliest.

200k debt plus 8% interest essentially adds 16k to that debt every year you don't reduce the principal. Even if you pay it off in 10 years ( a remarkably short time) you end up paying, after interest, almost 300k.

Add to that the fact that as a new physician, you haven't been able to actually accumulate money in the last 8-10 years you were in undergrad, medical school or if you took a year or two off and you're looking at anywhere from 300-400k in lost salary that you would have earned if you were working an entry-level job making 30-40k a year out of high school or even out of undergrad. Add to that your student loans from Undergrad and you essentially missed out on anywhere from 500-750 thousand dollars of income before you even have had a job.

THAT is why doctors in the US are paid 5 times more than doctors in Germany. Because for alot of us, we start off half a million dollars in the hole before we even see a paycheck.

Pretty bad financial math! Too much double counting.

Let us look at the balance sheet at say age of 30 when a traditional physician is out of residency. Average debt with interest is likely to be around 200,000. (Average loan taken is about 150,000). At the same age the alternative of getting 30-40K may not lead to any savings at all. After paying payroll taxes, income taxes etc nothing will be left. Consider you are doing a PhD in science where they are generally paid assistanceship. Up until you are going through pos-doc etc you save almost nothing. So at the age of 30 your alternative balance sheet is close to zer, while going to medical school will have a debt of 200,000. Some residencies may go for longer time but those specialities will pay higher too, and fellowship may be paying 100,000 instead of 60,000.

Now the worker may seem to be puting more money in Social Security through payroll taxes. Well. Soicial Security takes into account only the best 35 years.

In any case all these computations using averages are superficial. You have to take your particular situation, and see what is the best financial alternative for you. Wealth management needs to be done at particular personal level. 100,000 undergraduate dollar debt, if you have any, needs to be treated as sunk cost in comparing going physician route instead of your best alternative, and see whether this additional debt is good investment.

Don't get 😕 with what is average; analyze your particular case. Stephen J Gould, who had some sort of cancer, was given few months notice on his life by his doctor on average basis. Then he analyzed it his particular case and found that he probably has much longer life expectancy and lived much much longer.

Health managment and wealth management needs to be done at personal level. The devil is in details.

 

[NickNaylor]

Pretty bad financial math! Too much double counting.

Let us look at the balance sheet at say age of 30 when a traditional physician is out of residency. Average debt with interest is likely to be around 200,000. (Average loan taken is about 150,000). At the same age the alternative of getting 30-40K may not lead to any savings at all. After paying payroll taxes, income taxes etc nothing will be left. Consider you are doing a PhD in science where they are generally paid assistanceship. Up until you are going through pos-doc etc you save almost nothing. So at the age of 30 your alternative balance sheet is close to zer, while going to medical school will have a debt of 200,000. Some residencies may go for longer time but those specialities will pay higher too, and fellowship may be paying 100,000 instead of 60,000.

Now the worker may seem to be puting more money in Social Security through payroll taxes. Well. Soicial Security takes into account only the best 35 years.

In any case all these computations using averages are superficial. You have to take your particular situation, and see what is the best financial alternative for you. Wealth management needs to be done at particular personal level. 100,000 undergraduate dollar debt, if you have any, needs to be treated as sunk cost in comparing going physician route instead of your best alternative, and see whether this additional debt is good investment.

Don't get 😕 with what is average; analyze your particular case. Stephen J Gould, who had some sort of cancer, was given few months notice on his life by his doctor on average basis. Then he analyzed it his particular case and found that he probably has much longer life expectancy and lived much much longer.

Health managment and wealth management needs to be done at personal level. The devil is in details.

I think you missed the entire concept of opportunity cost. It doesn't really matter that you're left with no savings or not or how much of that salary goes into taxes. The fact is that you ARE taking a salary, which is significantly more than what you're doing by going to college and medical school.

The BLS said that in Q3 of 2011, the averages earnings of a high school graduate were about $33k annually. So if you were to forgo college and medical school and simply work at that average salary, you would gross about $360k over 11 years (4 years for undergrad, 4 years for medical school, and 3 years for a "short" residency). This income represents the opportunity cost of going to undergrad, medical school, and residency rather than simply working straight out of high school.

If you're a college graduate, your average earnings were about $59k annually. Over the 7 years (4 years of medical school and 3 years of residency) of graduate training, that translates to about $419k that you've lost in earnings to go to medical school.

Now factor in the actual costs of that training. Per the College Board, the actual average cost of attending a college (i.e., the cost after grants, financial aid, etc. rather than the average of the published costs) was $8,244/year for residents of state schools, $12,526 for non-residents of state schools, and $28,500 for private schools. For simplicity let's use the average of about $16k annually. Over four years, that's about $65k for your undergrad.

Now for medical school. The average total cost of attendance is $49,298 for state schools and $66,984 for private schools. This is according to the "published" costs so the actual costs might be lower, but unfortunately I don't have that data. Again, let's use the average of about $58k, which translates to about $232k over four years.

So at your medical school graduation, compared to a high school graduate, you've lost $264k in potential wages and paid $65k for undergrad and $232k for medical school. The total cost here is $561k. And that doesn't even include your loan interest!

Compared to a college graduate, you've lost $236k in potential wages and paid $232k for medical school, a total cost of $468k. Again, this doesn't include the cost of your loans.

Fortunately after residency you start getting paid. For simplicity I'll say that the average resident salary is $50k annually. Over three years, that means you've actually grossed $81k more than the high school graduate but lost $27k compared to the college graduate.

So, by the time you start working as a physician, this is how things stand:

Compared to a high school graduate, you're $480k "behind."
Compared to a college graduate, you're $495k "behind."

Also keep in mind the difference in how long each "class" can work. Assuming you retire at 65, high school graduates can work 47 years, college graduates 43 years, and physicians 36 years. Given the average salaries and above and assuming that you went into peds, which has an average cash salary of about $190k, your lifetime earnings would be:

High school graduate: $33k at 47 years = $1.55 million
College graduate: $59k at 43 years = $2.54 million
Pediatrician: $190k at 36 years = $6.84 million

After adjusting for costs:

High school graduate net: $1.55 million - $0 = $1.55 million
College graduate: $2.54 million - $0.065 million = $2.48 million
Pediatrician: $6.84 million - $0.48 million = $6.36 million

Develop an opinion of that as you will. This analysis is obviously superficial and painting with broad strokes, but it's still interesting nonetheless.

 

[IMSingular]

I think you missed the entire concept of opportunity cost. It doesn't really matter that you're left with no savings or not or how much of that salary goes into taxes. The fact is that you ARE taking a salary, which is significantly more than what you're doing by going to college and medical school.

The BLS said that in Q3 of 2011, the averages earnings of a high school graduate were about $33k annually. So if you were to forgo college and medical school and simply work at that average salary, you would gross about $360k over 11 years (4 years for undergrad, 4 years for medical school, and 3 years for a "short" residency). This income represents the opportunity cost of going to undergrad, medical school, and residency rather than simply working straight out of high school.

If you're a college graduate, your average earnings were about $59k annually. Over the 7 years (4 years of medical school and 3 years of residency) of graduate training, that translates to about $419k that you've lost in earnings to go to medical school. One also should miss the sunk cost: your undergraduate debt that you have to pay whether you go to medical school or not, and should be included in both alternatives and essentially cancels out except for interest part.

Now factor in the actual costs of that training. Per the College Board, the actual average cost of attending a college (i.e., the cost after grants, financial aid, etc. rather than the average of the published costs) was $8,244/year for residents of state schools, $12,526 for non-residents of state schools, and $28,500 for private schools. For simplicity let's use the average of about $16k annually. Over four years, that's about $65k for your undergrad.

Now for medical school. The average total cost of attendance is $49,298 for state schools and $66,984 for private schools. This is according to the "published" costs so the actual costs might be lower, but unfortunately I don't have that data. Again, let's use the average of about $58k, which translates to about $232k over four years.

So at your medical school graduation, compared to a high school graduate, you've lost $264k in potential wages and paid $65k for undergrad and $232k for medical school. The total cost here is $561k. And that doesn't even include your loan interest!

Compared to a college graduate, you've lost $236k in potential wages and paid $232k for medical school, a total cost of $468k. Again, this doesn't include the cost of your loans.

Fortunately after residency you start getting paid. For simplicity I'll say that the average resident salary is $50k annually. Over three years, that means you've actually grossed $81k more than the high school graduate but lost $27k compared to the college graduate.

So, by the time you start working as a physician, this is how things stand:

Compared to a high school graduate, you're $480k "behind."
Compared to a college graduate, you're $495k "behind."

Also keep in mind the difference in how long each "class" can work. Assuming you retire at 65, high school graduates can work 47 years, college graduates 43 years, and physicians 36 years. Given the average salaries and above and assuming that you went into peds, which has an average cash salary of about $190k, your lifetime earnings would be:

High school graduate: $33k at 47 years = $1.55 million
College graduate: $59k at 43 years = $2.54 million
Pediatrician: $190k at 36 years = $6.84 million

After adjusting for costs:

High school graduate net: $1.55 million - $0 = $1.55 million
College graduate: $2.54 million - $0.065 million = $2.48 million
Pediatrician: $6.84 million - $0.48 million = $6.36 million

Develop an opinion of that as you will. This analysis is obviously superficial and painting with broad strokes, but it's still interesting nonetheless.

Have I lost opportunity cost? I don't think so. Opportunity cost is your best alternative to going to medical school. You have to choose from two options: Medical School or Best Alternative, and needs to be done on individual basis.

 

[NickNaylor]

Have I lost opportunity cost? I don't think so. Opportunity cost is your best alternative to going to medical school. You have to choose from two options: Medical School or Best Alternative, and needs to be done on individual basis.

Opportunity cost is an economic term for which you can ascribe a value. Your previous post gave off the impression that you didn't understand what opportunity cost was since you started talking about taxes and savings, which aren't really all that important in the discussion.

 

[tiedyeddog]

Yahoo had this article on their homepage. I spent a few minutes reading the comments. It was kind of disheartening.... So many people have no idea what it takes to become a doctor and beleive we must have a normal 9-5 job. Eh.

 

[IMSingular]

Opportunity cost is an economic term for which you can ascribe a value. Your previous post gave off the impression that you didn't understand what opportunity cost was since you started talking about taxes and savings, which aren't really all that important in the discussion.

Agreed. You have to assess values to two option from the vantage point of your current position. One option is going to medical school and the other is what is your best alternative. You have to calculate NPV of two alternatives.
About $30,000 annual additional income as a physician should pay for the additional investment, that is debt, of about $200,000. At any event this must be done at personal level just as you would asses some one's health management at personal level. Infact you should do this even if that $200,000 going to come from your own pocket as cash. Miller-Modigliani theorem says that whether it is equity or debt is irrelevent when you consider financial. You have to consider opportunity cost of $200,000 regardless of whether that comes from debt or your savings account.

 

[SSLiebstandarte]

I feel that being a physician in America is a greedy and unethical job.

German physicians are paid less, but genuinely cares about treating a patient, not how to cheat him/her out of as much money as possible.

In fact, is it wrong to say that all physicians in America HARM people rather than help - because by forcing the patients into bankruptcy, they are harming them emotionally and mentally. This is now a viscous loop cycle - they get physically ill from the stress, and then go to doctors again, and become even more broke, more mental stress, which leads to more physical symptoms.

 

[AntiHouseMD]

I feel that being a physician in America is a greedy and unethical job.

German physicians are paid less, but genuinely cares about treating a patient, not how to cheat him/her out of as much money as possible.

In fact, is it wrong to say that all physicians in America HARM people rather than help - because by forcing the patients into bankruptcy, they are harming them emotionally and mentally. This is now a viscous loop cycle - they get physically ill from the stress, and then go to doctors again, and become even more broke, more mental stress, which leads to more physical symptoms.

Do American physicians cause that to happen? I would think insurance companies and HMO's cause high prices. Who is to say that German physicians care more about their patients than American doctors or are any more honest? You're generalizing about an entire profession by using common stereotypes.

 

[AntiHouseMD]

Double-Post. Just delete this one. Sorry.

 

[cyanide12345678]

Have I lost opportunity cost? I don't think so. Opportunity cost is your best alternative to going to medical school. You have to choose from two options: Medical School or Best Alternative, and needs to be done on individual basis.

Ofcourse you have an opportunity cost. Everyday that I choose to spend in college, I could have been spending that time flipping burgers and making 8 dollars an hour. Similarly, while one is studying in medical school, they could be using that time to earn certain wages which is a cost the person has to pay by going to medical school.

 

[cyanide12345678]

I feel that being a physician in America is a greedy and unethical job.

German physicians are paid less, but genuinely cares about treating a patient, not how to cheat him/her out of as much money as possible.

In fact, is it wrong to say that all physicians in America HARM people rather than help - because by forcing the patients into bankruptcy, they are harming them emotionally and mentally. This is now a viscous loop cycle - they get physically ill from the stress, and then go to doctors again, and become even more broke, more mental stress, which leads to more physical symptoms.

Doctors themselves have a very small role in being able to determine the price of health care. The big play makers are the insurance companies and the hospitals themselves.

 

[IMSingular]

Ofcourse you have an opportunity cost. Everyday that I choose to spend in college, I could have been spending that time flipping burgers and making 8 dollars an hour. Similarly, while one is studying in medical school, they could be using that time to earn certain wages which is a cost the person has to pay by going to medical school.

As I said, opportunity cost is the best alternative to the option of going to medical college. That's the basic concept in corporate finance used in making decision on an investment opportunity. If your best alternative to medicine is flipping hamburger then taht is what it is.

 

[NickNaylor]

I feel that being a physician in America is a greedy and unethical job.

German physicians are paid less, but genuinely cares about treating a patient, not how to cheat him/her out of as much money as possible.

In fact, is it wrong to say that all physicians in America HARM people rather than help - because by forcing the patients into bankruptcy, they are harming them emotionally and mentally. This is now a viscous loop cycle - they get physically ill from the stress, and then go to doctors again, and become even more broke, more mental stress, which leads to more physical symptoms.

You do realize that the physicians account for something like 5-10% of the overall cost of healthcare, right? So even if you decided to work FOR FREE the patient STILL wouldn't see that large of a decrease in their healthcare costs.

 

[cyanide12345678]

you do realize that the physicians account for something like 5-10% of the overall cost of healthcare, right? So even if you decided to work for free the patient still wouldn't see that large of a decrease in their healthcare costs.

+1

 

[btown8908]

Tangent again (I apologize):

I wonder what people's reaction would be if they all had to take a position with Medecins Sans Frontieresn (aka Doctors Without Borders) before graduating med school or finishing residency?

 

[Law2Doc]

As I said, opportunity cost is the best alternative to the option of going to medical college. That's the basic concept in corporate finance used in making decision on an investment opportunity. If your best alternative to medicine is flipping hamburger then taht is what it is.

You have to adjust the concept of opportunity cost for the student base we are talking about. The person who goes to med school is among the smartest and most ambitious of professional students. You need a higher GPA to go to med school than any other professional school, you need to jump through more hoops, you have to interview well. If you guys think that this group, on average, is deciding between med school or being a fry cook, you are out of your mind. Pretty much anyone in med school is choosing that over a whole host of decent career options, most of which these individuals never explored. Whereas the average college grad may end up earning $50k, or whatever you are ascribing to it, the average subset of college who is smart enough to score a 3.5/31 or above while holding down a host of extracurriculars is the kind of alpha dog who would be capable of averaging a lot higher than that average. Atul Gawande's made this point in one of his New Yorkers articles -- the person who succeeds in medicine is likely to succeed anywhere and so it's foolish to ever compare this persons plight to the national averages. So like it or not, your opportunity cost on another path is huge,even if you didn't see it. Take it from someone previously on a high net worth trajectory, you are not maximizing your income in medicine, simply because this is a field that holds you out of the job market for a decade. The time value of money (a basic finance concept -- that a little money now is often worth a lot if money later) has a much bigger impact than you realize.

But again I think you guys are straying from the point of the thread, that nothing about this career is guaranteed, and if the economy persists, a lot of the assumptions in your calculations will be pie dreams. You are banking on something a lot of years out, in an economy that is certainly not trending in that direction. My take-home point for this article -- only do this path because you like it because a lot if the other reasons are going by the wayside.

 

[Skinceutical]

This has far more to do with the combination of over-treatment on the side of physicians for both personal monetary gain...

Please elaborate. Are there specific instances you have observed where a physician over-treated a patient for personal financial gain?

I saw an article a while ago discussing the steadily decreasing auscultation skills of physicians as a result of reliance on echocardiography; despite the much higher cost of the echo, it's more accurate, has better reimbursement with insurance, and will let the physician avoid a costly malpractice suit, so it only makes sense to send every patient with a suspicious sound to get one rather than learning to distinguish murmurs and diagnose with the scope.

I don't understand what the problem is here.

Cardiac auscultation is an inexact, highly observer-dependent science. There's no dearth of studies out there that have shown that even experienced cardiologists (who have been extensively taught how to "distinguish murmurs and diagnose with the scope") have difficulty picking up mild-moderate pathology on auscultation alone. If there's appropriate clinical suspicion, then what's wrong with sending a patient for a safe, non-invasive, highly accurate diagnostic test?

 

[Law2Doc]

...

I don't understand what the problem is here.

Cardiac auscultation is an inexact, highly observer-dependent science. There's no dearth of studies out there that have shown that even experienced cardiologists (who have been extensively taught how to "distinguish murmurs and diagnose with the scope") have difficulty picking up mild-moderate pathology on auscultation alone. If there's appropriate clinical suspicion, then what's wrong with sending a patient for a safe, non-invasive, highly accurate diagnostic test?

The article (or one similar) was in NEJM a few years back. I think the problem is that back in the day, doctors were able to come up with diagnosis that were generally pretty accurate without sending patients through a barrage of tests. Today, both because of convenience, loss of these skills, and defensive medicine, we are losing (or perhaps have lost) this skill set and simply sending patients off for studies. An NP can send a patient off for studies just as effectively as a doctor. Heck, this plays right into the hands of folks who suggest medicine just become a set of algorithms for computers like Watson to follow. If you are going to rely on the cardiologist or radiologist to diagnose every patient, and the diagnosis more or less dictates the treatment, what value added is there to primary care? Part if being a doctor is being able to examine a patient and through history and physical exam come up with a pretty comprehensive but short list of differential diagnosis. You should be able to accurately come up with a differential for most patients with nothing more than your eyes, ears, nose and fingers. And THEN start using tests to narrow the differential. Not just blindly send every patient for an EKG and CT and sip your coffee while you wait for the specialists to tell you what is wrong with your patient. There's nothing wrong with getting a test to prove a diagnosis or to rule out something in your differential. There is a big problem with relying on this in lieu of coming up with a differential.

 

[AntiHouseMD]

The article (or one similar) was in NEJM a few years back. I think the problem is that back in the day, doctors were able to come up with diagnosis that were generally pretty accurate without sending patients through a barrage of tests. Today, both because of convenience, loss of these skills, and defensive medicine, we are losing (or perhaps have lost) this skill set and simply sending patients off for studies. An NP can send a patient off for studies just as effectively as a doctor. Heck, this plays right into the hands of folks who suggest medicine just become a set of algorithms for computers like Watson to follow. If you are going to rely on the cardiologist or radiologist to diagnose every patient, and the diagnosis more or less dictates the treatment, what value added is there to primary care? Part if being a doctor is being able to examine a patient and through history and physical exam come up with a pretty comprehensive but short list of differential diagnosis. You should be able to accurately come up with a differential for most patients with nothing more than your eyes, ears, nose and fingers. And THEN start using tests to narrow the differential. Not just blindly send every patient for an EKG and CT and sip your coffee while you wait for the specialists to tell you what is wrong with your patient. There's nothing wrong with getting a test to prove a diagnosis or to rule out something in your differential. There is a big problem with relying on this in lieu of coming up with a differential.

Unfortunately, with a possible lawsuit as the alternative, most primary care doctors would probably rather punt the case than take the risk. I can't blame them, either.