A detailed analysis a physician’s school debt. Great post from a new blog, Rural Doctoring.
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While I agree with the poster, just to put things in perspective, his view is very shortsighted. This is understandable given that he is living his tough financial times as he writes the post. But extend the scenario out a bit and the argument becomes more untenable. At the “opportunity cost” salary the poster quoted, with yearly raises, a lifetime of work would accrue a net worth of $1,161,000 for the average white-collar worker in the business world. The doctor, making a conservative $125,000 a year and no raises, would end up with a net worth of $4,075,000, even after taking into account educational indebtedness. These calculations are ridiculously simplified and don’t even take into account investment income, spending habits, etc. The doctor appears much better off from a financial perspective when all is said and done. This is why the public has no tolerance for physicians who whine about money.
what is the average white collar worker making after 8 years in their field.
You should compare apples to apples. Comparing net work isn’t a very good marker because maybe doctors are better in general at saving money. Compare salaries and benefits and pensions. I don’t know of a single doctor who gets a pension but i know of a lot of workers who do.
While I was slaving in med. school and working 100 plus hours/week as a resident, I used to always think to myself, what if I spent this kind of time on Wall Street? Well, my little brother did and his income has an extra zero. He had 2 years of grad school.
Thanks for the link, Kevin.
In response to Anonymous #1, I agree that the analysis I presented was not farsighted. In fact, it was specifically limited to the 8-year period of my training. It was not meant to represent a lifetime’s earning potential. You can only calculate opportunity cost–meaningfully–over a fixed term.
As for your net worth calculations, even if we accept your numbers, some physicians might argue that 4x net worth earning potential is poor compensation for the liability risk and general arduousness of an entire career working in medicine. For myself, I haven’t decided on this issue but it should remain an open question.
In response to both Anonymous #1 and #2–future posts will address past and current income scenarios, net worth, and spending patterns. Hopefully this will fill in some of the questions remaining in your minds.
I take heating and air conditioning in high school. At 19, I have people chasing me, and offering me $5000 on the spot to come with them rather than the other guy chasing me.
I know very little about this business, but at 19, I am making $50K. Assuming no raise, I have made $500K by age 30, and lived a comfortable life.
Meanwhile, the doc owes $150K for college, and $250K for med school. He starts making $50K at age 26. Prior to that age, he lives like a destitute pig.
So at age 30, I am ahead by $500K. Doc is still in the hole for $400K and has made $200K. I am $700K ahead. I have earned every penny, of course.
We both go into private practice at 30. He starts netting $500K a year. With his intelligence and energy, in the heating and A/C business, I know enough to fit skyscrapers and to have my own contracting business. What is the upper limit on that? I have to deal with the Mob, which is a reasonable, helpful set of people, once paid off. Doc has to deal with HMO’s and the FBI backing up vans for his records because he upcoded a controversial procedure. They are nuts.
I am also helping 1000’s of people a year to stay healthy, just like the doc.
It’s more than the net worth. It has to to with respect, place in society, and lifestyle. Physicians consider themselves professsionals. Even if going into medicine is not financially motivated, many physicians expect that if they work hard and help people that they will be able to live in a good neighborhood, send their kids to good schools and colleges and maybe take a vacation once in a while. Even if the net worth is 4 times greater, it doesn’t match the cost of the neighborhood, schools, etc.
Thus, the public may have no tolerance when physicians whine about money, but if you can’t keep up with the dentists, laywers, accountants, etc. why go to medical school? The publich should listen to the whining, specifically for primary care. Fewer than half the interns starting their family practice residencies this July will be US medical grads. This is not to disparage some fine medical schools in other countries. But whil John and Jane Q Public may not want to hear physicians whining about reimbursement, they need to realize that in about 5-10 years, their primary care physician (if they use health insurance to pay for health care) will be a non-US medical graduate.
” but if you can’t keep up with the dentists, laywers, accountants, etc. why go to medical school?”
The problem is that for all your bitching on average you outstrip every one of those professions by 50%.
“some physicians might argue that 4x net worth earning potential is poor compensation for the liability risk and general arduousness of an entire career working in medicine. “
There are a hundred jobs just as arduous, many with a much higher death rate, than physicians. And they make less than 1/2 of the average physician. What liability risk? How many physicians actually end up bankrupt as a result of the “liability risk”? 1%? 1/2 of 1%? Do you even know?
“There are a hundred jobs just as arduous, many with a much higher death rate, than physicians. And they make less than 1/2 of the average physician. What liability risk? How many physicians actually end up bankrupt as a result of the “liability risk”? 1%? 1/2 of 1%? Do you even know?”
I see your words, but I see no facts. Come back when you have them. Til then, I will feel free to dismiss your remarks as ravings.
When including the opportunity cost, earnings of MBA’s outstrip all physicians. Lawyers make about as much as specialty physicians, and primary care physicians come in last. The numbers were worked out in the mid-1990’s, it was either NEJM or JAMA.
“make about as much as specialty physicians, and primary care physicians come in last.”
This claim is wrong according to the DOL. Got a link?
“I see your words, but I see no facts.”
You need sources to tell you that your job isn’t as dangerous as a number of jobs in construction, for example? Really?
You guys claim that you’re all about to go bankrupt by liability. Surely you know the percentage? Or maybe it’s so small and so anecdotal that you have literally no clue yet you just whine about it constantly?
I’m guessing it’s choice #2.
The article was in either NEJM or JAMA in 1994.
The DOL talks about salary it is not talking about opportunity cost.
Insurers were really profitable in 1994. How come you don’t cite those statistics when arguing those?
What does insurance profitability have to do with the opportunity cost of medical school?
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