Published 9/10/2019
Eeric Truumees, MD

Medical Student Debt and the Future of Orthopaedic Surgery

Editor’s note: This editorial concludes a two-part series on orthopaedists’ pay. The first editorial appeared in the September issue of AAOS Now. Visit www.aaos.org/aaosnow to read more.

In the first part of this editorial, I assessed whether U.S. orthopaedists are paid too much and compared our incomes to those of other professions across the nation and world. Here, I’ll examine the role of altruism and the impact of student debt on the attractiveness of medicine in general and orthopaedic surgery specifically.

Altruism, professionalism, and the value proposition

Although the U.S. public expects more altruism from healthcare providers than from other professions, the notion has decreased alongside a massive increase in the regulation and expectation of professionalism in the field. Before the 1970s, most U.S. hospitals were philanthropic enterprises. In 1973, President Richard Nixon opened the door to for-profit medical institutions. Since then, even nonprofit hospital systems have been increasingly forced to compete with their for-profit neighbors, leading to more scrutiny of profit and loss rather than healthcare outcomes.

In this environment, and with physicians competing with hospitals for practice employees, including nurses, a reduction in the profit motive is unlikely. Hopefully, ongoing evolution of true, value-based healthcare purchasing can alter this path and compensate all the healthcare stakeholders, including physicians, based on the value of what they provide to patients. Individual physician altruism is laudable (and regularly acknowledged by AAOS by humanitarian awards, etc.), but as an organizing principle, it simply will not work across the vast and complex landscape of healthcare delivery.

As an employee of a nonprofit Catholic healthcare system, I am regularly reminded of Sister Irene Kraus’ pithy quotation, “No margin, no mission.”

The impact of debt

Many articles that criticize “excessive” physician salaries pay short shrift to the debts incurred to become a doctor. Dean Baker, responding to critics of his Politico article, stated that “a debt burden of $250,000 comes to less than $9,000 a year over a 30-year career. That’s less than 4 percent of the average doctors’ pay.” That analysis seems to require a willful setting aside of present value of money considerations. The debt is incurred over eight years, and most doctors have difficulty paying the debt down during residency, leading to four to six years of additional interest charges.

Economists have “done the math” comparing the net worth by age of physicians to other professions. For example, Travis Hornsby compared physicians and plumbers. Even though the model assumed relatively low debt levels and applied a very high 50 percent savings and investment rate, and even though the plumber never started his or her own business (given debt incurred and the much later start to a “real” salary), the physician’s net worth only surpassed the plumber after age 42.

Even without tax-bracket differences and debt service, it takes physicians until age 37 to 39 to “catch up” with other fields. Some articles also mention the opportunity costs associated with the highly competitive and demanding landscape of pre-med, medical school, and residency education. Surveys often put debt in the top three “challenges faced in residency.”

Similarly, in a comparison of physician net worth to that of others making more speculative $250,000 early-career investments (real estate or stocks), the investor was far more likely to become truly rich. Of course, when you only start repaying debt and saving money at age 30, there are considerable risks. Even a normal retirement at age 65 yields a relatively short window to pay school debt, buy a house, save for retirement, etc. If a physician is not able to maintain his or her practice through the critical 40s and 50s, due to medical or other issues, the investment starts looking much more speculative.

The impact of pay on career choice

At the upper end of the physician pay scale, orthopaedic surgery remains one of the more competitive specialties for graduating medical students. Yet we know that potential pay hurts other fields’ ability to attract students. Is this because they are greedy? No, it’s simply a matter of economics. Emergency physician and founder of the White Coat Investor, Jim Dahle, MD, said, “There is a certain subsegment of medical students who literally cannot afford to be pediatricians. … Students are finishing residency with $500,000 in debt in some cases, and pediatricians make $150,000 to $200,000 a year.”

Does the disproportionate pay mean that we should pay orthopaedic surgeons less and primary care doctors more? Although it probably makes sense to pay primary care doctors more, across-the-board reductions in physician pay have net negative consequences on health care in general. This is best seen by looking at other countries.

Even in Canada, debt loads have been shown to affect specialty choice and practice location. Frank Chen compared the experiences of Hong Kong physicians to those in mainland China and noted that in Hong Kong, physicians earned a mean salary of $289,564.56 in annualized U.S. dollars. That compared favorably to U.S. doctor pay and had a strong influence on the fact that half of the top scorers in the college admission test chose medicine. However, in mainland China, physicians made a mean 28,000 Yuan per year in 2013. Plastic surgeons, the most highly paid specialists, made 186,000 Yuan, or $26,334.05, per year. The article quotes an “orthopaedic specialist in a top Shanghai hospital” describing his pay as “nothing short of disgraceful.” Medical students in mainland China have been forced to repeatedly lower their minimum entry criteria.

As with any salary reports by specialty or country, sources vary significantly. Salary Expert, for example, reports Chinese orthopaedic surgeons’ pay as $161,852.81. Most other articles report low base salaries of 1,000 Yuan. Bonuses significantly boost income to 10,000 Yuan for new medical school graduates, gradually rising to 40,000 Yuan for chief surgeons ($5,816.40). “In my department, fresh graduates (young doctors) earn about 8,000 to 10,000 Yuan per month. Chief residents earn a little over 10,000 [Yuan]. Attendings are divided into junior and senior based on experience and earn about 15,000 to 20,000 Yuan, respectively. Associate chiefs and chiefs earn about 30,000 or 40,000 Yuan. This money mostly comes from bonuses,” according to a doctor from mainland China. The article notes that 20 percent of graduating medical students choose to never practice medicine.

In response to lower pay, Chinese surgeons boost their income by accepting cash from companies and patients. In addition, especially in rural areas, “doctors might face hostility, even violence, if patients are not satisfied with the results,” according to the article.

Too many, too few?

In medicine in general and orthopaedics in particular, it is commonly said that, with the aging of the population, we will need to train more doctors. As a result, many new medical schools have opened. From 2007 to 2016, 17 medical schools gained full accreditation. New residency positions have unfortunately not kept up, creating a bottleneck of sorts. As orthopaedic training programs are added and enlarged, the population of practicing orthopaedic surgeons is likely to climb. However, we have the highest number of orthopaedists per capita in the world. Changes in healthcare access, increasing reliance on physician’s assistants and nurse practitioners, and improved technology that speed or obviate surgery may stymie the perceived need for so many new surgeons.

The future

Simply training more doctors and reducing salaries as more individuals compete for jobs is not the answer. Based on the data available, the future of orthopaedic surgery, and medicine more broadly, requires us to continue to attract the “best and brightest” by offering a reasonable return on their years of investment in education and training. Rather than cutting physician pay, we should address the barriers excluding some of the best prospects.

First, we must attract students to less desirable practice locations and underserved patient populations by providing proper incentives. More importantly, we must remove the financial obstacles that impact such choices.

The U.S. system sees university students, even older medical students, as dependents. Families are expected to contribute to their education costs, and family finances play a large role in financial aid eligibility. Elsewhere, in most of Europe, for example, such students are independent adults with little need to rely on their parents’ resources. Obviously, our system limits access for those from poorer families.

Currently, medical student debt is still rising, but there are some potential changes on the horizon. Of the 2020 Democratic candidates running for president, many have plans for free tuition. Although the plans put forward by each candidate differ, they focus on undergraduate education at public universities, as lower undergraduate debt would put students in a better position for medical school debt. Senator Bernie Sanders suggests complete debt cancellation.

From an investment perspective, I suggest that limiting medical school debt would yield far greater dividends than some of the useless degrees offered by predatory, for-profit institutions of “higher learning.” More promising are the new tuition-free programs at New York University and the Kaiser Permanente Medical School.

Eeric Truumees, MD, is the chair of the AAOS Now Editorial Board, editor-in-chief of AAOS Now, and an orthopaedic spine surgeon in Austin, Texas, where he is also professor of orthopaedics at the Dell Medical School, University of Texas.


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