Adapted from the Wall Street Physician (WSP) post of November 13th, 2018, “If You Could See Medicine Through My Eyes: Resident Perspective”
In my 30+ years of working in medical school financial aid, I have seen the many changes in Medicine along the way, but I have especially seen the change in culture and economics of medicine as well. This year I have taken an interest in keeping up with physician finance bloggers and their messages to their physician, resident and medical student readers. A lot of great wisdom and advice is given that if taken seriously will put you on the road to financial success. It all started with the White Coat Investor. Now, there are many out there hoping to curve the financially unhealthy habits of young and older physicians. The bloggers put forth their wisdom and advice based on personal triumphs and downfalls and those of others, hoping to help their followers avoid making some of the same mistakes.
Radiologist and blogger Xrayvsn enlisted physician finance bloggers young and experienced to write posts on the common topic of generational perspectives of the past, present, and future of medicine:
- Doctor of Finance MD: A Late-Career Perspective On Medicine
- Xrayvsn: Medicine From A Mid-Career Perspective
- Reflections of a Millennial Doctor: Beginning A Career in Medicine As a Millennial
Medical school is more expensive than ever
The WSP reflects on when medical school was less than 5 figures. Today, the cost of attendance for medical school tuition is approximately $38,000 for in-state and approximately $62,000 for out-of-state, with a couple of medical schools surpassing annual tuition of $90,000. The Cost of Attendance (COA), which also takes into account the cost for tuition, fees, book/supplies, and a reasonable living allowance is routinely in the mid-5 figures.
Student loans are an expectation whereby 75% of those who graduate from medical school will leave with educational debt from medical school. Nationally, students in the Class of 2018 indicated a student loan investment of $196,000. This comes from information received by the AAMC off the Graduation Questionnaire (GQ). Although the information is from those graduating in 2018, it does not take into account the relative cost of loans that include the accrual interest on student loans during medical school that can add another $21,000 or more to that average indebtedness before graduating from medical school. As the WSP states, it is almost impossible to avoid student loans without family assistance these days (although MD/ Ph.D. programs, military service commitment programs, tuition-free schools, and the rare merit scholarship are still options). Keep in mind that although New York University is the first to claim to be a tuition-free medical school, it still comes with a price tag of $130,000 due to the living costs in New York City.
Pre-medical students are increasingly considering medical school cost when making medical school decisions. Indeed, many students are choosing to go to a less expensive state school over elite private medical schools because of cost.
Physician residency training time is longer than ever
According to the WSP, over the past few decades, residency training has gotten longer and longer. Radiologists now routinely have to do a 1-year fellowship after 5 years of residency. Emergency medicine residencies are often now 4 years instead of 3 years. A fellowship is increasingly necessary to become a pediatric hospitalist. Internal medicine residency used to be 2 years instead of 3 and fellowship was also often only 2 years.
Previous generations may argue that medicine is more complicated than it used to be and current residents work fewer hours than past residents because of duty-hour regulations. Whatever the reason, medical training is longer than ever. This means that current physicians will have fewer peak-earning years, and student loans will accrue interest for a longer period before they can be repaid.
Work-life balance is increasingly valued
Again, according to the WSP post, in previous generations, medicine was everything for many doctors. Primary care physicians and pediatricians would round on their patients when they were admitted to the hospital. Long hours were expected and even encouraged. From a financial perspective, most physicians had ownership in their practice.
These days are long gone in medicine. Primary care physicians, family physicians, and pediatricians rarely round on their patients in the hospital, with hospitalists handling most inpatient care in internal medicine and pediatrics. Fewer and fewer physicians have ownership in their medical practice, instead, choose to be employed by a hospital system. Shift-work specialties such as emergency medicine, anesthesia, and radiology are increasing in popularity, as these specialties can allow for significant work-hour flexibility.
Is it still worth it to go to medical school? Yes!
Higher student loans. Longer residency training. Shorter hours in favor of work-life balance. Less physician ownership.
What all of these themes have in common is lower earning potential for this generation’s physicians. Some have questioned whether it is even worth it to go to medical school anymore.
But for all the pessimism about the current and future state of medicine, it’s important for physicians to remember why they went to medical school in the first place. There are so many reasons why medicine is an awesome career. It is a tremendous privilege to care for patients, and most patients are grateful for what they do.
To achieve financial success, the margin for error is lower than ever
There is no question that today’s generation of doctors will still achieve financial success and a secure retirement. The return of investment (what you put forth as an investment financially compared to the outcome) is still significantly in the physician’s favor. But, as the WSP indicates, the margin of error is lower than for physicians of previous generations. Financial mistakes or missteps cost physicians today more than it did generations ago. In other words, today’s physicians have to be financially smarter. Yes, most are able to overcome a small mistake here and there, but for those who do not heed the warnings and continue making mistakes will be less successful than those who do the right things.
There are many financial errors that physicians can make to erode their potential wealth. Not adequately saving for retirement. Paying too much in investment fees. Trading in the market. Buying inappropriate financial products from so-called financial advisors. Not investing in a tax-efficient manner.
Physicians who are currently retiring or near retirement could afford to have made many (or perhaps even all) of these errors, yet still, achieve financial success. They were buoyed by high salaries, low student loan debt, and a bullish stock market. In other words, many are content with following other’s paths that are not so healthy financially instead of creating their own path toward financial independence and still enjoy life to its fullest.
Today’s generation of physicians can achieve financial independence, even early financial independence, through sound saving and investing principles. We can still afford to make big mistakes, but just not as many as previous generations. Financial education for the current generation of new physicians is more important than ever.
In the WSP’s view, the practice and economics of medicine aren’t what it used to be. Today’s residents are taking on more student loan debt, finishing training later, and valuing work-life balance. As a result, today’s residents will not be able to afford to make as many financial mistakes as previous generations of doctors. But with early financial education, financial independence, and a secure retirement remains achievable for every graduating medical student and resident physician. A resident (and fellow) who completes training and continues to live and behave financially as a resident for several years (or more) beyond training, will make significant strides toward becoming financially independent