The results of the annual residency and fellowship match were just released and once again, there were specialties that were losers and those that were winners. But if you dig into...
It costs more than $1.1 million to train a doctor in the United States. The societal investment in creating physicians is enormous and has widespread implications for American health care in everything from acceptance of international medical graduates to the future use of non-physician health care providers.
Breaking down the costs
Depending on the specialty, tt takes 11 to 15 years to train a physician when you count college, medical school, residency, and fellowship. At each of these steps there are direct costs and indirect costs. Some of these costs are paid by the physician in training and some of these costs are paid for by society in general (usually through state or federal taxes). Here is a breakdown of the direct and indirect costs at each step along the way:
Undergraduate education. Colleges essentially have 3 sources of income: tuition, endowment, and government funds. For this reason, the total cost to educate an undergraduate is considerably more than what the student actually pays in tuition. It becomes complicated because most colleges not only have to finance the education of students but also have to finance the research activities that professors must perform in order to keep their jobs. Thus, it is hard to separate the costs of education from the costs of research. Public colleges receive state government funds to subsidize their education and research activities and this results in lower tuition for in-state residents than for out-of-state residents. The out-of-state tuition and fees best reflects the cost to teach an undergraduate without the state governmental subsidy. Private colleges and universities generally do not receive state governmental subsidies and have considerably higher tuition costs. For the purpose of this analysis, I used the current cost of attendance for out-of-state freshman at the Ohio State University that includes tuition, fees, books, room, board, and miscellaneous expenses if living on-campus which is $49,556. For four years of college, this would be a total cost of $198,224.
Medical school. Colleges of medicine have the same 3 sources of income as undergraduate colleges so for this analysis, I used the current cost of attendance for an out-of-state medical student at the Ohio State University College of Medicine. Once again, this estimate is for tuition and fees as well as estimated living expenses. Unlike undergraduate college, the cost of medical school varies considerably for each of the four years of training: year one = $80,019, year two = $76,026, year three = $114,442, and year four = $114,542. Totaling all four years, the cost to go to medical school is $385,029.
Residency. There are both direct and indirect costs of resident education. The direct costs are the resident’s salary and benefits. At the Ohio State University Medical Center, these costs are $51,510 for a first year resident (intern) and increases each year so that a fourth year resident cost is $56,636. However, the direct costs are only the tip of the iceberg when it comes to the total cost to train a resident. There is the cost of everything from hospital call rooms, to residency program administrator salaries, to part of the salaries of chairmen and faculty to cover otherwise non-compensated teaching time. Most of these indirect costs are ultimately paid from federal tax dollars- either by Medicare payments to teaching hospitals for graduate medical education or by the higher Medicare payments for clinical services that teaching hospitals get paid (as opposed to non-teaching hospitals). In 2014, the Alliance for Academic Internal Medicine estimated that the total direct and indirect costs to train a resident is $183,416 per year. For the 3 years of residency it takes to become a general internist, pediatrician, family physician, or hospitalist, the cost is $550,248. It takes longer to train other specialists, for example, an obstetrician is 4 years ($733,664), a gastroenterologist is 6 years ($1,100,496), and an interventional cardiologist is 7 years ($1,283,912).
Total costs. Adding all of these together, the total costs to train physicians is astounding. This demonstrates that society has an enormous investment in each physician in the United States.
- $1,133,501 – general internist, family physician, pediatrician
- $1,316,917 – obstetrician, psychiatrist
- $1,500,333 – general surgeon, endocrinologist
- $1,683,749 – gastroenterologist, pulmonary/critical care, general cardiologist
- $1,867,165 – interventional cardiologist, neurosurgeon
Implications for U.S. healthcare
International medical graduates. One of the best ways to reduce the cost of training doctors is to get someone else to pay for it. If you can get another country to cover the costs of college and medical school, then the cost to American society drops. Therefore, the U.S. cost to train a family physician who is an international medical graduate is $583,253 less than a family physician who is a U.S. medical graduate. In other words, the cost to American society of an international medical graduate is about half that of a U.S. medical graduate.
Non-physician providers. Nurse practitioners and physician assistants are far less expensive to train than physicians. The typical NP or PA training consists of 4 years of undergraduate training plus 2 years of NP/PA training. The costs to become an NP or PA is approximately $84,598 after college (tuition and living expenses) and the total cost including college is $282,822. In other words, the cost to train a family practice NP/PA is only one-fourth of the cost of training a family practice physician. Given that NPs and PAs increasingly have a similar scope of practice as physicians, from a societal standpoint, it will be a lot less expensive to train an NP or PA than it is to train a physician to do the same job. The implication is that NPs and PAs will replace many physician jobs in the future.
Repairing broken physicians. In a meeting I was recently attending, a question was asked whether we have different standards for terminating physicians with behavioral problems or substance abuse than we do for terminating other health care workers for the same problems. The reality is that I think we probably do and part of this is because of the enormous societal investment in those physicians. To create an analogy, if you have a broken handle on a screw driver that cost $2, you buy a new screw driver and don’t pay the cost of repairing it. On the other hand, if you have a broken handle on an airplane that costs $1.2 million, you repair the handle rather than throwing out the entire plane. If society invests $1.2 million to create a physician who then develops alcoholism, one can make the argument that hospitals have a societal obligation to first attempt to cure the physician and return him or her to practice when/if safe to do so rather than permanently end that physician’s career. Like it or not, hospitals will often put broken physicians on leave and attempt to rehabilitate them for infractions that would result in an unskilled employee being terminated – it is not necessarily fair but it is an economic reality. On the other hand, if an airplane has a critical mechanical flaw that puts it in continuous danger of crashing, you decommission that airplane – physicians with critical flaws should similarly be decommissioned.
Discussions about the cost of training physicians usually center around the cost to the individual physician and often stop at the average debt of a graduating medical student. But beyond medical student debt, there is a much larger cost that is not paid directly by the doctor but is paid more broadly by the institutions that provide scholarships, by the citizens who pay state and federal taxes, by direct salary costs of residents who cannot bill for their services, and by the indirect costs to hospitals to train residents.
July 11, 2019