Note to Myself (and other medical students): On Physician Incomes

Every so often, someone writes a post talking about how physicians don’t actually earn as much as they seem due to medical student loans, or some story about how physicians are being forced into bankruptcy by their own personal choices or Medicare reimbursement changes. Especially with the current dialogue surrounding Occupy (your city here) and income inequality in the United States, I can’t help being a little skeptical about these claims, but then again, I’m no economist and so I have waited to see something that has numbers to back up their complaints.

Recently, I came across this article from Dr. Ben Brown has done a pretty decent job of summing up the issues with physician income. In short, our disadvantages are that:

  • We spend an ungodly amount of time in training during our young adult years (6,400 hours undergrad + 15,360 hours medical school + 34,000 hours for a 3-year residency = 45,800 total hours).
  • This time is poorly compensated – about $50,000/year for the 3-year residency (or $4.41/hr – LOL).
  • And on top of that, student loans are terrifying. Assuming no loan repayment program, medical school alone tends to cost about $45,000/year (according to this article, to my knowledge, private medical schools are actually considerably more than that these days). At 7% APR (I guess this is assuming these are all Grad Plus loans or something) that comes out to about $200,000 in debt at medical school graduation (which is pretty much in line with other estimates of medical student debt).
  • The tax code basically does not help doctors at all when it comes to repaying that debt: Since we tend to earn more than $145,000, physicians do not get to write-off loan repayments as a tax deduction, and for whatever reason, setting up a doctor’s office does not count as starting a new business (and so is not associated with the tax deductions that go along with that. Without getting into stuff like the SGR, basically, the federal government does doctors no favors for the work that we do, unless we work for a nonprofit hospital perhaps.

However, even considering all this, the article cites the 2009 physician compensation survey which finds that in 2008, primary care physicians earn $186,000/year and specialty physicians earn $340,000/year. According to Dr. Brown’s calculations, most physicians need to pay at least $40,000/year to pay back their loans after about 20 years (which seems like spreading out the loans quite a bit and doesn’t take into account loan repayment programs). This puts primary care physicians’ income at $146,000/year and specialty physicians at $300,000/year, pre-tax. According to the New York Times calculator, this puts primary care physicians at the top 10% and specialty physicians at the top 2% of the United States.

In my view, this puts physicians solidly in the “tax-paying rich” (aka much like Warren Buffett’s secretary, who earns his or her income from working and so famously, has to pay much higher taxes than Buffett himself). We’re not in the 1%, we’re not going to make any day traders jealous, and we work long hours and pay lots of taxes. But honestly? we’re still far from living in penury, we’re still better off than at least 90% of our patients (assuming an economically diverse patient population, which I realize isn’t always the case). What we suffer from then, ultimately, is not inadequate income but poorly calibrated expectations.

At the end of the day, we’re not becoming doctors to get rich quick (because what, exactly, is quick about medical school and residency again?) but to serve patients. QED.