Are student loans being exploited to limit physicians’ practice choices?

We are in the thick of the job hunt, and it seems like every time I feel like we are inching closer to having a couple of jobs locked down, some new variable comes up. We’ve interviewed at small private practice groups, large private practice groups, academic and “priva-demic” groups located in the southeast and midwest.  The more I learn about these different job configurations, the more I realize I don’t know. However, along the way we have discovered a few morsels of information, and I’ve been struck by some aspects of the evolving healthcare climate that I wanted to share.

First, there is a noticeable migration of surgical practices toward hospital-employed rather than private practice. In my limited sampling on the interview trail, the practices have either just become hospital-employed, or are doggedly fighting to resist the gravitational pull of becoming hospital employed (and discussing this situation openly). Coming from my academic institution, at first this did not strike me as noteworthy, and I felt like the physician-employed model was essentially more convenient and equitable.

I was pretty close-minded regarded going into private practice, and definitely didn’t  consider full-time locums as a viable option until I started listening to Nii Darko’s podcast Docs Outside the Box. I’m sure it was somewhere in the dozen episodes I’ve listened to where I first heard the phrase, “No one will pay you more than you will pay yourself.” Such a simple statement, but it got me thinking about this situation with physicians voluntarily giving up control of their practices, and to a large extent, their paychecks. My experience matches the published statistics on the AMA website that as of 2016, less then half of physicians own their own practices, and the statistics are more dramatic for younger physicians, with 59% of physicians under 40-years being employed.

The second issue that has come up more and more frequently is that of the federal program for Public Service Loan Forgiveness. I first heard of this program in med school, roughly ten years ago, and at the time it was described as a program that may or may not ever come to fruition but has the potential to wipe out your loans after ten years. I was quite skeptical at the description, and honestly I assumed that it would never work out. I kept my loans on the standard repayment plan, even though it was a bit difficult at times to keep paying them on that schedule through residency. Then I refinanced near the end of residency (I should have done this sooner) with SoFi. However, I have many friends and colleagues who bought into the program, made the minimum payments to stay eligible (opting for the income-driven repayment plan), and consequently ran up piles of interest, graduating with larger balances than they entered residency with. THEN, they are limited in choice of employer to these “not for profit” entities, and now are facing the frightening possibility that they still won’t ever see the loans forgiven. (Note: I don’t mean to incite panic or add to any melodrama. The White Coat Investor has some good advice for anyone worried about this issue). Whether or not this program was written with the intention of limiting physicians’ practice options in order to encourage the employed model is questionable, but it has certainly had this effect. (Here’s link to .gov site for direct info).

Taking into account the principle that “No one will pay you more than you will pay yourself,” these physicians have:  #1. Taken out massive amounts of loans, #2. Had interest payments balloon through residency thanks to income-driven repayment plans that don’t touch the principle, #3 signed up for jobs that will likely pay less and prevent them from taking control over their practices. This situation seems like an ideal formula to take a tremendous amount of power and earning potential away from physicians and transfer it to administrators.

Now, I’m personally not against taking an employed position. As a trauma + critical care surgeon, I think this is probably a much more common scenario for my field considering many tasks we are responsible for are non-RVU based and located in larger hospital trauma centers. Nevertheless, I’ve been amazed at how many neurosurgery practices have been bought by hospital systems, and the main reason cited is complexities of billing.

At the risk of sounding glib, I’d like to point out that this same evolution happened in the record industry, did it not? We ended up with a bunch of simple, formulaic, boring bands and cheesy music genres. Same thing happened with beer; remember before craft brewing was a thing and all that was on the shelves was weak, smelly water with clever ad campaigns?  Fortunately, these two industries, among many others, have benefited from an awakening of independent artists and craftsman, and there is now a flourishing variety of creative music and micro-brews for us to enjoy. Maybe the same thing can happen with healthcare, but that there are much stronger influencers including lobbyists, politicians, and that infamous army-of-middle-men standing in the way. However, if it’s best for patients and best for physicians, we can keep the indie spirit alive in healthcare as well. The Frugal Physician has just written an excellent post about this very idea, expanding on the idea that in order to take back control of medical practices we have to control the finances, starting with our personal finances (i.e. student loans).

This idea of finances being the key to engineering the practices, and lives, that we want has been coming up again and again lately. Personally, we have little choice but to pay off our debts and achieve some measure of financial independence if we really want to pursue careers in humanitarian medicine. But for those outside of this field, ignoring finances has the analogous consequence of limiting the type of practice, and ultimately life, that one can have. It’s likely no coincidence that these changes are correlating with the burnout epidemic. I’m not the expert, and I don’t have the answers. I’m merely the naive young doctor observing and asking the question: Is it too late for physicians to take their practices back? Who is really benefiting by keeping us out of practice ownership?

5 Replies to “Are student loans being exploited to limit physicians’ practice choices?”

  1. You bring up so many salient points in this post!

    I don’t know if it was intentional to have student loans limit the types of practices that we can join, but it certainly is an unhappy by-product of this.

    In med school and residency, we just don’t have the foresight to see what kind of practice we will ultimately end up joining and unfortunately many of us bank on doing the PSLF program without really looking into what our prospective job offers will be once we actually finish training. I personally didn’t want to take any risks on the PSLF not existing when I was ready to pay back my loans, so I refinanced everything within a few months of graduating from residency.

    As someone who is now looking at jumping ship from private practice to a hospital employed position (albeit in a totally different specialty), I will say that it is VERY important to make sure you’re joining the right private practice, otherwise you may get screwed even moreso than if you were to be employed by an institution, and it will feel 1000% more personal.

    Take it not just from my personal experience, but also from an OBGYN colleague’s story – she joined a private practice who touted “work/life balance” in order to recruit her, ended up having her take more OB call than her more senior peers, strung her along before she could make partner, was faced with a ridiculous buy-in and productivity requirements, and all in all was paid a 1/3 of what her other OBGYN hospital counterparts made, even after 8 years.

    If you’re going to private practice, make sure it’s with the right people.

    Yes, no one will pay you more than you will pay yourself, but also no one will look out for you more than you will yourself –> It’s been a hard lesson to learn, so please save yourself the trouble!

    1. Great points, M! I kind of see the PSLF options like the military options. It might help pay back your loans but you may be trading your highest-earning years relegated to positions with mediocre salaries.
      I really appreciate your advice on the risks of private practice as well. I’m interviewing for my first “real” job now and I will definitely take it to heart!

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