How The U.S. Doctor Shortage Is Changing Student Loan Debt | Student Loan Planner

Is there a shortage of
physicians in the United States? The answer is yes, but it depends on what you’re talking about. So for example, there might not really be that bad of a shortage of
high paying specialties, but there is a severe shortage
of primary care doctors. So why is that, and how does student loans potentially influence this? That’s part of the question,
but they reality is, is the majority of physician shortage issues that exist in
America are really due to shortages in residency
slots, for the most part, and restrictions on
the ability for various health care practitioners to practice. So let’s give you an example. In 1997, Congress passed a limit, capping the amount of residency slots funded by the government at 100000 total. Now before that, when Medicare got passed during the Johnson administration, the government got into
funding residency slots for the first time under
the Medicare program. Before that, why were residencies called residencies in the first place? So the reason is actually
because residents actually lived at the hospital, hence the name resident, right. So you had places like John’s Hopkins, and the most prestigious
teaching hospitals in the country develop training programs where
these physicians in training would basically live in the hospitals, make very low pay, and they
were willing to do that, because of the prestige
of the institutions. Gradually, since the most
prestigious hospitals had this way of doing things,
that got adopted more broadly across the entire country. And then to make sure that
there was enough physicians to treat all of these elderly patients that the government was now paying for, that’s one of the reasons
why the government got into funding residencies
in the first place. Of course whenever you have
huge government involvement in something, it’s susceptible
to things like lobbying, and budget restrictions, and
various competing priorities over federal dollars. And before 1997, we had a huge influx of immigrant physicians from
a lot of different countries, to alleviate some of this shortage, and even today you will see a lot of first generation immigrant
physicians in America, in a lot of these places
that are more rural areas, or underserved areas to
fulfill specific needs that were set in as a condition, for easing up immigration
restrictions back in the day. Now immigration is a lot tighter now, and it’s a lot more difficult I believe, to become a physician as an immigrant, than it perhaps was in the past. So we have a situation now, where we have this physician shortage, and we are not allowing
immigrant physicians into the country, probably
because you’re concerned if you’re an existing
physician making a good living, that you don’t want to have
a lot of physicians come in, say from, you know, Korea, or Poland, or something like that,
and drive down the wages that you’re able to receive. Now, on the flip side, also with the limit in-residency slots, that
prevents you from having too many physicians or
enough physicians really, to fill all the gaps that exist. So, just to think about this, in other areas of the professional world, we’re seeing a huge problem
with an oversupply of spots. So for example, pharmacists, there are way too many
pharmacists right now, relative to the demand I think, and you’re seeing this in the form of a lot of reduced hours
available, a lot of layoffs, people having a hard
time getting full time in a lot of different
parts of the country, and wages are not necessarily growing like you might think they would be. And you’re seeing this
also in the legal market, you had to have a lot
of law schools close, because people weren’t
getting enough legal jobs, you know, that required a JD, and you know, you could
go on and look and see, that a lot of these different
fields that don’t have high barriers to entry
to and enter the field, except for the credential, you’re seeing an overproduction
of people in those fields, and you’re seeing a limit
on the growth and wages, because of that oversupply, so it’s kind of like Economics 101. And why is this happening? Well, it’s just because
you don’t have that cap on the number of people that
are allowed to, you know, go into these training programs, that then allow you to
earn the big salary, so you just go straight in for most of these professions, right. And so because of that, there’s no cap, except for accreditation bodies, which are generally
controlled by, you know, the colleges and universities that exist, or at least the
associations a lot of times, are heavily influenced by
colleges and universities, right. And so, you have situations where the number of pharmacy
schools has quadrupled, you know, or doubled, you know, over the past short amount of time really. So, if you think about the
problem with medical schools, medical schools have not been able to expand that much by comparison. You know, medical schools
might have increased maybe 30% or so, and
the number of students that they have enrolled
since the early 2000’s, you know, compare that to
the number of pharmacists that’s increased maybe
by 300% or something, that’s just absurd, and that’s because you
don’t have this barrier to entry of a residency, where you have to do one
of those at you know, and now obviously you know, there are some training
programs that exist, you know, pharmacists do have residencies, lawyers do have some
training programs that exist, but you don’t have
these required programs, where you must do a residency
in order to practice. Now, with this shortage that exists, what kind of incentives are created by virtue of these capped residency slots? So think about the 100000 cap, now there is some extra spots available that are funded by you
know, for profit hospitals, or for states, or something like that, but in general, that’s a fairly, you know, solid cap that’s existed for you know, the past you know, 20ish years, okay. So, that means that if you have a certain number of residency
slots you’re allocated, of course some of those are
going to go to primary care and internal medicine, family
medicine, things like that, but really hospitals
are highly incentivized to establish residency programs for higher paying specialties, ’cause they’re gonna
make a much higher profit off of you that way. So, the residency pay scale is really not all that different, depending in what your
specialty is, right. So you might be making a very
similar salary as resident, you know, if you’re a
neurosurgery resident, or if you are a primary care, you know, internal medicine resident. So, that same salary scale,
again incentivizes them to go after residents
that bring in, you know, a lot of revenue by virtue
of their specialties. So, you’ve got a big incentive to produce a lot of people
that are coming out with, you know, procedural
based surgical skills, and a lower incentive with
these capped residency slots, to come out with people
in these primary care kind of specialties. Also physicians, actually
face a huge incentive to specialize right now. We have done a lot of work
at Student Loan Planner, analyzing the cost of loan forgiveness for different specialties within medicine, and to figure out which
specialties pay the least. You might be surprised to realize that when you’re in training, you can $300 a month
on your student loans, and get credit towards the non profit loan forgiveness program, PSLF. So neurosurgeons, because they train for eight years in some
cases, seven or eight years, you might pay $300 a month
for seven or eight years, or maybe even longer than that, and then you might only pay, as an attending, for
maybe a couple of years, and then at the end of the 10th year, you get your loans forgiven, tax free. In contrast, the primary care physician might pay for a resident
income for three years, and then become an attending, and have to pay significantly more over the life of their loan, because they have to pay
income driven payments, so they lose 10% of a
higher income sooner. And so if you look at the cost, and in many cases, we’ve
modeled loan forgiveness cost in primary care physicians triple the cost of what it would cost much much
higher earning specialists. So, that’s just you
know, just an indication that our student loan system, and the way we fund
residencies in America, it is basically designed in such a way, that it creates a natural
shortage of primary care doctors. So, the only way around that, would likely be to create more ability for nurse practitioners
and others to access the ability to see patients
without a doctor’s supervision. Now that creates a whole
nother pluther of issues, a lot of questions are raised by that, but we have to realize that if there is a physician shortage, it’s
because of our own making, it’s not because of some strange
outside force that exists. So, that’s just something to think about, something to chew on. I will say this, that medical school is, in comparison to other
professional programs right now, because of the weird student
loan roles that exist, it is actually a much better program to go into in terms of
course of study financially, than a lot of other fields out there. Not necessarily to say
that you should do it, but it’s certainly interesting to look at the incentive models, and to understand why there is a shortage, especially acute and primary care, whereas there’s not that big of a shortage in a lot of these higher
paying specialties, especially in the big metro areas, which are really desirable to live in. So, if you have a lot of questions about your medical school loans, about how to optimize
things, just reach out to us, and check out our site,

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