Opportunity Costs in Medicine

I was inspired by this article at Med School Hell to try and explore further the opportunity costs undertaken by those in medicine. The first half of his article is good, as he explains opportunity costs in terms of time spent watching TV, but I felt the second half could use some more concrete examples, so here goes.

Point Number One: Medical school itself has opportunity costs. If I'd graduated college and gone to work for minimum wage ($5.15 when I left college), 40 hours a week, I'd have made $42,848 these past four years. With my degree in psychology, I could feasibly have gotten a job as a research technician (but not much else) with a median salary of $52,000 in my area. So in four years, I'd have made $208,000. In med school, instead of earning money, I'm borrowing it. This data from AAMC shows that a debt of $130,000 in Stafford loans increases to $225,351 by the time it's all paid off. So my total costs so far include my opportunity cost of $208,000, plus $225,351 in student loans, to make $433,351. Ouch.

Opportunity costs for medical school also include: time spent in the hospital when I'd rather have been at home, hours of sleep lost, pounds gained eating bad hospital food, time wasted in horrible lectures when I could have been at the dog park, etc. If you wanted you could calculate how many hours were wasted, assign a dollar amount to my time ($25 at the above salary) and find the product. Let's estimate that I've wasted 8 hours a week in the above activities (a conservative estimate) x 52 weeks in a year x 3.5 years (the end of fourth year will not be such a waste) x $25/hour = $36,400. Now my total cost is $469,751 for four years of medical school, at the end of which I'm 26 years old.

Point Number Two: Residency has costs, too. After spending $469,751 in loans, lost wages, and time wasted, now I have an MD and must complete a residency. As a resident, I'll be paid ~$40,000/year in this area, which is still slightly less than my research technician job. For a minimum of 3 years, then, I'm losing $12,000 per year in predicted wages. If I'm working the 80-hour/week maximum, my wage is ~$9.60/hour, which is much lower than my $25/hour as a research technician. Residency and fellowship can go on as long as you like, basically, with a minimum of 3 years. During this time, that student loan debt is accruing interest. So now, I'm $469,751 + $36,000 (more lost earnings opportunities) = $505,751 down in total costs for attending med school + residency. Residency will carry its own opportunity costs similar to med school--nights on call, lost sleep, time away from family, more pounds gained from bad hospital food, more sanity lost, more time filling out scut paperwork, etc. Let's estimate that at 15 hours/week x 52 hours/week x $25/hour x 3 year minimum = $58,500 for a new grand total of $564,251. Whew!

Point Three: Pick your specialty wisely! Different specialties will have vastly different working hours, salaries, nights on call, etc. Let's make a few case examples.

a) In my area, the median family practice doctor's salary is $158,860. Let's assume best-case scenario, outpatient only, 40 hour workweek, and let's assume that there's no opportunity cost to working 40 hours a week--it's "normal" for a US adult to work that much. As a 29-year-old, I start working in this specialty, and I work until I'm 62 and retire. That's 33 years of earning potential at $158,860 = $5,242,380 - $564,251 = $4,678,129. Of course, that salary level is variable, with changes in Medicare reimbursement, interest, time off for maternity/paternity leave, sabbatical, etc. I'm not smart enough to deal with all those numbers.

b) In the US, the average family practice doctor works 52.5 hours/week (in 2003). That means you're either working both weekend days or you worked 10+ hours each weekday. Here, Fat Doctor details her recent stints of 110+ hour workweeks. At 168 hours in a week, she's getting 58 hours a week to come home, eat, sleep, play with her son, see her husband, go to church, and whatever else she may like to do when not at work (remember opportunity costs???). $158,860 looks a lot better for 40 hours of work, or 52.5, than 110.

c) The average US psychiatrist works 48 hours/week and in my area earns a median income of $172,615. I have to go to one more year of residency, so my new total cost of med school + residency is $595,751. If I work until I'm 62, that's 32 years of earning = $5,523,680 - $595,751 = $4,927,929, with (mostly) better hours than family practice.

d) The average US general surgeon works 60 hours/week (really?) and earns a median income of $289,008 in my area. Their residency is 5 years long and generally more brutal than non-surgical residency: therefore, the opportunity cost of going into surgery is higher. If we redo the calculation for med school + lost wages in residency + 40 hours/week of wasted time (I'm assuming a surgical resident works the "80 hour minimum" and no more) at the rate of $25/hour we get $789,751 for surgical residency. The price of your soul, of course, can't be calculated. If they have 31 years of earning x $289,008 - $789,751 = $8,169,497, which is more than the above specialties but with possibly higher hours. I had a general surgeon tell me I should be able to have a family and a life; however, he worked over 80 hours a week on average and had recently taken a new position because he'd been working even longer hours at his old position.

e) Dermatologists work an average of 45.5 hours/week at a median salary of $227,816 after 4 years of residency. Total lifetime earnings of $6,466,545.

Obviously, these specialties differ in the physical nature of the work involved, the hours worked, amount of call, etc. A surgeon is on their feet all day with few opportunities for meals, breaks, etc, where a more clinic-based specialty may be less physically intense. I also think the opportunity costs of residency training are important to consider. After all, that's 3 to 5 to 7 to 9 to infinity years you can't get back.

I'm certainly not saying doctors don't earn a nice living financially. That research technician at $52,000 makes $2,080,000 in a lifetime. I think I have finally reached the conclusion that Med School Hell was trying to make, which is that a) surgeons make a ton of money but the price of getting there and being a surgeon is really high b) other "ROAD" specialties make good money without the high opportunity costs of surgery c) some primary care specialties make less money with high opportunity costs and d) overall, hours worked is a VERY important piece of choosing a specialty, because it's hard to assign a dollar value to lifestyle. If making big bucks is its own reward, great; if you don't care how many hours you work, great; but if you DO, then look at the whole picture.