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New Primary Care Physicians in a Financial Hole

New study shows new physicians\' expenses exceed income

The typical primary care physician will be in a financial hole, with expenses exceeding income, for 3 to 5 years after residency, forcing the doctor to cut expenses and delay savings to remain solvent, a new study in the November issue of Academic Medicine found.

Applying a financial planning model that compares primary care physicians with other young professionals, the authors found that these physicians won't begin to have a positive cumulative net worth until age 33.

"This reality greatly increases the financial disincentive for pursuing a career in primary care compared with other fields of medicine," write lead author Martin Palmeri, MD, a fellow in the Department of Hematology/Oncology at Dartmouth Medical School, in Hanover, New Hampshire, and colleagues.

The study looked at educational loan costs, average starting income, housing expenses, and recommended savings for retirement and children's education. It concluded that primary care physicians fresh out of residency face a monthly budget shortfall of $801 unless they make significant reductions in expenses or postpone savings. Physicians in most other specialties have higher earnings and won't face the same shortfall.

Although primary care doctors typically begin to have some discretionary income a few years after residency, the authors warn that "any erosion in primary care physician income may make a career as an internist, family physician or pediatrician untenable. Rising interest rates on educational loans, increasing student debt, declining Medicare/Medicaid reimbursement and inflation can significantly reduce physician income."

"There'd been very little written about the effect that educational debt plays in financial planning" for young professionals, Dr. Palmeri told Medscape Medical News. "This study started with me trying to figure out my own family finances on the back of a napkin, and grew from there."

Although the conclusions may appear depressing, Dr. Palmeri notes that a primary care income should be adequate to meet savings and investment goals a few years after residency. "If doctors become financially savvy and plan from the beginning, primary care can still be a lucrative working opportunity."

The study "makes concrete something most medical students already know, but it raises awareness, and that's to the good," Wiley said. "This report doesn't shock us. It's just the harsh, scary reality. I started medical school later than most, so I'll be in my mid-30s when I finish training. At this point, I can't see how it's even feasible to think about saving for children's college education.

"Reimbursement parity is the big elephant in the room," she said. "Even the proposed 10% increase in Medicare reimbursement to primary care doctors over 5 years isn't nearly enough." The American Medical Students Association supports increasing scholarships and loan repayment plans to incentivize service in primary care.

Roland A. Goertz, MD, a family physician in Waco, Texas, and president of the American Academy of Family Physicians, strongly agrees.

"It takes an amazing commitment to go into primary care these days, to resist the temptation to go into another specialty," he says. "We've got to change the payment model to one that focuses on the patient-centered medical home to improve quality and bring costs under control.

"This issue has been troublesome for many years, and we're facing a huge shortage of primary care physicians," he said. "We've tried to get policy makers interested, but their interest waxes and wanes. This report helps focus attention on the problem."

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