Education Debt May be a Barrier to Enhanced Care

By | February 5, 2019

With the 2018 New York University announcement of free medical school tuition, undoubtedly there is increased interest in the potential impact this will have. Many hypothesize that this is a new era, and a new education model is forthcoming and necessary. As recently as 2017, there was a proclamation from the Association of American Medical Colleges that the average private medical school debt burden on graduates is $192,000. Albeit high in its own right, it does not include the total hardship of educational debt.  Forbes indicates, the average debt for a college student is $37,000.

Many postulate that by decreasing this level of debt, it will positively affect enrollment in underrepresented minority groups and thus improve on the present physician ethnic distribution and ultimately service populations that presently do not have equal access to caregivers.  Additionally, the presumption is that by decreasing debt, medical school graduates will be able to choose their field of practice based on their personal desires rather than return on investment — this is an argument for increasing the number of primary care physicians by offsetting educational debt.

Though these are positive, not included in the conversation is the influence of student debt on the cost of healthcare. There is a belief that the unit price of our healthcare is at a non-sustainable level. When we dig further into unit pricing or the cost of production, professional services are a category that falls into scrutiny. If we study what the components of this dynamic, student loans constitute a significant factor, rough math would indicate that if the average physician education debt is $230,000, then the average repayment would be approximately $2,000 a month, or $92 a workday (based on 260 workdays per year.) If one averages this out to the average number of daily encounters in a primary care office of 17, it equates to $5.42 per encounter. Sure, these are just estimates, but the premise is valid. A real percentage of the cost of a visit relates to educational debt.

Furthermore, these dollars do not convert to direct income to the physician. One could argue these costs pertain to the delivery of care, because without education, physicians would not have the know-how to do their job and do it well. Regardless, understanding how physician educational debt affects the cost of healthcare is essential as we continue to delve into models of financing our educational endeavors.

Unfortunately, just eliminating the cost of education will have effects on other parts of our economy, such as banking and possibly, the institutions themselves. The money has to come from somewhere. We must remember that the cost of healthcare is an important part of our greater financial health and thus the polarity is a dynamic needing management.

Understanding all the variables will aid us in innovating our educational systems in a manner that influences many factors. The same dollars that feed into our educational and banking systems can also help us enhance care.