Young surgeons face high debt, financial instability

(Reuters Health) - As the costs of medical school and training continue to rise, young surgeons often face debt burdens that make it difficult for them to start their careers and pay off their loans, according to a new study.

“Most people who go into medicine are scientifically-oriented and want to take care of people,” said Dr. Bruce Harms of the University of Wisconsin School of Medicine and Public Health in Madison. “The financial picture isn’t their focus at this point in their careers.”

“We’re trying to understand how deep the problem of personal financial health is so we can take the next step in figuring out how to solve it,” Harms said in a phone interview.

Harms and colleagues surveyed 105 surgical trainees at their university about their debt, equity, cash flow, expenses, income and financial education.

More than one in three, or 38 percent, reported more than $200,000 in educational debt. When non-student loan debt, mortgage liability, vehicle debt, and credit card debt were factored in, the average trainee owed more than $220,000.

A general surgery residency typically lasts five years. In the U.S., during that period, the average general surgery resident earns about $57,000 per year.

Overall, the authors reported in the Journal of the American College of Surgeons, 82 percent of respondents had moderate- or high-risk debt-to-asset ratios.

The type of residency program, year, gender and perception of financial knowledge didn’t correlate with a high-risk debt-to-asset ratio.

Harms and others want to develop a web-based course that would teach medical students about finances.

At Johns Hopkins University in Baltimore, Maryland, for example, finance faculty created the Pillars of Wealth financial literacy initiative, aimed at teaching medical professionals to make better financial decisions. It is now offered to fellows, residents and staff physicians throughout the Johns Hopkins medical system.

“Young physicians are relentlessly pursued by financial product salespeople who often don’t have doctors’ best interests at heart,” said Yuval Bar-Or, the Johns Hopkins professor who created the course.

Bar-Or, who wasn’t involved with the Wisconsin study, said the challenge now is finding the best way to teach the material and scale up the number of qualified teachers. Financial advisors can’t provide reliable education due to conflicts of interest, and senior physicians may provide poor advice due to their own biases, he explained.

“Physicians who don’t have the knowledge to make constructive financial decisions are vulnerable,” Bar-Or told Reuters Health by email. “Without a trusted, expert and unbiased source of financial literacy education, they are effectively being set up for failure.”

“We tend to see those in the medical profession as financially well-off, but that’s starting to change,” said Dr. Joey Johnson of Brown University’s Warren Alpert Medical School in Providence, Rhode Island. Johnson, who wasn’t involved with this study, has researched the debt burden of orthopedic surgeon residents.

“If we see a decrease in the number of people interested in becoming doctors, that would be detrimental as Baby Boomers age,” Johnson told Reuters Health by phone. “We’ve seen reform in home loans, but the same change hasn’t even been discussed when it comes to medical training loans.”

Initiatives such as the Public Service Loan Forgiveness Program have created avenues for students to pay off their loans by working for government or non-profit organizations after graduation. Future programs could expand on this idea, Johnson said.

“People brush off student loan debt, but debt is in fact debt, and anyone seeking higher education in the past decade is running into this problem,” he said. “This affects not only doctors - it affects everyone.”

SOURCE: Journal of the American College of Surgeons, online May 31, 2018.