Educational Debt and Physician Employment

The health care landscape has changed considerably in the past decade. The Affordable Care Act introduced sweeping changes to insurance coverage and payer source against the backdrop of already evolving population demographics. An expanded payer source and a dynamic demographic trend should seem like a ripe business climate for new graduates, yet these changes occurred during the throes of the Great Recession of 2008 and rising national debt. With the adoption of bundled payments, various organizational models have gained popularity, with a nod to physician employment by multispecialty groups and hospitals.(1,2) This is notably reflected among early-career physicians.

Medical education itself also has changed, with a shift in the composition of graduates and increasing graduate indebtedness. Although doctors of osteopathic medicine currently comprise only 8.5 percent of licensed U.S. physicians,(3) they are a rapidly growing segment. Today, one in four U.S. medical students matriculates at an osteopathic medical school, and more than 5,400 graduate annually.(4)

This shift has important individual financial implications. Although the overall percentage of medical students who graduate with educational debt has remained fairly steady, regardless of degree type (osteopathic versus allopathic), differences in mean debt values exist. In 2016, mean medical education debt among osteopathic graduates was $240,000, whereas it was $180,000 for their allopathic peers.(5-8) The discrepancy is in part because the vast majority of osteopathic medical schools are privately held and have associated high tuition and fees.(9,10)

Although a thorough discussion of factors that contribute to the differences between allopathic and osteopathic education indebtedness are beyond the scope of this analysis, its existence raises the question: Do differing levels of debt alter practice patterns?

The idea that debt influences early career decisions is not unique to medicine, and confirming evidence has been observed at all levels of higher education.(11,12) Most of the research to date on early medical career decisions and indebtedness has centered on specific subspecialties, but no clear patterns have emerged. For example, Steiner et al(13) reported that anesthesia residents with higher debt burdens were more likely to choose private practice over academic positions, but similar studies of other subspecialties variously have shown no correlation,(14) correlation to debt in general but not varying levels of indebtedness,(15) or positive correlation.(16)

Early-career physicians face daunting financial decisions at the end of graduate medical education training (i.e., residency). Having already experienced a delay to full income potential and often saddled with considerable educational debt, they must now choose a practice model that meets their financial needs.

In broad categories, these models include academic positions, government employment, self-employment, group or salaried position, and health-maintenance organization participation, and each choice is associated with potential risks and benefits. For example, the self-employed physician may enjoy greater financial opportunity and lifestyle control but a variable income stream and high barriers to entry because of startup costs or expensive practice buy-ins.

In this analysis, we sought to explore trends in anticipated business model selection among early-career physicians, considering the backdrop of economic variability and legislative overhaul. More specifically, we explored the following questions: How has the anticipated business model selection changed during the past 12 years? Does the intended business model selection change with the accrual of differing levels of educational debt?

Methods

Each year, the American Association of Colleges of Osteopathic Medicine invites all accredited colleges of osteopathic medicine to conduct a voluntary survey of graduating students. Similar to the American Association of Medical Colleges’ Graduate Questionnaire, this survey gathers information on demographics, specialty selection, anticipated practice decisions, indebtedness and various other metrics of undergraduate medical education. Since its introduction, the AACOM survey has evolved to reflect changes in medical education, but questions regarding anticipated practice type and current level of indebtedness have remained consistent.

We examined responses to the following survey questions:

• Select one item that best describes your intended activity five years after internship and residency training: government service, HMO, self-employed, private practice, other, undecided.

• Indicate the dollar amount borrowed to finance your osteopathic medical education.

The surveys from 2007, 2010, 2013 and 2016 were chosen for analysis. These surveys were administered before and after implementation of the Affordable Care Act (2010) and before and after the so-called Great Recession (2007-09). We evaluated national trends in anticipated practice type, practice type in relation to specialty choice, and differences in high- vs. low-debt respondents (as determined by lowest and highest quartiles of debt). For this study, a staff-model health maintenance organization is defined as an employment model under which physicians serve as salaried staff of an HMO and provide care only to a defined group of the HMO’s members or beneficiaries.

We assessed the univariable associations between the amount of medical school debt and the above questions using the x-squared test, Fisher exact test with Monte Carlo p-value, and analysis of variance. We used a multivariable proportional odds ratio model with logistic regression to assess relationships of interest. P-values of less than 0.05 indicated statistical significance. Categorical data are expressed as number and percent. The software used for these analyses was SAS Studio (release 3.7, basic edition, SAS Institute Inc.). Deidentified data and analyses were placed on a password-protected Microsoft Excel file and stored on a secured institutional network.

Data were obtained and analyzed with the permission of AACOM. This study was deemed exempt by the Mayo Clinic Institutional Review Board because no personally identifiable information was used.

Results

The number of survey responses ranged from 2,403 in 2007 to 4,191 in 2016, reflecting increased matriculation over time at osteopathic medical schools nationwide. The response rates for the years studied ranged from 72 percent to 77 percent.

We observed consistent increases in the mean educational debt level at graduation, from $155,698 in 2007 to $240,331 in 2016. The percentage of respondents graduating without debt declined from 19.3 percent in 2007 to 6.7 percent in 2010 but then increased to 12.3 percent by 2016. Figure 1 shows the distribution of educational debt during the years studied.

Figure 1. Distribution of educational debt

We observed several trends for graduating osteopathic students. The percentage of students expecting to work in HMOs significantly increased (from 1.58 percent in 2007 to 10.77 percent in 2016; p-value less than 0.001). We noted a corresponding significant decrease in students who expected to be self-employed (practicing with or without a partner), with 17.07 percent positive responses in 2007 and 7.69 percent in 2016 (p-value less than 0.001). Table 1 summarizes employment plans, stratified by survey year.

Students were categorized into debt quartiles for each year of the survey. The lower quartiles of debt were $125,500 (2007 survey), $135,000 (2010 survey), $74,750 (2013 survey), and $50,000 (2016 survey). The upper quartiles of debt were $216,000 (2007 survey), $255,750 (2010 survey), $278,000 (2013 survey), and $308,000 (2016 survey). During all four years, the anticipated practice types significantly differed (p-value less than 0.001) when comparing plans from those in the highest versus lowest quartiles of debt (see Table 2).

Comparing data across the various years, the difference between students with the least amount of debt (quartile 1) and those with the most debt (quartile 4) who are anticipating employment in government service narrowed from 21.5 percent in 2007 to 7.0 percent in 2016. Among students with the least debt (Q1), 1.8 percent anticipated working in HMOs in 2007 compared with 8.4 percent in 2016. For students with top-quartile debt (Q4), 1.9 percent predicted HMO employment in 2007 contrasted with 13.6 percent in 2016. In 2007, private practice was anticipated by 15.4 percent of students with the least debt (Q1) and 17.3 percent of students with the most debt (Q4). In every subsequent year analyzed, those with the top quartile debt had lower planned private practice participation compared with their classmates with bottom quartile debt.

Using univariate logistic regression modeling, we individually investigated the role of specialty (nonprimary care vs. primary care), graduate indebtedness (Q4 vs. Q1) and gender on the selection of various employment models in each year examined. For example, in all years examined, those in nonprimary care specialties were more likely than those in primary care to be employed in other professional activities. Specialists were less likely to plan employment in government service, an HMO, or private practice but these values were not statistically significant (see Table 3).

With regard to the influence of indebtedness, those with the highest level of debt were less likely to anticipate government service practice and, in most years, were more likely to plan working for an HMO or in a group/salaried position. There were no other consistently significant relationships between degree of indebtedness and employment model (see Table 4). Last, our gender analysis reveals that women, in most years, were less likely to anticipate government or self-employment (see Table 5).

Discussion

The decision about what type of practice to pursue is inherently multifactorial. Many factors commonly cited by trainees include lifestyle, flexibility, compensation and desired geographic area of practice. This mix of factors confounds predictions about physician workforce habits and changing trends. One fact is clear, however: Physicians have moved rapidly away from the traditional model of solo practice and now are predominantly employed by corporate institutions.(17)

The trend toward hospital or large group practices is understandable, given the larger economic and regulatory context. New regulations have markedly increased startup costs and business complexity for new practices.(18,19) Whereas a new graduate previously may have just rented office space and started seeing patients with one or two staff members, current documentation, billing and reporting requirements necessitate as many as seven full-time support staff per clinician.(20) Larger group practices, hospitals, corporations and care delivery organizations much more easily can absorb the administrative requirements of current mandates from the Centers for Medicare & Medicaid Services.(18)

These larger regulatory factors appear to explain the trend away from solo practice and toward hospital or multispecialty group employment, but our analysis of intended practice type after stratifying respondents by debt levels shows that educational debt can exaggerate these effects markedly. Respondents in Q4 were more likely to seek HMO or group/salaried employment. This may reflect that heavily indebted graduates are risk-averse, seeking a competitive but dependable income stream to counterbalance their educational debt obligations.

Additionally, in every survey year, graduates with higher debt were less likely to pursue work in government service positions. These positions often involve caring for underserved populations with less access to health care, but they usually have lower salaries than analogous private practice positions.

Interestingly, we observed a consistent pattern of female graduates being less likely to pursue self-employment. This suggests that the overall decreasing trend in self-employment is driven primarily by waning male physician enthusiasm.

The trend away from solo practice and toward employed and group positions shows how radically our profession has changed. In 2000, 53.2 percent of physicians operated in practices they owned, and only 23 percent were employed by outside groups or hospitals. Physician ownership has rapidly declined since 2016, with most physicians being employed by groups or hospitals.(15) Additionally, our data show that less than 8 percent of the graduating class of 2016 saw themselves opening a solo practice. With a demographic shift that strong, the future of physician-owned practices looks grim in the setting of increasing educational debt levels. Greater debt increases pressure on medical graduates to opt for more predictable employment environments over risky, though potentially more lucrative, entrepreneurial endeavors.(21)

Our analysis is not without limitations. Although the survey had a high response rate and nearly 20,000 graduates during the years analyzed, it is still vulnerable to recall and response bias by participants. Additionally, causal relationships cannot be extrapolated from a cross-sectional analysis, and it is unclear how final-year medical student practice intentions predict actual physician practice choices. Further research is needed to assess how career intentions evolve throughout residency training and physician practice.

Physician practice choices are multifactorial decisions. Although the overall trends in medical student planning are strong, many variables beyond education debt contribute to career choice, including personal connections, lifestyle choices and a changing regulatory environment. These variables currently are poorly understood but nevertheless can markedly influence changes in physician employment.

Conclusion

Debt appears to drive the current trend of physicians moving to employment in a group or salaried setting and away from traditional solo practice. Given the magnitude of regulatory and environmental factors, understanding the trends of physician practice type is important for understanding how health care is delivered in this country. We are no longer a nation of physicians who “hang out a shingle,” and building policy based on facts instead of opinion is increasingly important as the physician workforce changes.

Acknowledgment

With thanks to Lanyu Mi, Michael Golafshar and Matt Kunz for assistance with this study.

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