T. P. Gao1, R. L. Green1, A. Hamilton1, E. Kopelson1, L. Kuo1 1Temple University, Surgery, Philadelpha, PA, USA
Introduction: Surgical residents make career decisions that may have a dramatic impact on future earnings. Given the rising cost of education, it is not surprising that surgical residents cite increased income potential as a motivating factor for pursuing fellowship training. The earning potential for a general surgeon without subspecialty focus is not well understood. This paper utilizes economic principles to illustrate the effect of debt burden, repayment plan, and practice setting on a general surgeon’s career value.
Methods: A financial model was created to determine the value of a surgeon’s career using net present value (NPV). NPV is the difference between the present value of cash inflows and outflows over time and is used in finance to analyze the profitability of a projected investment. The NPV was calculated using positive cash flows (after-tax salary with yearly growth rate), negative cash flows (education debt, yearly spending), and a moderate discount rate of 5%. Physician salary data were obtained from Medical Group Management Association Physician Compensation Data and Association of American Medical Colleges (AAMC) Faculty Salary Report, student debt information from the AAMC Student Debt Fact Card, and tax and average household spending data for one person per household from publicly available US government records. Assumptions included no gaps in training, no debt prior to medical school, single-person household, and career duration of 35 years. Variable levels of debt, repayment plans, and private vs. academic setting were considered to model the value of a surgeon’s career across 32 scenarios.
Results: A general surgeon’s salary adequately re-pays debt burdens from $100-$300K over a period of 10-25 years, regardless of repayment plan or practice setting. Practice setting influenced career value when debt burden and repayment plan were held constant: for example, the NPV at attending year 5 for an academic surgeon with $100K of debt and an unsubsidized 10-year repayment plan is $382K, compared to $500K for a non-academic surgeon. Increased debt burden repaid through unsubsidized plans and income-based repayment plans incrementally reduced career value for all surgeons, while subsidized plans increased NPV. 25-year plans reduced overall career value compared to 10-year plans: for example, a private surgeon with 200K debt has a NPV of 2.76M in the 25-year plan vs. 2.78M with a 10-year. The projected NPV for all scenarios after 35 years range from 2.35M to 2.87M.
Conclusion: Non-specialized general surgeons can have financially viable careers across all levels of debt. Practice setting, repayment plan type and duration all impact NPV. Importantly, the modeled scenarios do not account for prior debt burden or major expenditures and assume no increase in yearly household spending beyond the national averages. However, general surgery residents should be aware that a general surgery career is financially feasible.