Featured Research

from universities, journals, and other organizations

Is medical education in a bubble market?

Date:
October 30, 2013
Source:
Perelman School of Medicine at the University of Pennsylvania
Summary:
The currently high costs of medical education – which at some schools rise above $60,000 per year – are sustainable only if physician salaries remain high, which authors say is less likely because of efforts to reduce health care costs.

The costs of medical education must be reduced as part of efforts to reign in health care costs more generally, according to a Perspective published online this week in the New England Journal of Medicine. The currently high costs of medical education -- which at some schools rise above $60,000 per year -- are sustainable only if physician salaries remain high, which the authors, led by a physician from the Perelman School of Medicine at the University of Pennsylvania, say is less likely because of efforts to reduce health care costs.

Noting that students leave medical school with debt that often exceeds $150,000, the authors argue: "If we want to keep health care costs down and still have access to well-qualified physicians, we need to keep the cost of creating those physicians down by changing the way that physicians are trained. From college through licensure and credentialing, our annual physician-production costs are high, and they are made higher by the long time we devote to training."

"People wonder whether we are in a bubble market in medical education," says lead author David A. Asch, MD, MBA, Professor of Medicine and Director of the Center for Health Care Innovation at Penn Medicine. In bubble markets, such as the recent US housing market and the dotcom bubble of 2000, prices rise based on speculation rather than intrinsic value, as people buy houses or stocks with the hope of reselling them to those with even more optimistic views of their valuation. When clearer thinking returns, those who haven't sold are left having overpaid, holding an asset they cannot unload. "In the case of medical education, students buy their education from medical schools and resell that education in the form of services to patients. Medical education can remain expensive only so long as there are patients, insurers, and employers who are willing to pay high prices for health care. But if prices for physician services decline, then the cost of medical education will have to decline too, or people won't be willing to pay for medical school in the first place," Asch says.

The authors warn that high debt-to-income ratios drive students away from less financially rewarding fields. "Debt-to-income ratios reveal how much a student has to go into the hole financially for education compared to what a graduating student might earn," says Asch. "For example, it costs approximately the same to become an orthopedist, psychiatrist, or primary care physician, but orthopedists earn much more."

That might suggest that there is already a medical education bubble for psychiatry and primary care, but as bad as the debt-to-income ratios might be for those fields, they are even worse for some other fields outside of medicine. The authors note that veterinary medicine is closer to a bubble market situation, which could burst when potential students recognize that the high costs of becoming a veterinarian aren't matched by high income later.

As the cost of education in general rises, students might naturally be expected to focus more on those fields that provide a better balance between cost and return. "Veterinary education is vulnerable, medicine less so. Business education still seems to be a good buy." But, Asch asks, "Do we really want a world populated only by MBAs?"

"Doctors do well financially," says Asch, "but the cost of becoming a doctor is rising faster than the benefits of being a doctor, and that is catching up to primary care more quickly than orthopedics, and that ratio is close to overtaking the veterinarians." While only about 20 percent of health care costs are attributable to physician payments, physicians' earnings have been sluggish since the early 2000s. The authors note that a burst bubble can be averted if schools see these changes coming before their students do and lower their prices.


Story Source:

The above story is based on materials provided by Perelman School of Medicine at the University of Pennsylvania. Note: Materials may be edited for content and length.


Journal Reference:

  1. David A. Asch, Sean Nicholson, Marko Vujicic. Are We in a Medical Education Bubble Market? New England Journal of Medicine, 2013; 131030140029007 DOI: 10.1056/NEJMp1310778

Cite This Page:

Perelman School of Medicine at the University of Pennsylvania. "Is medical education in a bubble market?." ScienceDaily. ScienceDaily, 30 October 2013. <www.sciencedaily.com/releases/2013/10/131030185155.htm>.
Perelman School of Medicine at the University of Pennsylvania. (2013, October 30). Is medical education in a bubble market?. ScienceDaily. Retrieved July 31, 2014 from www.sciencedaily.com/releases/2013/10/131030185155.htm
Perelman School of Medicine at the University of Pennsylvania. "Is medical education in a bubble market?." ScienceDaily. www.sciencedaily.com/releases/2013/10/131030185155.htm (accessed July 31, 2014).

Share This




More Science & Society News

Thursday, July 31, 2014

Featured Research

from universities, journals, and other organizations


Featured Videos

from AP, Reuters, AFP, and other news services

House Republicans Vote to Sue Obama Over Healthcare Law

House Republicans Vote to Sue Obama Over Healthcare Law

Reuters - US Online Video (July 31, 2014) The Republican-led House of Representatives votes to sue President Obama, accusing him of overstepping his executive authority in making changes to the Affordable Care Act. Mana Rabiee reports. Video provided by Reuters
Powered by NewsLook.com
Florida Panther Rebound Upsets Ranchers

Florida Panther Rebound Upsets Ranchers

AP (July 31, 2014) With Florida's panther population rebounding, some ranchers complain the protected predators are once again killing their calves. (July 31) Video provided by AP
Powered by NewsLook.com
Britain Testing Driverless Cars on Roadways

Britain Testing Driverless Cars on Roadways

AP (July 30, 2014) British officials said on Wednesday that driverless cars will be tested on roads in as many as three cities in a trial program set to begin in January. Officials said the tests will last up to three years. (July 30) Video provided by AP
Powered by NewsLook.com
Health Insurers' Profits Slide

Health Insurers' Profits Slide

Reuters - Business Video Online (July 30, 2014) Obamacare-related costs were said to be behind the profit plunge at Wellpoint and Humana, but Wellpoint sees the new exchanges boosting its earnings for the full year. Fred Katayama reports. Video provided by Reuters
Powered by NewsLook.com

Search ScienceDaily

Number of stories in archives: 140,361

Find with keyword(s):
Enter a keyword or phrase to search ScienceDaily for related topics and research stories.

Save/Print:
Share:

Breaking News:
from the past week

In Other News

... from NewsDaily.com

Science News

Health News

Environment News

Technology News



    Save/Print:
    Share:

    Free Subscriptions


    Get the latest science news with ScienceDaily's free email newsletters, updated daily and weekly. Or view hourly updated newsfeeds in your RSS reader:

    Get Social & Mobile


    Keep up to date with the latest news from ScienceDaily via social networks and mobile apps:

    Have Feedback?


    Tell us what you think of ScienceDaily -- we welcome both positive and negative comments. Have any problems using the site? Questions?
    Mobile: iPhone Android Web
    Follow: Facebook Twitter Google+
    Subscribe: RSS Feeds Email Newsletters
    Latest Headlines Health & Medicine Mind & Brain Space & Time Matter & Energy Computers & Math Plants & Animals Earth & Climate Fossils & Ruins