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Resident stipends stable despite fears of upcoming cuts

From the April 1996 ACP Observer, copyright © 1996 by the American College of Physicians.

By Christine Wiebe

The average resident stipend remained stable this year, despite indications that residents, who already feel underpaid, may face even tougher economic times as teaching hospitals brace for possible funding cuts.

This year, nearly a quarter of teaching hospitals responding to an annual survey reported they had frozen or even cut interns' stipends from the previous year. "Apparently, these hospitals are taking to heart the whole debate" over funding for graduate medical education, said Ingrid Philibert, author of the annual report, "Survey of Housestaff Stipends, Benefits and Funding 1995," produced by the Council of Teaching Hospitals (COTH). Congress' examination of whether Medicare should fund medical training, and at what level, has probably made some hospitals more conservative with residents' stipends, she said.

On the other hand, about a quarter of teaching hospitals raised first-year stipends by 4%, apparently trying to "catch up" with competing institutions, Ms. Philibert said.

As a result, the average first-year stipend this year-- $31,650--is slightly higher than last year--$30,753--even when adjusted for cost-of-living increases.

Does pay make a difference?

The gap between the highest- and lowest-paid residents appears to be closing slightly, Ms. Philibert said. However, the differences (mostly due to competition in the marketplace) are still significant. At the Hospital of St. Raphael in New Haven, Conn., for example, interns make about $40,000 a year. Compare that with interns in Dallas, where hospitals pay about $29,000.

Residency program directors are divided on the significance of housestaff pay levels. Some think pay has a major influence on residency choices, while others believe it plays no role.

Generally, medical students are choosing between programs with a $1,000 or $2,000 pay differential, not $10,000, said Patrick Henry, MD, program director in internal medicine at St. John's Mercy Medical Center in St. Louis. He explained that residency programs set their stipend levels to be competitive with comparable programs in their region. In his 27 years of interviewing residency candidates at both university and community hospitals, he has never heard anyone cite stipend levels as an issue.

Across the city at St. Louis University, however, program director Coy Fitch, MD, is convinced his hospital loses residents to community hospitals that can either pay more or offer better benefits. "There's not a doubt in my mind that it makes a difference," he said.

Even if students do not base their residency choice entirely on stipends, pay levels probably are a factor. Mitu Agarwal, MD, is one of the "lucky" residents at St. Raphael in New Haven, and he admits the stipend level had some influence on his choice.

"Having to repay over $100,000 in loans, one does think of financial security," said Dr. Agarwal, a surgery intern.

Trying to compete

Several factors determine hospitals' residency pay levels, but program directors say competition is a major influence. Some programs identify their competition as other hospitals in their city or region, while some use "comparable" programs as their yardstick.

At Washington University Medical Center in St. Louis, administrators use the COTH report to help set resident pay levels, said Kevin Bjerke, manager of graduate medical education. He looks at a grouping of hospitals that includes "premier" teaching institutions such as Brigham and Women's Hospital, Johns Hopkins and Harvard. Wanting to compete with that group, Washington University raised first-year stipends each of the past four years between 3% and 4.5%, Mr. Bjerke said. Now that they have "caught up," increases will likely be smaller next year, and stipends at the PGY 4, 5 and 6 levels will probably be frozen, he said. However, he added, program directors already have expressed concern that the institution remain competitive.

"Residents do look at stipend levels," Mr. Bjerke said. "Whether a thousand dollars makes a difference, we're not sure."

Competition across a city seems to affect the average pay level as well. In St. Louis, for example, the average first-year stipend is somewhat higher than the national average, perhaps due to the high level of competition. In Dallas, by contrast, program directors have agreed not to set stipends higher than those offered at the city's public hospital, said John Fordtran, MD, former program director in internal medicine at Baylor University Medical Center. That way, he said, "we compete on the quality of the residency training rather than on pay."

Perhaps as a result of the lack of competition, the average first-year stipend in Dallas is only 90% of the national average. Dallas stipends are comparable for the region and reflect cost-of-living standards, Dr. Fordtran said, pointing to the average for Houston, which was only slightly higher.

Furthermore, some cities may not have to compete as much because they are popular places to live, he said. "An awful lot of people want to stay in Dallas," said Dr. Fordtran, who is currently president of the Baylor Research Institute. "We've never had anybody raise [stipends] as an issue."

Location and ownership

Stipends have always varied by geographical region, with the South historically offering the lowest pay levels. Last year, however, the West dropped below the South for the first time and this year still trailed slightly. As usual, the 1996 average first-year stipend is highest in the Northeast at $33,965, followed by the Midwest at $31,109, the South at $29,876, and the West at $29,851.

Most residents and program directors know anecdotally that community hospitals pay the highest stipends, although the COTH report does not pinpoint such a category. However, hospitals identified as "church-owned" report the highest stipends, with a first-year average of $32,609. The next highest-paying group are the "other not-for-profit" hospitals, which includes community hospitals, with an average first-year stipend of $32,174.

State, municipal and VA hospitals all have average first-year stipends below the overall average, with state hospitals paying the lowest.

Cutting costs elsewhere

Although first-year stipends on average remained comparable with previous years, hospitals are likely looking at other areas in which they can contain or cut costs, says author Philibert, whose report was published by the Association of American Medical Colleges. For instance, step increases for the higher levels of training were lower this year, suggesting that hospitals may be curbing pay levels for residents already locked into a training program rather than hurting recruiting efforts by lowering first-year stipends.

Also, some hospitals are reducing or eliminating benefits to cut costs. For instance, the percentage of hospitals paying residents' parking in full declined from 61% to 56% this year, according to the COTH survey. Similarly, the percentage offering fully paid meals declined from 23% to 15%.

Benefits may be targeted increasingly in the coming years, Ms. Philibert predicted. If threatened budget cuts become reality, hospitals will need to find ways to curb costs while remaining competitive in attracting residents.

Christine Wiebe, of Providence, Utah, writes frequently on issues related to medical residency.

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