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Amid flat stipends, resident pay an issue for some

From the March 1998 ACP Observer, copyright © 1998 by the American College of Physicians.

By Christine Wiebe

As medical school debt continues to rise dramatically, some residents are beginning to question the fairness of stipends that have risen only slightly over the past two decades. In addition, a national lawsuit may add fuel to the issue by questioning whether residents are primarily workers or students.

In January, a report from the Council of Teaching Hospitals (COTH) announced that the average stipend for first-year residents is $33,387, a figure that is up only $598 (1.9%) from last year (see "A look at resident raises").


A look at resident raises
Mean first-year housestaff stipends nationwide
Actual
Dollars
Percent
Increase
Dollar
Increase
1997-98 $33,387 1.9% $598
1996-97 $32789 1.9% $1,139
1995-96 $31,650 2.9% $897
1994-95 $30,753 3.8% $1,121
1993-94 $29,632 3.5% $1,014

Source: "Council of Teaching Hospitals and Health Systems
Survey of Housestaff Stipends, Benefits and Funding 1997."
Association of American Medical Colleges.


The report, which was released by the Association of American Medical Colleges (AAMC), also found that raises for more senior trainees declined slightly. According to the report, average pay for subsequent years of training after internship rose about $1,534, down from last year's increase of $1,600 per additional year of training. Thus, a PGY8 earns about $10,700 more than a first-year resident.

Experts say that increases may have been more modest this year because hospital budgets were set before federal funding levels were determined. "That may have had a slightly depressing effect on stipends," explained Ingrid Philibert, one of the report's authors and a staff associate at the AAMC.

For debt-burdened residents, however, the figures mean hard times. Jonathan B. Berger, ACP Associate, chief internal medicine resident at Jackson Memorial Hospital in Miami, complained that his stipend makes it difficult to make ends meet. He and his wife, who is also a physician, owe a combined debt of more than $200,000. "The problem is that medical school costs a fortune now," Dr. Berger said.

He is not alone. While stipends have remained fairly flat for the past 20 years, medical school debt has been rising dramatically. According to the AAMC, the median debt for 1996 medical graduates who borrowed to finance their education was $71,500, up 10% from the previous year.

"Many people make less than residents, but not many start their careers with that type of debt burden," said Herbert S. Waxman, FACP, the College's Senior Vice President for Education. "Something needs to be done to break this cycle."

To make matters worse, the rules about repaying educational loans keep changing, usually to the detriment of residents. In 1993, Congress took away medical graduates' ability to defer repayments on federal loans for up to two years of residency, explained Paul Garrard, director of AAMC's student financial services. A grandfather clause allowed students already in those loan programs to continue claiming those deferments, so this year's new residents were the first to be affected. Mr. Garrard estimated that roughly a third of last year's graduates failed to qualify for the grandfather clause.


What housestaff are paid
Average stipends by level of training.
PGY1 $33,387
PGY2 $34,974
PGY3 $36,596
PGY4 $38,158
PGY5 $39,730
PGY6 $41,144
PGY7 $42,605
PGY8 $44,124

Source: "Council of Teaching Hospitals and Health
Systems Survey of Housestaff Stipends, Benefits
and Funding 1997."
Association of American Medical Colleges.


Mr. Garrard pointed out, however, that those who qualify for economic hardship can get deferments for up to three years, a year longer than the other deferment. During deferment, loans do not accrue interest; all residents still can request forbearance, during which interest does accrue.

Mr. Garrard said that most graduates who owe at least $60,000 and make an average stipend can qualify. (For worksheets to calculate whether you qualify, call the AAMC at 202-828-0400.) Mr. Garrard said that a number of residents who qualify for the deferments have failed to claim them and urged residents to call the AAMC or their lenders to see if they can take advantage of the deferment.

Regional differences

Despite concerns from residents like Dr. Berger, many housestaff say they see nothing wrong with the sluggish growth of their pay. "It's always been our understanding that we were in a training program," explained Jeff M. Schussler, ACP Associate, a third-year resident at Baylor University Medical Center in Dallas. "We are not expecting to get salaries that are equivalent to an attending."

"It's part of the game," agreed Sue Horvath, MD, chief resident at Millard Fillmore Hospital in Buffalo, N.Y. Residents generally accept that they have to live like students rather than like practicing physicians while they are in training, she said.

The COTH report found that stipends continue to differ from region to region. As in previous years, the highest stipends last year were paid in the Northeast, followed by the Midwest, then the West, and then the South, where Dr. Berger works. Residency leaders say those differences largely reflect the cost of living in respective regions.

According to the report, the highest paying areas included New York City, Long Island, N.Y. and Brooklyn, N.Y., where first-year residents earn about $38,000. Major cities like Houston, Los Angeles, Kansas City, Buffalo and Dallas, on the other hand, pay first-year residents less than $31,000. Even San Francisco, which has a very high cost of living, ranked near the bottom of the list at $31,618.

Residents point out that regional differences in pay can be exacerbated by local living costs. In Miami, for example, Dr. Berger has found that housing costs are high largely because the city is still recovering from the devastation left by Hurricane Andrew in 1992. He explained that any spending money residents might have had in previous years now goes to pay for housing. As a result, Dr. Berger said, some residents at his hospital are arguing for a pay raise, something they have not seen in several years.

Interestingly, however, when comparing only first-year stipends, the South came out ahead of the West. Thus, first-year residents in the South might start at a higher pay level than someone in the West yet end up earning less in their third year of residency than that same Western resident. Some programs might be using higher starting pay to recruit residents, said Ms. Philibert, one of the report's authors. "Artificially high first-year stipends are meant to get someone in the door."

Greater interest brewing

In the future, however, the role of stipends may change dramatically for some training programs. Teaching hospitals, for example, are anxiously watching a federal court case that could affect future stipend levels. The case challenges the characterization of housestaff as primarily students, an argument often used to explain modest stipend levels.

"A stipend is meant to offset the cost of living," said Ms. Philibert of the AAMC, which supports the current "student" status of residents. Based on that view, she said, stipend levels should only be adjusted for changes in the cost of living.

Resident unions, however, insist that housestaff are primarily employees and argue that pay levels should reflect their long work hours and intense patient-care duties. To make that point, the Committee of Interns and Residents (CIR), a housestaff union based in New York, last year challenged a 1975 ruling by the National Labor Relations Board (NLRB) that defined residents as "trainees" and barred them from unionizing at private hospitals. Residents at public hospitals, who are viewed as state employees, already have collective bargaining rights.

According to Ms. Philibert, educators are concerned that if the NLRB overturns its earlier decision, the ripple effect could force training programs across the country to re-examine stipends. "Hospitals will have to decide what it will take to keep 60% of their residents from forming a union," she said.

Even at training programs where residents are content, a growing union movement could entice housestaff to organize and seek better working conditions and wages, said James M. Cerletty, FACP, program director at the Medical College of Wisconsin in Milwaukee. But because most training programs set their stipends based on Medicare funding, he doesn't know how much flexibility they actually have in paying housestaff. "I don't know where the money would come from to bump the stipends up," Dr. Cerletty said.

The NLRB case actually raises much bigger questions than how much residents should be paid or whether they are students or workers, according to ACP's Dr. Waxman. "The truth is, they've always been both," he said. The bigger issues are about the training environment for residents, he said, and whether residents receive an optimal educational experience. Recent accreditation changes such as limits on work hours and guidelines for supervision, have shifted residency more toward an educational experience than a work experience, he said.

As long as residents are satisfied with that balance, it's possible that there will be little pressure to raise stipends. At Akron General Medical Center in Ohio, for instance, residents generally feel that the hospital is "taking care of them," said Tom Tanphaichitr, MD, chief resident. Fringe benefits such as free parking and free meals at the hospital help supplement their stipends, he said, and a relatively low cost of living also helps. Although he is paying back some loans already, Dr. Tanphaichitr is realistic about his financial expectations. "I'm not living like a king," he said, "but I can make ends meet."

In fact, he added, "This is the most money I've ever made."

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

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