Financial Implications of Increasing Medical School Class Size

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Re: Schieffler DA Jr, Azevedo BM, Culbertson RA, Kahn MJ. Financial implications of increasing medical school class size: does tuition cover cost? Perm J 2012 Spring;16(2):10-4.

Toffler WL. Medical education—the challenge of distinguishing actual costs versus charges (tuition). Perm J 2012 Spring;16(2):73-4.

To the Editor,

During the last 50 years or more the cost of an undergraduate college education has consistently grown at a rate that exceeded inflation. Some potentially contributory factors include the decreased time commitment of the average college professor to classroom teaching as research activities became more important to career advancement and the variety of subsidies, such as college loan programs, work-study arrangements, etc, that partially insulate the process from true economic market forces. Given the perceived value of a college education, there has been little pressure for colleges to be truly competitive on pricing for their students. Most economists will agree that if something is subsidized one tends to get more of it. One has to assume these same forces are also part of the rising cost of medical school. It is hard to tell if this article took that perspective into account or started with the underlying presumption that the present medical school cost structure was appropriate. As long as classes are filled and the admission process is so competitive, there is little incentive for schools to seriously address their cost structure and faculty time commitments.

Paul Bellamy, MD

Pulmonary and Critical Care Medicine

Kaiser Permanente, Woodland Hills

Response from Richard A Culbertson, PhD; Danny A Schieffler Jr, PhD; and Marc J Kahn, MD, MBA

We are pleased to receive Dr Bellamy's comments on our paper and his observations regarding price inflation as represented by tuition in higher education in general and medical education in particular. We did not address the issue he raises regarding the appropriateness of the cost structure of the medical school, confining ourselves to the question of the relationship between tuition revenues received for increasing class size and the added cost of providing education for a larger class. As Bellamy correctly observes, classes are indeed full and the admission process is indeed competitive. Economists might well argue that this scenario represents an opportunity for profit generation, much as universities have done in recent years with their schools of law and business.¹

The fact remains that students are still willing to apply to medical school, and medical school represents a firm prospect of good financial return to the student,² which would seem to encourage the charging of higher tuition without discouraging applicants. Medical education is often thought to have a relative inelasticity of demand, such that the demand for a seat in a medical school class is not particularly sensitive to price.

The irony of the current situation is that public policy makers, who might be logical sources of revenue for public schools, are encouraging the expansion of schools to meet projected deficits in the supply of available physicians. It is the schools themselves that must cover the gap between available revenues and added costs. Seldom does the state government provide the funds for what represents an "unfunded mandate." As Dr Bellamy observes, if the problem cannot be addressed through added revenues, then the logical alternative is reduced expense. The take-away question is whether this will produce a diluted educational experience that is in the interest of neither good public policy nor the student.

Richard A Culbertson, PhD

Danny A Schieffler Jr, PhD

Marc J Kahn, MD, MBA

References

1.    Caplan L. An existential crisis for law schools [monograph on the Internet]. New York: The New York Times Sunday Review; 2012 Jul 14 [cited 2012 Oct 10]. Available from: www.nytimes.com/2012/07/15/opinion/sunday/an-existential-crisis-for-law-schools.html?_r=0.
2.    Kahn MJ, Nelling EF. Estimating the value of medical education: a net present value approach. Teach Learn Med 2010 Jul;22(3):205-8. DOI: https://doi.org/10.1080/10401334.2010.488206

Response from William Toffler, MD

Dr Bellamy is quite correct in writing that the cost of undergraduate college education has consistently grown at a rate exceeding inflation. In fact, between 1985 and 2011, college tuition and fees went up 498.49% while the Consumer Price Index rose 114.85%.1 Similarly, over the past 13 years, medical school tuitions have also risen at about twice the rate of inflation (1.8 for private and 2.27 for public institutions).2 As a result, the total indebtedness of the average medical school graduate has risen from $13,500 in 1978 to $161,300 in 2011¹—almost 1200%!

Since finishing medical school in 1976 (incidentally with virtually no debt), I have been consistently involved in medical education—the first 6 years as a volunteer faculty member, and now (for the past 27 years) as a full-time academic. I have been directly responsible for medical education activities in a variety of roles within our institution and have also been involved with many other collaborative interinstitutional efforts to revise and refine curricula. Given this background, I am confident that the quality of medical education has significantly improved throughout the country. At the same time, I believe much of this needed improvement has been driven by the support of extramural educational grants from private funders such as the Culpeper Foundation and the Robert Wood Johnson Foundation as well as government funders such as the Health Resources and Services Administration and the National Institute of Health. Although institutional funding support for medical education has also risen, I believe the slope of that increase in no way parallels the slope of the increase in tuition charges.

Whereas there are many factors that have driven up tuition charges, there is a strong rationale for Dr Bellamy's concern that the very effort to support students (by helping them pay tuition with easily accessible loans and grants) is one of the significant contributors to this phenomenon.³ Although such programs may have been initially helpful, one now might credibly argue that their long-term effect on tuition may actually have created a significant burden (if not an insurmountable impediment) to present and future generations of economically challenged students. In the end then, rather than helping students, these inflated tuitions have simply enabled many institutions to channel the funds to many other goals not directly tied to their educational mission. Once again, the degree to which this occurs is impossible to ascertain. The shroud of secrecy enveloping the bookkeeping within the medical educational establishment is challenging to penetrate.

In summary, Dr Bellamy's concerns are well taken. Estimating educational costs based on a "presumption" of the percentage actually going to education is a bit of a circular reasoning.

William Toffler, MD

Professor of Family Medicine

Oregon Health & Sciences University

Portland, OR

References

1.    Wadsworth GH. Sky rocketing college costs [monograph on the Internet]. Capital Professional Services, LLC: InflationData.com; 2012 Jun 14 [cited 2012 Oct 10]. Available from: http://inflationdata.com/Inflation/Inflation_Articles/Education_Inflation.asp.
2.    Trends in cost and debt in US medical schools using a new measure of medical school cost of attendance. AAMC Analysis in Brief 2012 Jul;12(2).
3.    Clark K. Understanding the skyrocketing costs of a college education: an overview of the basic reasons behind rising college tuition [monograph on the Internet]. Chicago, IL: About.com; 2012 [cited 2012 Oct 10]. Available from: http://collegesavings.about.com/od/understandingcollegecosts/a/risingcosts.htm.