The average, newly minted physician enters the workforce with $195,000 in student loan debt, according to an Association of American Medical Colleges survey. This number is expected to rise over the coming years. Undoubtedly, this creates a lot of financial stress just as physicians are beginning their medical careers.
For healthcare organizations, the medical debt crisis is a challenge because new doctors may experience financial stress that puts their quality of work at risk.
However, if you look closer, there is an opportunity here for hospitals and medical offices. By actively addressing the debt issues that new hires may have, healthcare facilities can win over the best graduating physicians. Here’s how they can precisely do that.
Offer student loan reimbursement
Think about this: Fresh graduates have spent more than a decade studying to become physicians. Then, they graduate with all this debt. It has to feel bittersweet.
A good example of a healthcare organization that’s used student loan repayment benefits to attract quality physicians is LifePoint Health, a for-profit healthcare organization that operates in growing regions as well as rural areas and small towns. LifePoint and the newly hired physician agree on a monetary amount to aid with repayment each month. The hospital pays this amount for three to four years, as long as the physician stays with the company during the commitment period.
Help physicians find refinancing options
For federal student loans, interest rates range from 5.84% for Direct Stafford loans to 6.84% for GradPLUS loans. Both are unsubsidized, meaning that interest starts accumulating as soon as funds are dispersed. For loans from private lenders, rates can be even higher. This adds greatly to the cost of the loan.
Many healthcare organizations have good relationships with local banks and lenders. They could potentially leverage these relationships to help new physicians refinance and get lower interest rates and better terms. Since physicians have steady, high salaries in comparison to the general population, many lenders may be willing to provide attractive refinancing deals.
Even if hospitals can help a doctor refinance at a 1-2% lower interest rate, they can save them a bundle. For instance, if a new internist has $200,000 in loans at a 7% interest rate and is able to refinance at a 5% interest rate, she can save nearly $25,000 if the loan term is 10 years (and will save $200 per month on payments).
Offer free financial training and resources
Physicians are incredibly smart. There’s no doubt about that. Yet they don’t receive personal finance training in school (as they’re so busy with their studies). Healthcare organizations can show their commitments by providing free training and resources to help physicians get off to a good start financially as they begin work.
One thing hospitals can do is partner with personal finance advisers that can provide top-notch counseling to new doctors. For example, AMA Insurance offers a Physicians Financial Partners programthat pairs doctors with expert financial experts who have years of experience serving medical professionals.
Provide better perks and compensation
Medicine’s top earners are actually hospital and insurance executives–not doctors. While your hospital probably can’t boost salaries for new hires considerably, think about what’s feasible. For instance, can you up the salary by a few thousand dollars?
Beyond base compensation and student loan reimbursement, you could increase the sign-on bonus, provide the chance for call pay and give an annual CME allowance (millennials do value career development). Doing this will show dedication to the financial wellness of your healthcare facility’s most important asset: your doctors.
Final words
The goal of every young physician is to be a great doctor. Financial stress can impede their ability to reach that goal. Healthcare facilities that address the medical debt issue and financial wellness of its young doctors stand to gain the most in the long run.
