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The Cost of Pursuing a Medical Career in the Military: A Tale of Five Specialties

Cronin, William A. MD, MBA; Morgan, Jessica A.; Weeks, William B. MD, MBA

doi: 10.1097/ACM.0b013e3181e5d6b8
Financial Cost of a Medical Career

Purpose The physician payment system is a focus of potential reform in the United States. The authors explored the effects of the military's method of physician payment on physicians' returns on educational investment for several specialties.

Method This retrospective, observational study used national data from 2003 and standard financial techniques to calculate the net present value—the current value of an expected stream of cash flows at a particular rate of interest—of the educational investments of medical students in ten 30-year career paths: either military or civilian careers in internal medicine, psychiatry, gastroenterology, general surgery, or orthopedics.

Results At a 5% discount rate, in the civilian world, the lowest return on an educational investment accrued to psychiatrists ($1.136 million) and the highest to orthopedists ($2.489 million), a range of $1.354 million. In the military, the lowest returns accrued to internists ($1.377 million) and the highest to orthopedists ($1.604 million); however, the range was only $0.227 million, one-sixth that found in the civilian sector. The authors also found that most military physicians do not remain in the military for their full careers.

Conclusions Choosing a military career substantially decreases the net present value of an educational investment for interventionalists, but it does so only modestly for primary care physicians. Further, a military career path markedly diminishes specialty-specific variation in the net present values of educational investment. Adopting a military structure for engaging medical students might help reverse the current trend of declining interest in primary care.

Dr. Cronin is a recent graduate, Dartmouth Medical School and Tuck School of Business, Hanover, New Hampshire; he is completing a transitional internship at Naval Medical Center, San Diego, California.

Ms. Morgan is in her last year of the MD/MBA program, Dartmouth Medical School and Tuck School of Business, Hanover, New Hampshire.

Dr. Weeks is associate professor and core faculty member, Dartmouth Institute for Health Policy and Clinical Practice, Lebanon, New Hampshire.

Correspondence should be addressed to Ms. Morgan, Dartmouth Medical School, 466 Kellogg Building, Hanover, NH 03755; e-mail:

The United States is facing unrelenting and accelerating health care costs. By 2017, health care costs are expected to be 20% of GDP.1 Many factors may play a part in this trend. Research indicates that having a high proportion of specialists in the country is a contributor to high health care costs2 and that states with relatively more primary care providers receive more evidence-based care at a lower cost than those with fewer primary care providers.3 Although the appropriateness of the current supply of physicians overall is a contentious issue,4,5 most agree that increasing the proportion of primary care physicians could help to decrease costs.6–8

Physician payment reform has been proposed as a mechanism for incentivizing medical students to pursue primary care careers. Although not the only factor, differences in incomes across specialties are likely contributing to more medical students pursuing careers as procedure-based specialists.9,10 Though most are aware of the financial dynamics for medical students and physicians in the private sector, there are in fact two alternative systems for medical students in the United States: civilian medicine and military service commitment programs. In civilian medicine, the cost of a medical education has dramatically increased since the mid-1970s. Students incur substantial debt in medical school and receive low incomes during residency training, and their debt levels potentially influence specialty decisions.10,11 Although the average return on educational investment for physicians is on par with other professions, it can vary dramatically depending on the medical specialty that is pursued.12 Returns on educational investment range from very high for cardiology and gastroenterology to negative following fellowships in geriatrics and urogynecology.13–15

An alternative for medical students is to enter military service programs. These programs, offered through the Navy, Army, and Air Force, provide military personnel with stipends and tuition coverage that are not available to their civilian counterparts. Additionally, the Uniformed Services University of Hospital Sciences Program (USUHS), the only federal medical school, was created by an act of Congress in 1972 to provide a reliable source of career health care providers for the military at a time of low recruitment during the Vietnam War.16 USUHS continues to be a common path for students to become military physicians. However, on completion of a residency, a military physician's income potential may be more limited, and income levels may vary less across specialties.17,18 With an eye on the potential impact of physician payment reform in the private sector, we sought to understand how the military payment structure affected physicians' returns on educational investment across medical specialties and how the military payment system was related to retention of physicians of different specialties within the military workforce.

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We took the perspective of a 22-year-old college graduate who, both free of debt and devoid of assets, must choose either a civilian medical school or a medical education through USUHS. In either case, we assumed that the physician remains in the chosen career path—civilian or military—for a 30-year career: four years in medical school, the minimum required residency, and the remainder of time in practice. Although some physicians choose to work longer, discounting makes the contribution of the final years trivial to the analysis.

We assumed that students in the civilian track incurred the expense of four years of tuition and fees, each year equivalent to the average tuition and fees of all 124 medical schools (74 public, 50 private) in 2002–2003. We assumed that the military stipend for cost-of-living expenses was sufficient for all medical students; therefore, we added that dollar amount to the debt for civilian medical students. We took this approach instead of using average debt levels because we think the military stipend better represents the actual investment requirement for a student who begins medical school without assets and free of debt.

Within each career path, we examined five specialty choices: general internal medicine, psychiatry, gastroenterology, general surgery, and orthopedic surgery. We chose these specialties because they represent the military's four major classifications of incentive bonuses. We added psychiatry, which is in the same classification as internal medicine, to provide another example of primary care. We used data on mean resident salaries and age-specific incomes of the five specialties. We used the minimum postgraduate training periods required for board eligibility for each specialty and assumed that residencies are completed without interruption. Military branches differ on the percentage of physicians that complete residency without interruption; however, for comparison in this model, we compared solely physicians that completed residency uninterrupted.

We assumed that physicians immediately became employed in their chosen fields on completion of residency training. In the military system, a physician's salary is determined in part by one's rank. In general, commissioned officers are ranked from O-1 to O-11. One's rank or pay grade is determined by length of service, professional education, and performance. On the basis of the most typical path taken by military physicians, we assumed that military physicians were promoted to the rank of O-3 at graduation, held that rank for five years, then were promoted to O-4 for six years before promotion to O-5 for six years, and finally spent their last 12 years at the rank of O-6. We assumed that military physicians remained in the military, and that once their required service commitments were completed, they signed on for the longest contract extension and thus the largest bonus for that contract extension. Finally, we assumed no difference in work hours between military and civilian physicians.

To obtain specialty- and age-specific information on physician incomes, we used three data sources. To estimate income during a private-sector residency and fellowship training, we used postgraduate-year-specific housestaff stipends as published by the Association of American Medical Colleges for 2002–2003.19 To estimate the specialty-specific income of practicing civilian physicians, we used aggregated respondent data from the Community Tracking Study Physician Survey for 2004–2005, which reported 2003 incomes.20 To estimate military physician and military resident salaries, we used the Defense Finance and Accounting Service Military Pay Rates tables from 2003.17

Finally, from the Health Professions' Retention–Accession Incentives Study Report to Congress, dated March 2002, we obtained retention rates by specialty in the military system over years of accession, with accession defined as years as an attending, after training. We examined this to determine whether different career choices were more or less likely to remain in the military after training.18

We examined one measure: the net present value of the educational investment that could be expected by a college graduate contemplating a career in orthopedic surgery, general surgery, gastroenterology, internal medicine, or psychiatry in the civilian or military paths described above. Net present value is the current value of an expected stream of cash flows at a predetermined rate of interest, the discount rate. We defined the annual cash flow (CF) of the educational investment as the after-expense annual income minus educational costs. Educational costs were capitalized and repaid at an 8% interest rate across 15 years, beginning on completion of residency and fellowship training.

A dollar earned today is worth more than a dollar earned in the future because today's dollar can be invested at an interest rate (i) to produce an immediate return; the discount rate accounts for the opportunity cost associated with foregoing income today in anticipation of income in the future. Because the discount rate is very important to the calculation of a net present value, we performed a sensitivity analysis by discounting cash flows at 0%, 5%, and 10%.

We calculated the net present value (NPV) of the educational investment for the entire career (years j to n), as shown in the equation:



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Using a discount rate of 5%, we found substantial variation in returns on educational investment, depending on the specialty chosen and the career path (military versus civilian) taken (see Figure 1). For both general internal medicine and psychiatry, a military career had a higher net present value of the educational investment; further, the military path avoided the need to incur debt. However, for gastroenterology and orthopedic surgery, the civilian path outperformed the military path on return on educational investment, with civilian gastroenterologists surpassing their military counterparts 13 years into their careers, and civilian orthopedic surgeons surpassing their military counterparts at 9 years.

Figure 1

Figure 1



The range of net present values, across three different discount rates, demonstrated a “leveling of the playing field” among military physicians that is not seen among civilian physicians (see Figure 2). At a 5% discount rate, a civilian orthopedic surgeon had a net present value of $2.5 million, whereas a civilian psychiatrist had a net present value of $1.1 million. For military physicians, the differences were much narrower: An orthopedic surgeon had a net present value of $1.6 million, whereas a psychiatrist had one of $1.4 million. The roughly $227,000 difference in net present values among military career physicians was approximately one-sixth that found in the civilian sector.

Figure 2

Figure 2

Within the military system, we found that retention rates are significantly lower among internal medicine specialists (a subsample of gastroenterology, cardiology, and hematology/oncology physicians) as compared with other groups of physicians (see Figure 3). After eight years, the military retained roughly 20% of attendings in these subspecialties. Although retention rates were highest among primary care providers (family practice and preventive medicine physicians, pediatricians, and general internists), after eight years, only 35% of primary care providers had stayed in the military system.

Figure 3Source:

Figure 3Source:

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We found that the relative returns on educational investment of physicians in the military versus civilian system vary significantly based on specialty. For psychiatrists and general internists, the cumulative net present value of the educational investment is larger for those who pursue and complete a military, as opposed to a civilian, career. In contrast, physicians who pursue and complete civilian careers as orthopedic surgeons, gastroenterologists, or general surgeons have much greater returns on their educational investments than if they had pursued and completed military careers in those fields. The differences that we found are largely attributable to the marked difference in civilian, as opposed to military, interventionalists' incomes.

Because pursuit of a military career eliminates the need to pay tuition for medical school, debt levels are eliminated as a potential factor in the specialty decision process. Because primary care tends to have lower incomes relative to specialties, this element effectively removes a disincentive to go into the field. Moreover, the military pay structure for pediatricians and family practice physicians is roughly the same as for internists and psychiatrists, which suggests that the trend found with internal medicine and psychiatry would also be present in other primary care specialties. For those physicians who complete a 30-year career in the military, the differences in net present value between interventionalists and primary care physicians are substantially narrower than for those who complete a 30-year career in civilian practice.

However, we found that medical specialists have the lowest retention rate in the military system, and the rate drops quickly after accession. Across all specialties, retention in the military ranged from about 20% to 40% after eight years of accession. In contrast to the civilian sector and its relatively high proportion of specialists, because of a lower level of retention, the military is struggling to maintain the optimal number of specialists for its needs.18 Our findings suggest that interventionalists are acutely aware of the pay differential between military and civilian careers and may pursue a path that leads to a higher net present value of their educational returns as soon as their military obligations are complete.

Our findings suggest that payment structure is a lever that might be used to increase the proportion of civilian primary care providers, particularly if there were a minimum required time of service after completion of medical training. If the civilian sector were to shift toward the military model, wherein medical school tuition is paid in exchange for a minimum service time, health care spending might decrease in at least two ways. First, there is evidence that having relatively more primary care providers in a hospital referral region is associated with superior rates of use of effective care and lower spending.3 Second, overall spending on physician salaries might decrease, as primary care physicians' incomes replace interventionalists' incomes. However, the lower salaries for physician services found in the military are coupled with substantial up-front costs for medical education costs: Civilian policy makers would need to determine whether potential cost savings associated with having a greater proportion of the physician workforce enter primary care are worth the initial investment in paying their tuitions, which may be substantial. Military policy makers, apparently, have already concluded that this investment is a good one.

Our study has several limitations. First, there are significant noneconomic factors in a medical student's choice to enter civilian medicine or military service commitment programs; for instance, military physicians face a risk of death, lifestyle challenges, location limitations, and deployments. In particular, the threat of death among military physician personnel, though extremely low, may be unacceptable to some who choose civilian medicine. But simply changing the way that education is paid for, without adding the risk of death, should not dissuade medical students from pursuing a civilian career that is funded like a military one. On the other hand, a military career provides additional benefits not included in our analysis, including housing allowances, commissary privileges, and generous health, benefit, and retirement packages. Second, the public costs of paying for a primary care physician's medical education are likely to be substantial. Nonetheless, there are a number of state and federal publicly funded programs that support physicians' medical school and residency experiences. From a societal perspective, these up-front costs might be offset by avoiding the high physician payments and high costs of testing associated with interventionalists and by substituting lower physician payments and lower rates of testing.3 Another limitation to our study is that we examined only five specialties. Although these specialties represent a good cross-section of primary care and specialty medicine, our results may not be generalizable to other primary care or interventionalist specialties.

Compared with the civilian sector, the military physician education and reimbursement system results in flatter physician payment structures and lower overall costs of physician salaries. However, as currently structured, this model seems unable to retain adequate numbers of specialists. Nonetheless, within the context of ever-rising tuition costs and as the civilian system anticipates a shortage of primary care physicians, a program designed to cover the costs of an educational investment in medicine may entice enough medical students to pursue primary care medicine. That fewer internists left the military after accession suggests that civilians who were to choose a primary care tract might complete careers in primary care medicine. Therefore, the benefits of adopting a military approach to educating and employing physicians, particularly if it included a longer minimum payback period after accession than the military currently requires, should be considered in the context of health care reform.

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Other disclosures:

Dr. Cronin is a military physician.

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Ethical approval:

Not applicable.

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The views expressed herein are those of the authors and not of the Department of Defense or the U.S. government.

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