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Are For-Profit Medical Schools Providing an Inferior Education at Higher Prices?

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[Editor's Note: Calling all females in the WCI community: Join us Sunday night (November 13) at 7pm ET for our monthly Girl Talk Happy Hour: Let’s Talk Money!, hosted by WCI Ambassador Dr. Disha Spath. It’s where women can get together with like-minded colleagues to chat about finances and investing without any external judgment. There is so much we can learn from each other, so make sure to sign up here right now. We can't wait to see you there!]



By Dr. James M. Dahle, WCI Founder

Does it matter if you attend a for-profit or a nonprofit medical school? What are the repercussions of a profit motive on the profession of medicine? Does it matter if these for-profit medical schools are in the US? What about osteopathic for-profit medical schools?



Today, we're going to discuss all of these questions and more.

The History of For-Profit Medical Schools

Historically, for-profit medical schools were banned in the United States. The Flexner Report of 1910 reported all kinds of problems with the wide range of quality in US medical schools. The Flexner Report (and reforms that were well in motion prior to the actual publication of the report) eliminated the “proprietary model” of medical education and also established the biomedical model as the gold standard of medical education.

The transformation of medical education a little more than a century ago was profound—with a heavy emphasis on scientific knowledge and its advancement, adopted from the Germans, instead of tradition and superstition. The report put the existing schools into three categories: the good ones, the ones that could be made good, and the ones that should be (and subsequently were) closed. The “defective” schools had low admissions standards, bad laboratory facilities, and little exposure to clinical material. Medical education was a “for-profit enterprise producing a surplus of poorly trained physicians.” It is noteworthy that there may have been a racist component to these closures. All but two schools that permitted African-Americans to attend were closed, and this could have an effect on disparities seen even today.

Medical professors were to become full-time teachers and researchers, and they were provided a salary adequate to keep them from being distracted by the fees that were generated from patient care. William Osler and Harvey Cushing, among others, were critics of the full-time model as they felt it did not prioritize education and patient care enough. At any rate, this hyper-rational/hyper-academic approach was certainly anti-profit.

From 1910 onward, basically all MD medical schools were associated with large research universities. Starting in the 1970s, off-shore for-profit institutions began to open throughout the Caribbean. These “second chance” universities provided access to medical education for people who could not gain access to US schools, including many people of color.

However, they were plagued with high costs and low match rates. In 1996, a court ruling forced US accrediting agencies to reevaluate the existence of for-profit medical schools. Although no new MD medical schools were started in the 1980s and 1990s, 29 were opened during the next 20 years. Twenty-five of those 29 were started by established universities, including 19 at public institutions and six at private institutions. Two were established by prominent people who wanted a medical school in their community; one was established by a healthcare system (Kaiser, a nonprofit); and one was established by a for-profit university. However, seven more were established in partnership with a healthcare system that insisted its name be put on the medical school and that it be the school's primary clinical affiliate.

Per the “Choose DO Explorer,” there are 44 DO schools in the country. Of those, five are for-profit, all founded in the last 20 years. Incidentally, 37 of the 44 DO schools are private, a much higher percentage than MD schools. Apparently, public institutions can have for-profit medical schools, and there are obviously many private schools that are not for profit.



Moving beyond medical schools, recent years have seen residency programs established by industry, including large physician contract management groups and healthcare systems. For instance, HCA has more than 300 residency programs. Cynics see this as a way to lower its cost of labor and to have more control over the physician workforce.

More information here:

Cheapest Medical Schools in the US

What Does “For-Profit Medical School” Really Mean?

A for-profit medical school is owned by investors or a private equity organization. A major reason, if not the primary reason, for operating the school is to make money. One can easily see that this major profit motive has the potential to reduce the quality and/or increase the cost of a medical education.

List of For-Profit US MD Schools

  • California Northstate College of Medicine
  • Ponce Health Sciences University School of Medicine (Puerto Rico and St. Louis)
  • Morgan State University (Proposed)

List of US MD Schools with Significant Industry Ties

  • Kaiser Permanente School of Medicine
  • Geisinger Commonwealth School of Medicine
  • Virginia Tech University (Carilion Clinic)
  • Rowan University (Cooper Health System)
  • Hofstra University (North Shore-Long Island Jewish Health System)
  • Seton Hall University (Hackensack Meridian Health)
  • University of Illinois at Urbana–Champaign (Carle Foundation)
  • University of South Carolina (Greenville Health System)
  • Oakland University (Beaumont Health)

List of For-Profit US DO Schools

  • Burrell College of Osteopathic Medicine
  • California Health Sciences University College of Osteopathic Medicine
  • Idaho College of Osteopathic Medicine
  • Noorda College of Osteopathic Medicine
  • Rocky Vista University College of Osteopathic Medicine
  • University of Northern Colorado (Proposed)

Does a Profit Motive Really Affect the Quality of Your Education?


for-profit medical school

Does any of this matter? I mean, there are other industries that have both for-profit and not-for-profit companies providing services. Consider life insurance, for instance. Some of the worst actors out there are “mutual” companies that are theoretically not-for-profit. And it does not seem that mutual insurance companies offer rates that are significantly lower than those from non-mutual companies.

However, the experience from the Caribbean schools is certainly concerning. While there is substantial variability among the schools, only about 50% of matriculants actually graduate on average, and only 60% of those match into a US residency. These numbers are dramatically lower than are seen at both US-based MD and DO schools.

The opinions of the students at the schools are all across the board, according to a few redditors. For example, this one thinks for-profit = low-quality:

“I went to a for-profit institution that, rumor has it, plans to open a FIFTH campus. We have sub-par clinical rotation sites at smaller regional and community hospitals that, at many times, are unable to accommodate students due to lack of available providers or limited resources. Examples like this show how these institution heads care more about the financial gain from tuition vs. actually serving areas of need, providing students with valuable education that will prepare them for residency, and ensuring they match into their specialty of choice.”

This one does not think the “for-profit = low quality” insinuation is fair:

As a DO student at one of the for-profit schools, I dislike the stigma that because we are here, we aren’t as capable. I know many in my class who are extremely capable. Then there is the argument that we receive a lesser education because we have sub par faculty or aren’t associated with a teaching hospital. We have a lot of great faculty [. . . ] For profit/non profit in my opinion doesn’t matter, there are good and bad programs on both sides. I think the real problem is the residency bottleneck. If we don’t limit the number of new schools, there will be a large increase in the number of unmatched students (and the majority I think will be from these newer programs).”

You can find plenty more opinions from students on Pre-Med Reddit and the Student Doctor Network forum and from medical educators and think tanks all over the internet.

The AMA tried to analyze attrition rates, residency match rates, and the cost of for-profit schools in a report published in 2019. Concerns were found in all three categories, although most of these schools are generally pretty new and, thus, difficult to analyze. Certainly, this is something our profession should continue to watch closely. We do not want to see the emergence of diploma mills churning out unqualified doctors and taking applicants just because they can pass a wallet biopsy.

Does a Profit Motive Affect the Cost of Your Education?

I think the answer to this question is a lot more clear. The answer is yes. If you go to a for-profit school, you will, on average, pay more for your education. That makes sense since “profit” is an “expense” (typically 20%) at for-profit schools that does not exist at nonprofit schools. However, you don't have to be much of a cynic to believe that pretty much every university medical school is very much trying to maximize its income these days—if not from its students, certainly from its patients.

It is theoretically possible that a for-profit institution could have a lower cost of education. For-profit businesses are often much more efficient than cumbersome “government” bureaucracies. Plus, given the disparity between the income sources for a school of medicine and its associated hospitals (basically dollars from patient care >>>>> dollars from charging tuition), any school that so wishes could offer medical education at a minimal cost.

Should You Attend a For-Profit Medical School?

If you are a pre-med, you may be wondering if you should attend a for-profit medical school. My general advice to pre-meds is to attend the cheapest school you can get into. Conveniently, the cheapest schools are also often the best schools! Certainly, if you get into multiple medical schools, cost should be an important factor in choosing between them. However, the truth is that most pre-meds get into 0–1 schools. Most students simply don't have a choice. So, if your choice is between a for-profit medical school or sitting around for a year and applying again, I'd probably recommend the for-profit school. However, if you have a choice, I think there are significant reasons to attend a more established, not-for-profit school if you can.



Personally, if I got into multiple schools of various types, I'd consider them in the following order:

  1. US MD Nonprofit schools
  2. US DO Nonprofit schools
  3. US MD For-profit schools
  4. US DO For-profit schools
  5. Non-US Nonprofit schools
  6. Non-US For-profit schools

Attending a Caribbean for-profit school is, in particular, a huge gamble (although one that you admittedly have some control over its outcome). While it works out just fine for many, these “second-chance universities” leave many saddled with huge debts that may not even be eligible for PSLF and without a residency position.

More information here:

From Fourth Year to the Real World, Part 1

What Are the Effects of For-Profit Medical Schools on the Physician Workforce?

My biggest concern about for-profit schools has little to do with individual docs. Docs are going to do what docs are going to do. Good docs will come out of for-profit schools, and bad docs will come out of nonprofit schools. My concern has more to do with the effects on the physician workforce overall, and the issue is more a proliferation of schools than the fact that the new schools seem to be more likely to be for-profit.

Consider what has happened with law schools. Before 2000, there were about 40,000 law students enrolling in any given year. By 2010, that number was up to 54,000. It has since corrected, but for years, there were thousands of new attorneys each year whose only employment options paid less than a typical resident salary. The Atlantic called it the “Law-School Scam.”

Likewise, as the number of med school enrollees goes up at a rate far faster than residency positions, match rates are dropping and thousands of doctors are finishing medical school with huge debt burdens and no chance to ever practice medicine. There may be a doctor shortage (likely mostly just a maldistribution), but you don't get more doctors unless you increase both medical school and residency positions.

As you can tell, I'm not a fan of for-profit medical schools or even industry-associated medical schools (and especially residencies). But I recognize that there must be financial backing to open either one. If universities, governments, churches, and charities are not going to provide it, who will?

What do you think? Are you concerned about the emergence of for-profit and industry-associated medical schools? Why or why not? Comment below!

The post Do For-Profit Medical Schools Provide an Inferior Education for Higher Costs? appeared first on The White Coat Investor - Investing & Personal Finance for Doctors.

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By: The White Coat Investor
Title: Do For-Profit Medical Schools Provide an Inferior Education for Higher Costs?
Sourced From: www.whitecoatinvestor.com/for-profit-medical-schools/
Published Date: Sat, 12 Nov 2022 07:30:17 +0000

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