When comparing 4-yr and 6-yr OMFS programs, the conversation frequently turns to income potential and opportunity costs. Unfortunately, I was unable to find any data that directly compares the income of 4-yr and 6-yr oral and maxillofacial surgeons. Personally, if I had to guess, there would be little or no difference between tracts in income potential. There is more likely to be a significant difference between those in private practice and academics than between those who have a single or dual degree. According to current ADA reports found here (must have an ADA login to access), the median net income of oral and maxillofacial surgeons is right around $400k. In this report, there are many different demographics they distinguish between such as regions, solo vs group practioners, and age. However, there is no distinction between 4-year and 6-year graduates. Even though it is doubtful there is a difference in yearly salary, there may be a big difference in lifetime income.
The opportunity cost of spending two years going to medical school is often known as “the million dollar decision.” The reasoning is that by spending two years in medical school, you are foregoing two years of average lifetime pay. How the million-dollar mark came up has always been a mystery to me because I have never found it actually calculated out. So, I took the time to actually calculate the opportunity cost in a hypothetical situation. In the table I posted below, I calculated the difference in earnings until retirement between a 4-year and 6-year program. To give the most accurate comparison, I tried to use a program that had both program tracts to standardize PGY pay and negate cost of living for an area since they’d be the same. There are many assumptions in this calculation, so please be aware of those below.
|
Assumptions |
|
|
Income increase per year |
3% |
|
Investment return per year |
8% |
|
Not adjusted for taxes or inflation |
|
|
6-yr starting salary* |
$240k |
|
4-yr starting salary |
$225k |
|
No income during medical school |
|
|
Savings per year as percentage of income |
15% |
*6-yr salary is marked slightly higher in order to reflect initial income floor being higher due to M.D. and job postings I have seen. No definitive evidence this is the case and is just an assumption.
For this case, I am going to use the pay data and medical school tuition from Vanderbilt University’s OMFS program. The reason I chose this program was because it had both program tracts, PGY pay was pretty standard (between $45k-$55k), and it had private school tuition to maximize the effect of opportunity cost. Other assumptions include beginning residency at 26 years old, and practicing until 65 years old.
Below is the first table where only lifetime salary was calculated. Each salary was increased 3% per year to adjust for inflation and increasing income. Year two and three for the 6-year tract are negative for tuition.
|
Income Chart |
|||
|
4-year |
6-year |
||
|
Year |
Age |
||
|
1 |
26 |
$52,427.00 |
$52,427.00 |
|
2 |
27 |
$54,000.00 |
-$45,350.00 |
|
3 |
28 |
$55,053.00 |
-$45,350.00 |
|
4 |
29 |
$58,969.00 |
$54,000.00 |
|
5 |
30 |
$225,000.00 |
$56,429.00 |
|
6 |
31 |
$231,750.00 |
$58,969.00 |
|
7 |
32 |
$238,702.50 |
$240,000.00 |
|
8 |
33 |
$245,863.58 |
$247,200.00 |
|
9 |
34 |
$253,239.48 |
$254,616.00 |
|
10 |
35 |
$260,836.67 |
$262,254.48 |
|
11 |
36 |
$268,661.77 |
$270,122.11 |
|
12 |
37 |
$276,721.62 |
$278,225.78 |
|
13 |
38 |
$285,023.27 |
$286,572.55 |
|
14 |
39 |
$293,573.97 |
$295,169.73 |
|
15 |
40 |
$302,381.19 |
$304,024.82 |
|
16 |
41 |
$311,452.62 |
$313,145.56 |
|
17 |
42 |
$320,796.20 |
$322,539.93 |
|
18 |
43 |
$330,420.09 |
$332,216.13 |
|
19 |
44 |
$340,332.69 |
$342,182.61 |
|
20 |
45 |
$350,542.67 |
$352,448.09 |
|
21 |
46 |
$361,058.95 |
$363,021.53 |
|
22 |
47 |
$371,890.72 |
$373,912.18 |
|
23 |
48 |
$383,047.44 |
$385,129.55 |
|
24 |
49 |
$394,538.86 |
$396,683.43 |
|
25 |
50 |
$406,375.03 |
$408,583.93 |
|
26 |
51 |
$418,566.28 |
$420,841.45 |
|
27 |
52 |
$431,123.27 |
$433,466.70 |
|
28 |
53 |
$444,056.97 |
$446,470.70 |
|
29 |
54 |
$457,378.67 |
$459,864.82 |
|
30 |
55 |
$471,100.03 |
$473,660.76 |
|
31 |
56 |
$485,233.04 |
$487,870.59 |
|
32 |
57 |
$499,790.03 |
$502,506.70 |
|
33 |
58 |
$514,783.73 |
$517,581.90 |
|
34 |
59 |
$530,227.24 |
$533,109.36 |
|
35 |
60 |
$546,134.06 |
$549,102.64 |
|
36 |
61 |
$562,518.08 |
$565,575.72 |
|
37 |
62 |
$579,393.62 |
$582,542.99 |
|
38 |
63 |
$596,775.43 |
$600,019.28 |
|
39 |
64 |
$614,678.69 |
$618,019.86 |
|
40 |
65 |
$633,119.05 |
$636,560.46 |
|
Working Average |
$400,345.36 |
$397,548.90 |
|
|
Working Total |
$14,457,536.46 |
$13,986,367 |
|
|
Total Difference |
$471,169.10 |
As you can see, the ending salaries are basically the same. The difference is in lifetime total where you can see that by not working those two years, the lifetime total is lower by about a half a million. What is deceptive about this chart is that is doesn’t account for savings and investments. So, in the chart below I calculated what the difference would be by missing those two early years of savings. This chart makes the assumption that you saved or invested 15% of yearly income, these investments or savings returned 8%, and no money was invested during the two years of medical school for the 6-year program. Feel free to adjust these figures as necessary, as I’ve included the excel table for download at the bottom.
|
Income Chart |
|||
|
Accounting for Investing/saving (15% income per year w/ 8% growth) |
|||
|
4-year |
6-year |
||
|
Year |
Age |
||
|
1 |
26 |
$7,864.05 |
$7,864.05 |
|
2 |
27 |
$16,593.17 |
$8,493.17 |
|
3 |
28 |
$26,178.58 |
$9,172.63 |
|
4 |
29 |
$37,118.21 |
$18,006.44 |
|
5 |
30 |
$73,837.67 |
$27,911.30 |
|
6 |
31 |
$114,507.18 |
$38,989.56 |
|
7 |
32 |
$159,473.13 |
$78,108.72 |
|
8 |
33 |
$209,110.52 |
$121,437.42 |
|
9 |
34 |
$263,825.29 |
$169,344.81 |
|
10 |
35 |
$324,056.81 |
$222,230.57 |
|
11 |
36 |
$390,280.62 |
$280,527.33 |
|
12 |
37 |
$463,011.31 |
$344,703.39 |
|
13 |
38 |
$542,805.71 |
$415,265.54 |
|
14 |
39 |
$630,266.26 |
$492,762.24 |
|
15 |
40 |
$726,044.74 |
$577,786.94 |
|
16 |
41 |
$830,846.21 |
$670,981.74 |
|
17 |
42 |
$945,433.33 |
$773,041.26 |
|
18 |
43 |
$1,070,631.01 |
$884,716.98 |
|
19 |
44 |
$1,207,331.40 |
$1,006,821.73 |
|
20 |
45 |
$1,356,499.31 |
$1,140,234.69 |
|
21 |
46 |
$1,519,178.10 |
$1,285,906.69 |
|
22 |
47 |
$1,696,495.95 |
$1,444,866.05 |
|
23 |
48 |
$1,889,672.75 |
$1,618,224.77 |
|
24 |
49 |
$2,100,027.39 |
$1,807,185.27 |
|
25 |
50 |
$2,328,985.84 |
$2,013,047.68 |
|
26 |
51 |
$2,578,089.65 |
$2,237,217.71 |
|
27 |
52 |
$2,849,005.31 |
$2,481,215.13 |
|
28 |
53 |
$3,143,534.28 |
$2,746,682.95 |
|
29 |
54 |
$3,463,623.82 |
$3,035,397.31 |
|
30 |
55 |
$3,811,378.73 |
$3,349,278.20 |
|
31 |
56 |
$4,189,073.99 |
$3,690,401.05 |
|
32 |
57 |
$4,599,168.41 |
$4,061,009.14 |
|
33 |
58 |
$5,044,319.44 |
$4,463,527.16 |
|
34 |
59 |
$5,527,399.09 |
$4,900,575.73 |
|
35 |
60 |
$6,051,511.12 |
$5,374,987.19 |
|
36 |
61 |
$6,620,009.72 |
$5,889,822.52 |
|
37 |
62 |
$7,236,519.54 |
$6,448,389.77 |
|
38 |
63 |
$7,904,957.42 |
$7,054,263.84 |
|
39 |
64 |
$8,629,555.82 |
$7,711,307.93 |
|
40 |
65 |
$9,414,888.14 |
$8,423,696.63 |
|
Total |
$9,414,888.14 |
$8,423,696.63 |
|
|
Difference |
$991,191.51 |
||
I have to admit, I was very surprised at how close the difference actually was to a million dollars. This estimation shows that the opportunity cost of obtaining an M.D. is nearly a million dollars if you plan on working until you are 65 and save 15% per year (recommended minimum). Many of these assumptions can result in the outcome being different depending on the economy, actual earned income, and taxes. However, for demonstration purposes, it makes it very apparent there is a difference over the long-term. If you consider yourself a super saver (25-30%+) the gap will be even wider. So, what are those extra two years worth to you?
Disclaimer: I am not an accountant and have no experience in accounting. If you notice a fundamental error or otherwise in my calculations, please let me know and I will make the necessary adjustments.
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