Pundits worry about the chilling effect that medical school debt -- which approaches $200,000, according to the AAMC -- has on our future physician workforce. If so, I'm wondering if health care should take a page out of a tactic being used for pro athletes: allow investors to buy shares of physicians' future income.
The company doing this for athletes is Fantex, It was launched in 2013 to some fanfare, particularly when their initial athlete IPO was to be for running back Adrian Foster. Foster signed away 20% of his future income for $10 million upfront. Investors could buy into the revenue stream for as little as $10 a share (sadly, the deal was postponed due to an injury). Fantex has gone on to sign something like nine NFL athletes and has now broken into MLB with the recent signing of Andrew Heaney.
Foster aside, most of the athletes whose shares are sold on Fantex are not the biggest names in their sports. They tend to be lower-tier athletes who still may expect to make several million dollars during their pro career but not so much that they don't find the the assurance of the upfront cash attractive. E.g., not so much the first pick in the NFL draft as the late first round or second round picks.
Fantex is looking to branch out to more sports, perhaps even to celebrities.
If you are going to be an orthopedic surgeon or a cardiovascular surgeon, which tend to be highly paid, you might not be interested, but if you are going into pediatrics or family medicine, you might see some appeal in such a deal.
While some investment experts are critical of Fantex, it's not a such crazy idea. FinTech darling SoFi is doing quite well focusing on refinancing debts for graduates of universities with a proven track record of high income alumni (think Harvard or Stanford). Medical school graduates are one of their prime targets, repackaging the loans and selling them.
The market must like their approach; SoFi has a $4b valuation after only 4 years of existence, and has been profitable for the past couple years. Making loan decisions based on expected future incomes of people and professions who tend to do very well financially seems like a pretty safe bet.
Would buying a share of that future income itself really be much different than, essentially, buying a share in the repayment of their medical school loans?
It's not that I'm all that concerned about medical school loans. Yes, they end up being a lot of money, but so does an undergraduate degree from, say, Notre Dame, or opting for an MBA or a law degree, for that matter. Financial institutions, even traditional ones instead of upstarts like SoFi, are usually quite happy to lend budding to new physicians to cover such debts.
And the real cost of becoming a doctor may not, in fact, be the cost of medical school but the "opportunity costs" of all that medical training, which has been estimated as being close to $800,000. The indentured servitude that medical school graduates must go through before being allowed to practice on their own (which is, I believe, unique to health care) accounts for the biggest part of these costs.
But I digress (and I've hit on the follies of our medical education system previously).
To be honest, I'm not even really all that interested in securitizing physicians' incomes, even for those (relatively) poor primary care physicians. Complaints about incomes aside, most physicians do quite well financially and, of course, much better than in most other countries. What I'm interested in is having the data on physicians that such an approach would require.
After all, you wouldn't (I hope) buy a stock or a mutual fund without some idea about how well it has performed and how well it is expected to do in the future. Not just stocks or mutual funds in general, but the specific ones you are interested in. And the same would presumably be true with a Fantex approach to health care; we'd be willing to invest in a specific physician but only if we could see some meaningful data on performance or expected performance of them.
And that, my friends, would be a game changer in health care.
We talk and talk and talk about transparency and pay-for-performance, but try finding out how many knee surgeries your would-be orthopedic surgeon has done, much less how many of those patients are happy with their surgery. Or how many are dead. And those would be easier to quantify than many other specialties we'd also be interested in.
I keep going back to something a colleague of mine said a few years ago: we can get more performance data on virtually any pro athlete than we can about any physician. That is crazy. He further proposed -- joking, I think -- that what we need are fantasy leagues for health care. I read with amazement about the hyper-growth of sports fantasy leagues, and wonder why we spend so time and energy on statistics for an activity that at most impacts our psychological health, but passively accept a dearth of comparable data on something that directly impacts our actual health.
The recent "insider trading" scandal at FanDuel and Draftkings, two leading fantasy sports companies, might seem like a cautionary note for trying anything remotely comparable in health care, but I'd say, on the contrary. We already have our own version of insider trading. Ask any doctor or nurse in a hospital which doctors they'd use, or stay away from, and they can tell you. They just don't.
We need to level the playing field. We need to see data on who is good, who is bad, and who is in-between. The efforts we've been doing to date -- e.g., Medicare's Physician Compare -- are well intended, but no sports fan would accept such paltry data for their fantasy choices.
We need to get people to be as passionate about their health as they are about their favorite sports.
Ironically, putting economic incentives like investments in, or fantasy "betting" on, individual physicians might just be our best hope.