Doctor jobs at “nonprofit” 501(c)(3) hospitals don’t all qualify for PSLF

Depending on where your searches take you or which books and articles you read, you may come across some questionable insight when it comes to PSLF eligibility for doctors. In short, people often argue that because approximately 70% of all hospitals in the United States are nonprofit hospitals, that a similar fraction of jobs at those hospitals qualifies for loan forgiveness. This is very logical, but it is unfortunately not true.

Now to be clear, this is often used as an argument for why residents should remain in a federal repayment plan like REPAYE instead of private refinancing, for which I wholeheartedly agree. In most cases, residents will get as good if not a better rate staying in REPAYE than they could get with a private company, all while enjoying the benefits, protections, and flexibility of the government plans while giving you the chance to achieve tax-free loan forgiveness via PSLF–depending on what job you take after finishing training. You really never know until you know. Most of you reading probably didn’t even apply for the same residency you’d have guessed when you applied to medical school, so why pretend you know exactly where you’ll be working years in the future?

That post-residency job bit is key though because the magic of tax-free loan forgiveness via PSLF requires a few things: qualifying loans paid for using a qualifying repayment plan while working at a qualifying institution.

The counterintuitive issue here is that it does not actually matter what you do for your job or even where you do it, it only matters who pays you. Outside of academia, county hospitals, and the government (including the VA and active duty military hospitals), relatively few “nonprofit hospitals” directly employ their docs. In some states like Texas and California, none at all.

It’s common knowledge that many specialties like radiology, pathology, and emergency medicine are nearly always a contracted private practice group that provides services. Specialists are a relatively uncommon direct hire at most non-profits. But even many hospitalists are actually employed by a separate physician group. So the question in many cases isn’t “is the hospital a non-profit?” It’s: is the physician group also a non-profit?

To give you an example: the very famous healthcare organization Kaiser Permanente runs a lot of 501(c)(3) hospitals. Many people who work at these places would definitely qualify for PSLF. However, the physicians who work for Kaiser are not employed by Kaiser Permanente itself or any of its network nonprofit hospitals. They are employed by various for-profit Permanente Medical Groups. It doesn’t matter if they work at a nonprofit; it matters who pays the bills. Whoever appears at the top of your W2 is who counts.

Sad but true. While the law was intended to encourage people to pursue careers in public service, the nature of how it was written dictates that it is only the details that matter, not the substance.

This is not to say that there are no qualifying nonprofit hospital jobs out there outside of the usual academic/safety net/government axis (of course there are) but rather that working at a nonprofit hospital doesn’t necessarily mean you are working for that hospital. It’s not the same kind of guarantee that working at an academic/university institution typically is, and even some academic hospitals are “privademics” that still silo off most of their doctors.

If you are relying on or planning for PSLF, then eligibility will be an important consideration when choosing your first job or two as an attending. In this case, you had better make sure you know exactly who your real employer would be, not just where you’d be working.

To repeat: if your hospitalist gig means you’re actually employed by a hospital-associated provider group, it’s the group that needs to be a 501(c)(3).

It doesn’t matter what hospital you work at if the hospital doesn’t employ you. It matters that your direct employer is a 501(c)(3) organization that treats you as a full-time employee.

Samples on Hand

From “Physicians Get Addicted Too,” an Atlantic story about opiates and addiction in West Virginia.

“I made pizza deliveries where I used to make house calls,” Ortenzio said. “I delivered pizzas to people who were former patients. They felt very uncomfortable, felt sorry for me.” But, he said, “it didn’t bother me. I was in a much better place.”

Ortenzio eventually left pizza delivery. But the way he told me the story, the job was an important step in his recovery: Every pie he delivered liberated him. He was free of the lies he’d told his colleagues, his family, and himself to hide his addiction. He liked hearing kids screaming “The pizza guy’s here!” when he knocked on the door. “You make people happy,” he said. “That was what I liked about being a doctor.”

Help with Residency Relocation Costs

For those moving for residency, there’s a new free service from a couple of fellow docs called Backlode.

The idea is based on the fact that moving companies can often be persuaded to give a discount for the return leg after a long-distance move (because they need to drive back to their home base anyway, and an empty truck doesn’t earn them squat).

The idea of the site is that you put your info in and see if you can link up with another graduating medical student or resident who is doing the opposite move and then coordinate your moves together.

Founder Arun told me this:

The idea stems from my own experience moving from Saint Louis to Ann Arbor for residency. I found a moving company in Ann Arbor that was moving an incoming fellow to Saint Louis within my time frame. Because they otherwise would’ve been driving home an empty truck, they discounted my move and saved me about $1,500.

My goal is to leverage the collective network we have as medical professionals and mitigate their relocation expenses by recreating this for others.

Neat. This isn’t even a money making thing, it’s just a cool way to potentially reduce the financial hit of moving when you’re already broke.

On a related note, most residents should probably be renting and not buying houses. But if you’re even considering it, LeverageRx is a totally free platform I recommend that will let you rapidly comparison shop multiple physician loan lenders (yes that’s a referral link, but check it out). It’s never a good idea to just call a company or two and go with whatever they offer on something as big and high-stakes as a mortgage.

Class Action Lawsuit against the ABMS

There are separate class action antitrust lawsuits against the ABIM, ABR, and ABPN.

But there’s also a class action lawsuit against the umbrella organization, the American Board of Medical Specialities (ABMS), which names all of the member boards as “co-conspirators.” The premise is the same in all of the suits: the ABMS and its member boards have a competition-squashing monopoly on initial board certification and use that dominance to illegally tie mandatory lifelong payments in the form of MOC-fees lest doctors lose their hard-earned certifications.

There’s an interesting excerpt from a Department of Justice letter in the middle that I’m going to pull a couple of passages from (emphasis mine):

Because, like other forms of professional standards-setting, certification can become a de facto requirement for meaningful participation in certain markets, a certification requirement may create a barrier to entry. In such circumstances, certification may function more like licensing requirements – establishing who can and cannot participate in a market – rather than voluntary certification that can help patients and others distinguish on quality among a range of providers.

The more certification comes to resemble licensing, the more such industry self-regulation raises similar concerns. For example, as the U.S. Supreme Court has explained, though market participants offer important and needed experience and expertise about their practice and profession, such professionals, when empowered to set licensing requirements without meaningful review, “may blend [ethical motives] with private anticompetitive motives in a way difficult even for market participants to discern.” Similarly, competitive concerns can arise when private standard-setting processes become “biased by members with economic interests in restraining competition.” The governing members of a dominant certifying body may have incentives to set certification requirements more stringently than is necessary to certify that providers have the relevant knowledge and skills. In situations where one certifying body has become dominant, such that physicians cannot turn to alternative bodies for a similar certifying function, market forces might not constrain the dominant body from acting on these incentives.

Which is to say: the DOJ wrote an excellent summary of the current situation several years ago.

The chance of these cases actually going to a jury trial does seem a bit higher when the Department of Justice and Supreme Court have already put words on paper warning of the dangers of “self”-regulation and legitimizing the complaints against these certifying organizations.