Opportunity costs: MD in an MBA

In economics class today, we’re tackling the idea of opportunity costs.

Remember the last time you picked a drink out of a case. You may have chosen a fancy bottle of water at the airport or at a gas station. You chose that instead of buying a coffee, juice, or any other drink at similar cost. This was an opportunity cost.

Whenever you have options and decide on one, you actively decide against choosing the others. No decision is truly neutral when there are options. We weight opportunity costs when choosing how we spend time at work, choosing a job, school, partner, or any time we spend time or resources doing anything. We choose one option at the expense of all the rest.

So what about choosing to do a full-time MBA over a year as a practicing surgeon. What are the opportunity costs?

Let’s break this down:

1-year MBA program NYU:

• $167,025, total with approximate living costs in NYC)

  • $113,365 tuition only

Surgeon salary as a bariatric surgeon in Iowa:

• $420,000 gross

  • $246,946 net: After federal and Iowa state taxes, SS, Medicare

So instead of EARNING net $246,946, I am PAYING $113,365 over the span of a year.

Source: NYU Stern MBA website

Factoring the higher cost of living in NYC vs Iowa City, costs are about 56% higher overall​ (NerdWallet: Finance smarter)​​ (Salary.com)​​ (Expatistan, cost of living comparisons)​​​. For example:

• NYC rent: $4550 for a (nice) studio apartment within walking distance of school

• Iowa City mortgage: $2700 for a (nice) 4-bedroom house

So what are some of the opportunity costs to consider?

• As a full-time staff bariatric and general surgeon in Iowa City, I can uniquely:

  • Earn: Post-tax $246,946 per year

    • Invest: $22,500 each year in a 401(k) with average compounded rate of 6.5%, the total amount will be approximately $1.94 million after 30 years.

  • Build surgical skills

  • Grow a practice: Impact patient lives directly

  • Contribute: To research, education, advocacy, and professional organizations

  • Credibility: Necessary and helps to advance in surgery, leadership roles, improve work environment, or make related contributions

  • But as a full-time surgeon, I also may not be able to:

    • Network or build relationships outside my field as easily

    • Learn how to think strategically in business as effectively

    • Position myself for more business and leadership roles as well

    • Build my startup with as much support

Now let’s take a look at the factors in doing an MBA. Not only is this an MBA, it’s an accelerated 1-year program instead of the typical 2 years. This program also has a tech focus with a much higher proportion of classmates and training in tech.

• As a student in a 1-year tech MBA at NYU, I can uniquely:

  • Immersion in learning: Taking a year to do full-time learning, trying new things, meeting new people, and thinking - an enormous luxury as an adult

  • Relationships: Meeting people in NYU/ NYC with experience and interest in business, finance, tech, fashion and fields that may not be ubiquitous elsewhere

  • Business learning: Gaining practice in accounting, finance, strategy, operations, marketing, and applications in technology

  • Startup building: Build a team and resources for my healthcare startup

  • West Coast connection: Dedicated immersive course

  • Healthcare connection: Contribute to research, education, outreach, and professional organizations in the business of healthcare

  • Earn an MBA in 1 year

  • But I also may not be able to:

    • Maintain my credibility as a surgeon as easily

    • Continue to improve surgical skills as well

    • Provide continuity of care for individual patients

    • Change investment in surgical training for 10y: 4y med school + 5y general surgery residency + 1y bariatric & minimally invasive surgery fellowship

Overall, it is clear that there is no tit-for-tat formula to determine opportunity cost. There are also a few factors I haven’t mentioned that played a role in decision making when comparing opportunities:

• Hospital bankruptcy: Mercy Iowa City declared bankruptcy when I worked there in 2023. This fundamentally changed my full-time job and work environment

• Locums work: From Latin for ‘placeholder’, locum tenens refers to ‘gig’ health care workers. I have worked as a locums surgeon since Dec 2023, providing surgical call and clinic coverage at hospitals in Iowa, Florida, and Washington. Locums work has dedicated opp costs. On the plus side, I can negotiate better and earn more versus full-time work. I can even keep working as a locums surgeon during an MBA, as long as timing limited. This allows me to earn some money, but importantly maintain my practice. On the down side, I can’t practice my specialty (bariatric surgery) as easily or hone my surgical skills as intensively.

• A year: Typical MBA programs take 2+ years. Accelerating the learning and networking into 1 year means less opportunity costs, but with greater effort.

• Scholarship: NYU was kind enough to grant me a significant scholarship for the MBA program. This demonstrated to me that OTHERS with more insight considered the MBA meaningful given my surgical experience.

• Profession: As a person with a well-established profession in surgery, I am lucky to have skills that don’t go out of style. A competent surgeon is capable of making decent money, making a positive impact, and finding meaning in their work. A friend and successful bariatric surgeon with his own private practice put it like this: “You took a bigger going to medical school when you didn’t have any skills. Now you do. So get over yourself and go for it!”

In deciding amongst opportunity costs, the most important consideration is not necessarily the money, especially depending on your profession. Instead, I considered what I wanted to do differently, such as:

• Learn how to grow and lead a business through practical skills

• Combine surgical experience with tech and business acumen to prevent hospital bankruptcy

• Take a calculated professional risk, but with support from people smarter than me

I’m only on my 2nd month of this program (technically MBA 14% completed), but some experiences have been worth the opportunity cost already: Accounting class, meeting people in my class from all walks of life and experiences, and pivoting my startup to something that was staring me in the face as a glaring need that already generating revenue.