Primary care physicians are in such great demand in Indiana—and the United States for that matter—that a state law passed last year attempted to attract young physicians to rural areas by forgiving part of their student loans.

Problem is, budget woes prevented lawmakers from allocating funds to the program.

Meanwhile, a career in family medicine appeals to fewer and fewer students at the Indiana University School of Medicine in Indianapolis. The reason students cite more than any other is the likelihood of making far less money than if they choose a specialty practice.

Interest in primary care has fallen off markedly since the late 1990s. In 1997, 51 percent of IU grads headed into primary care residencies—which include family practice, internal medicine and pediatrics. Today, it’s just 38 percent.

Explanations for the drop-off are complex. But the financial picture isn’t helping.

The median compensation for specialist physicians is a whopping 70 percent higher than the median pay for primary care doctors, according to national data from the Medical Group Management Association. In 1995, that gap was 62 percent.

Primary care doctors still do well, of course. Median pay for their specialties was $191,400 last year, according to the association. But med students start practicing under larger and larger burdens of student debt these days.

Newly minted MDs, on average, carry more than $156,000 in education debt, according to the Association of American Medical Colleges. Nearly eight in 10 doctors leave school with more than $100,000 waiting to be repaid.

So there’s a strong incentive to chase the higher pay of specialists, particularly in such fields as orthopedic surgery, radiology and invasive cardiology, where median compensation tops $400,000 per year.

That undoubtedly weighs heavily on graduates, said Mark Blessing, a partner at the Fort Wayne office of Springfield, Mo.-based accounting firm BKD LLP who works with several physician practices.

“If you get out of school with a lot of debt and start your career later than what most careers start,” he said, “is there going to be a payoff?”

The Obama administration has tried to correct the situation by bumping up federal Medicare payments for primary care doctors while reducing them for some specialists, particularly cardiologists. At the same time, Obama’s health reform law boosts Medicaid

payments to primary care doctors to match rates paid by Medicare.

But the lifestyle of specialists can be better, in part because of better pay. As the Medicare program and private health insurers held pay for primary care visits fairly flat in the past decade, physicians had to see more and more patients to generate the same kind of income. Also, many primary care doctors complain of hours of evening work calling insurers to get prior authorization for various tests and procedures.

Some primary care doctors have avoided such problems through a concierge model of health care, in which select patients pay an annual fee or retainer for immediate access.

Dr. Tim Story, an internist at Clarian North Medical Center in Carmel, launched his concierge service about five years ago, and has no regrets.

“I don’t think there’s any question that as patient choice becomes more limited, promptness of service will become more important,” he said.

But the need for more primary care doctors threatens to become huge. In a 2008 forecast, the Association of American Medical Colleges predicted a national shortage of 124,000 physicians by 2025, with more than one-third of the shortage occurring in primary care.

A 2006 study by the IU med school projected a 2025 shortage of 734 physicians in Indiana, with primary care in rural areas being a particular concern.•

– Reporter J.K. Wall contributed to this report.