POCA Tech: Some Math Required

I bet you’re thinking — another blog post, so soon? What’s the occasion? Well, I’ve been hearing some interesting rumors of consternation around POCA Tech; the NCCAOM has released more data from their 2013 Job Task Analysis (thanks, Elaine Wolf Komarow!); and I had a lovely vacation in Canada (thank you Simon, Cris, Melissa, Andy, Karen, Ash, Jon, Lisa B, and Dave) which included getting to visit “the baby”, actually the first of POCA’s microloan babies, Guelph Community Acupuncture, so I’ve perked up and I’m feeling ready to tackle some numbers.

If I’m understanding the grapevine correctly, some students and some staff at Portland’s other two acupuncture schools are not at all happy that POCA Tech is making acupuncture education “shorter and cheaper.” There is general disquiet about what this means for the profession. Great — I think we should talk about that.

Let’s start by defining shorter and cheaper than what, and making sure we’re comparing apples to apples while we’re at it. POCA Tech offers a Master’s Level Certificate in Acupuncture, clocking in at 1905 hours over 3 years. Of the acupuncture programs that I know of, ours is most similar to the Master of Acupuncture program offered by the Academy of Five Element Acupuncture in Florida, which demands 2405 hours over 3 years, uses a similar strategy of residential intensives and biomed co-requisite classes, and is ACAOM-accredited. The Midwest College of Oriental Medicine offers a Master’s Level Certificate in Acupuncture that requires 2,088 hours over 3 years (also ACAOM-accredited). So POCA Tech’s program is a little shorter, not much, than comparable acupuncture-only programs.

AFEA’s program costs about $43K; MCOM’s costs about $45K. POCA Tech’s costs will vary depending on where and how students get their co-requisites, but we are pretty confident that the total program cost will come in under $25K. So, OK, we’re a lot cheaper.

By contrast, the two other acupuncture schools in Portland, OCOM and NCNM, only offer Master’s degrees in Acupuncture and Oriental Medicine (MAcOM for OCOM, MSOM for NCNM.) NCNM used to have an acupuncture-only program, but it looks like they’re discontinuing it. OCOM has an option to complete the program in 36 months as well as 48 or 72; NCNM offers the option of completing the program in 48 or 60 months. NCNM’s program demands 3,474 hours; OCOM’s,  3,334.5 hours.  Maintaining our theme of apples to apples,  getting your Master’s at OCOM in 4 years costs about $85K in tuition, while at NCNM it costs about $86K. No argument: POCA Tech is shorter and cheaper than that.

Let’s look at those numbers in relationship to NCCAOM’s most recent Job Task Analysis data. There’s a lot that could be said about this JTA, and how the questions were asked, and what the answers do or don’t clarify, but for the purposes of this post I want to focus very narrowly on a couple of areas.

First, question 23: “What was your total gross personal income before taxes last year?” I complained noisily about how this question gets asked in acupuncture  surveys in general — see here and here    —  and though  it seems like there was an attempt to take those criticisms into account, I can’t say I like this version much better. The gross/net issue is still confusing. Is this supposed to be the gross income to your business before expenses, if you are a self-employed sole proprietor (which most acupuncturists are), or simply the gross on your employee paycheck before the IRS starts taking its various cuts? There’s an enormous difference there, and I think a better way to get at it is the way POCA’s annual survey does: ask about annual gross income to the business, annual expenses for the business, and then gross income paid to business owners and/or employees (and in what form: W-2, owner draw, etc). Of course POCA is surveying clinics as opposed to individuals, but even so, these distinctions could and should be teased out for practitioners. Question 23 from the JTA also doesn’t specify to what degree practicing acupuncture accounts for your gross personal income — and in fact,  earlier answers make it clear that many practitioners are working only part-time (“by choice” — or not) and likely have other sources of income (an AOM job, a non-AOM job, or another business or passive income stream, which they didn’t ask about).

But for the purposes of  this blog post, I don’t care. Let’s just look at gross personal income. They threw out all the responses that indicated income of less than $5K per year — I wonder how many of those there were?  21% have personal incomes of $5k to $25K.  20.5% have  personal incomes between $25K and $45K.  20.7% have personal incomes of $45K to $65K. So while the 2013 JTA Summary states that “AOM practitioners…have made some gains in income”, these numbers don’t look that much better to me than the 2008 JTA data that stated that 70.1% of us made less than $60K. Here we’ve got 62.2% making less than $65K, with an unknown, uncounted number who made less than $5K.

The median income was $52K. Again, for the purposes of this post, let’s not worry about exactly where that $52K came from; let’s just glance back at question 4: how many years have you been in practice? The median answer was 10 years.

Everybody knows that we don’t have a lot of data about acupuncturists in practice. Everybody knows that there are a lot of holes in the data we do have. We know the truth is out there, but we can’t prove anything. Were tens of thousands of acupuncturists too busy rolling naked in their piles of cash to fill out this survey? Were tens of thousands of broke, prematurely “retired” acupuncturists too disgusted or ashamed or demoralized to fill out this survey? Were tens of thousands of immortal scholar-physicians too evolved and/or vertically integrated to check the little boxes? All we really know is that some 30,000 people didn’t respond, and we can only make educated guesses about which category they’re in.

But based on this, the data we have, an AOM practitioner can expect to make $52K, 10 years out of school. (I know people who are 10 years out of school — or more— who would weep with gratitude to make that.)

With that in mind, let’s visit a financial aid calculator such as this one  and plug the cost of tuition at various schools in, and see what happens. We know, of course, that especially for programs with a lot of hours, students end up borrowing not only tuition but living expenses. Let’s not worry about that for the moment, though.

Starting at the high end, with NCNM’s tuition, if you plug in $86K of tuition, the calculator says, “The monthly loan payment was calculated at 119 payments of $989.69 plus a final payment of $989.83. It is estimated that you will need an annual salary of at least $118,762.80 to be able to afford to repay this loan. This estimate assumes that 10% of your gross monthly income will be devoted to repaying your student loans. This corresponds to a debt-to-income ratio of 0.7. If you use 15% of your gross monthly income to repay the loan, you will need an annual salary of only $79,175.20, but you may experience some financial difficulty.This corresponds to a debt-to-income ratio of 1.1.”

At the other end, if we plug in AFEA’s $43K tuition, the calculator says, “The monthly loan payment was calculated at 119 payments of $494.85 plus a final payment of $494.07. It is estimated that you will need an annual salary of at least $59,382.00 to be able to afford to repay this loan. This estimate assumes that 10% of your gross monthly income will be devoted to repaying your student loans. This corresponds to a debt-to-income ratio of 0.7. If you use 15% of your gross monthly income to repay the loan, you will need an annual salary of only $39,588.00, but you may experience some financial difficulty.This corresponds to a debt-to-income ratio of 1.1.”

In other words, tuition would have to be lower than $43K for people to easily repay their loans with an income of $52K.

I don’t know about you, but these numbers make me think of Charles Dickens’ character Mr. Micawber in David Copperfield. From Wikipedia: '”Micawber is known for asserting his faith that “something will turn up”. His name has become synonymous with someone who lives in hopeful expectation. This has formed the basis for the Micawber Principle, based upon his observation: 'Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery.'  “The data we have suggests that current tuition is going to result in financial misery. Even after 10 years in practice, there is no evidence that it’s going to be easy to pay off even AFEA’s tuition costs, let alone NCNM’s or OCOM’s.

OK, let’s plug POCA Tech’s tuition in, and call it $24K. I should say that POCA Tech can’t offer federal financial aid because we’re not accredited, but even once we get accredited, I don’t know that we will. There seems to be a straight, deadly line between access to federal financial aid and many of the current woes of the acupuncture profession. Nonetheless: “The monthly loan payment was calculated at 119 payments of $276.19 plus a final payment of $276.67. It is estimated that you will need an annual salary of at least $33,142.80 to be able to afford to repay this loan. This estimate assumes that 10% of your gross monthly income will be devoted to repaying your student loans. This corresponds to a debt-to-income ratio of 0.7. If you use 15% of your gross monthly income to repay the loan, you will need an annual salary of only $22,095.20, but you may experience some financial difficulty.This corresponds to a debt-to-income ratio of 1.1.”  And here’s the thing: POCA does have data, more detailed than the the JTA, that tells us punks can earn $33K. See Skip’s spreadsheet from the survey here.

If other schools have comparable data suggesting that their graduates can earn what the financial aid calculators say they’ll need, let’s see it.

Remember how, before community acupuncture came along, the conventional wisdom in the acupuncture profession was that all patients can easily afford to pay $70 per treatment, but they just don’t want to? Remember how all the income data from the US Census says otherwise? How many times do you think we’re going to have to hear the “you are devaluing the profession by making treatments, no wait, education cheaper”?

Will the people who are complaining about us please snap out of it? You are DREAMING. We’re not devaluing anything, we’re just doing the math. We’re not the ones who are being reckless with the fate of the acupuncture profession. You shouldn’t be asking, “how dare POCA make acupuncture education shorter and cheaper?”, you should be asking, “why aren’t any other schools daring to do the same?”

lisafer
Author: lisafer

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Conference Keynote: Breaking the Ceiling

The theme for this conference is “Breaking Barriers”. You know, there are so many barriers to break in acupuncture that it was really hard to choose which ones to talk about for this speech. But since I’ve spent so much time talking about classism as a barrier, I thought it might be fun to shift gears a little and talk about numbers.

Responses

  1. Well said Lisa!!!! Of course traditional schools will feel threatened by this as they will either have to justify why they charge so much, or prove their worth somehow.

    Keep doing that awesome math – love it!

  2. I’m surprised current students are complaining. There is nothing like competition to get folks to look at their bottom line. POCA Tech should end up saving all acupuncture students money, even those that don’t go there. Yay POCA Tech!

  3. Yeah that Q23 just screams for attention. This is a bimodal distribution (two humps) that looks more like a snail with the main body to the left and the head to the right. ~13% LAcs are making more than $100K. ~60% makes $65K or less. This 60% is what the 2008 JTA was trying to conceal behind the rosy claim “70.1% earn $60,000 or less.” That group is actually in 3 pieces of equal size. For NCCAOM and the same old schools the 13% are the “good signs.” I would like to know more about those three 20% slices of the pie. How long in practice, how old, how many hours working weekly, how much debt, etc. Do not forget when we snorted loud enough NCCAOM re-reported the income data in 2010. Turned out when you parse the p/t (majority) from the f/t the income numbers are quite lower.

    Here comes the USDE! It is a good thing Lisa you are calculating the loan default rate now and setting tuition so that it is affordable given the income prospects (aspirations). This is where the hammer hangs over the heads of OCOM and many CCAOM members. When a school’s loan default rate exceeds 30% the free money in tuition loans gets shut off. The hammer fell on Corinthian Colleges like a guillotine. They had to sell off their tuition mills in two weeks. No wonder ACAOM is asking USDE for a waiver for acu schools.

    Good luck to POCA Tech. Seriously. It could be the last school in and one of the last schools left come Dec 2015.

  4. Of note, OCOM and other acupuncture schools may or may not ever reach a 30% default rate on loans. What I see happen in my own small experience of fellow classmates, is that folks leave acupuncture practice to get a job that earns enough to make the loan payments.

    Add to this IBR & ICR, and there may not be actual defaults, but rather, folks who are in debt for 25 years and cannot earn enough to save for retirement, have children, or other life goals.

    Of course, if schools insist on raising tuition at this rate, then yes, there will be defaults galore!

  5. The USDE has three criteria for maintaining ability to have students acquire loans. The 30% default rate is one. By the way, this figure was negotiated UP from 20% by private for-profit groups. Corinthian Colleges chose to file false data anyway.

    The other two USDE criteria limit the % of income that the person who borrowed the $$ can pay back in a year, e.g., 12% of total income, 30% (??) of discretionary income. Sounds reasonable. However, I question the ability of AOM schools to calculate this or to provide accurate data so USDE can confirm the reported rates.

    California schools are required to report similar data annually. The quality of what gets reported varies a lot. Here is the link available to the public. I have looked at each of the schools that filed a report (some did not). Not to pick on any single school but you might check out the Annual Report (there is also a Performance Fact Sheet) for 5 branches. 5B omitted the loan default rate which is a required item. Only a few report this. Of course, not one school provides data that adds up. I would upload it but I do not see an upload option. These are actually guidelines for (i)what not to do, and (ii) how certain it is the hammer will fall. I suppose this is also a business opportunity for someone enterprising to help the schools prepare their data. But that won’t matter anyway since we can safely predict the data cannot be fudged enough and it will be terminal.

    https://www.dca.ca.gov/webapps/bppe/annual_report.php

  6. It’s incumbent upon POCA Tech to make sure the education it provides is WYSIWYG, since 1)no one else is doing it and 2)POCA is built on brutal transparency of data.

    The rest of the schools will just have to mutter amongst themselves and rearrange their programs into something that more closely resembles reality.

  7. “They threw out all the responses that indicated income of less than $5K per year — I wonder how many of those there were?”

    Fairly easy to see: The “N = 1112* ” for question 23 is interesting compared to some other N values.

    Questions 1,2,3 gender, age, ethnicity all have “N = ” values around 1500. So it would seem like there are about 1500 valid responses to this survey. So it looks like approximately 388 responses were thrown out as too low ( $450,000 ) for question 23.

    My assumption here based on the shape of the data presented is that many of those that were thrown out were $100,000 gross.

    So it seems that the median income would be lower on average if those responses had been included unless there were some people don’t want to answer the income question, even on an anonymous survey, so in that case they can’t count it.

    The anonymized raw data could be made available for inspection otherwise it becomes a guessing game.

  8. A truly transparent report would provide raw data. Never expect to see the word transparent associated with the NCCAOM. This history will not fly with SOCPC, the Policy Committee to which NCCAOM is submitting the request for a unique Standard Occupational Classification. That is the Bureau of Labor and Statistics section which assigns SOCs. They require transparent and complete data. They also want data that match what the other occupations with their own SOC provide. Not picky; just conforming. Example: income in 12 categories with same ranges. Ranges are smaller at lower end and broader at higher. Sampling should be across very specific geo areas. The regions NCCAOM uses are non-conforming, homemade. Which can be good, potentially, for baking pie.