Tuesday, January 23, 2007

Medical Licensing: Quackery, Financing, and Mixed Market Economics - Part I: Background

Medical licensing was the sort of thing that I never gave a lot of thought to as I was growing up. Licensing in many professions is so ingrained into our psyche, that we never even question the process. During my first year of medical school, I had a class on "physician authority in society," and mixed with what I knew from beforehand, the information started to make sense.

A licensing requirement is a powerful thing. It gives those that are licensed a distinct market advantage, if not a complete monopoly. The more stringent the requirements for licensure, the more exclusive a monopoly that develops, atleast initially.

There is no more complicated licensing process in this country than that required to practice medicine. There are five years of MANDATORY training, in the form of medical school and an internship year, plus four distinct licensing exams (Step I, Step II and Step II CS, and Step III). Some states have now expanded licensing periods to six or even seven years, requiring more years of post-graduate training. On top of all of this, governments have given a set of schools (specifically those offering MD or DO degrees) a monopoly on the intial training required for licensure. This monopoly on healthcare training has created all sorts of soft requirements that many people have to complete in order to obtain a license. These include, but are not limited to, a bachelors degree, a reasonable MCAT score, community service, a reasonable GPA at an undergraduate institution, clinical shadowing experience, and many more. Thus, the AVERAGE newly licensed physician will now have:
A bachelors degree with a GPA over 3.7, an MCAT score of around 30, multiple years of community service and shadowing experience, four years of medical school, one to three years of graduate medical education in the form of residency, and a passing score on ALL of the step exams.

Though there are some exceptions to some of the soft requirements, this makes the defacto licensing process a minimum 9 year ordeal for most people. The special monopolies given to both medical schools and residency programs have also caused tuition to go up, while keeping training salaries low. This means that the nine years usually comes with significant debt, which can be anywhere from $100-$400k if you aren't a trust fund baby. Needless to say, this is an exclusive group, and the medical training monopoly has succeeded in producing a limited supply of healthcare providers for many years, who until recently, had almost absolute power over the treatment of everything from malignant melanoma to allergic rhinitis. I won't even go into the special district monopolies given to hospitals, allowing them to avoid competition and keep prices high.

One would think that this would make being a physician a very lucrative position, admittedly at the expense of people who actually need treatment. For many years, this is exactly what happenend, and the bottom of the barrel medical school graduates (the ones who you wouldn't let babysit your dog) were able to obtain very large salaries, even at very low acuity practices.

This of course brings us to an obvious question: Why should a licensing process exist? Well, the intial purpose of licensure was taxation. Before the early 1900s, a medical license could be purchased by anyone, and anyone could open a medical school. The license was just a way for the government to tax anyone who claimed to be a doctor, as they would have to pay a licensing fee. Thanks to some special maneuvering on the part of the early AMA, and AMA backed Flexner Report, the medical license suddenly became the exclusive domain of graduates of specific "qualified" academic institutions in the early part of the 20th century. Qualified in this case was a reference to looking a lot like John Hopkins Medical School. The creation of the medical license coincided with breakthroughs in technology all over the country, and the new academic medical monopoly also had breakthroughs. This was also about the earliest time that physicians actually started to have a clue as to what they were doing.

Thus, the rallying cry in support of licensure became quality control. This is only of the reasons why government mandates licensing in professions, but it became the most logical to ascribe to medicine. There is some truth to it as well, it is nearly impossible to get through the nine year training period without having some clue. I've seen it done, but it takes a special sort of person. For the most part, everyone who completes the nine year training process is perfectly qualified to deal with most common medical issues. So this is a good thing right?

A fundamental question was never asked: Is there an easier way? So we can promise a quality of education after nine years. What about eight years? How about seven? The thing is, that current medical training is VERY expensive, and the practicioners that it produces are likewise VERY expensive, as we would expect a limited supply of heavily indebted, highly educated people to be. Without a free market operating in medical training and licensing, there is no competition to create more efficient training.

Atleast we maintain quality in healthcare delivery by training physicians with the current system, right? Not so fast. Stay tuned for part 2.


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