Thursday, April 26, 2007

Market Controls and Medical Training Part 1: The Introduction

I will come right out and say it. Medical training doesn't remotely resemble a free market. It doesn't even pretend to resemble a free market. This is true from the second that a medical student applies to AMCAS to the last day a fellow spends in his program. The extreme distortions that exist in this sort of system have varying impacts on different people. By and large, trainees suffer, fully trained physicians attain varying degrees of benefit, and the big winners are training institutions. Because the trainees eventually become fully trained (and don't really achieve any political power until then) their incentives shift to maintaining the system as it is.

Let's look at it globally. There has been a systematic attempt to limit the number of spots in medical schools. With a limited supply of training institutions, there was insufficient supply to meet demand. Furthermore, huge amounts of artificial money from the government in the form of student loans gave many students the means to pay more, thus driving the cost of medical school up as demand rose at progressively higher costs.

Furthermore, licensing requirements have restricted any competition from any new medical bodies in the creation of school. Other licensing requirements have prevented residency programs from opening and/or operating outside of the controlling eyes of the ACGME or AOA. This has far reaching impact on medical training.

What does it all mean? High demand coupled with artificially low supply produces shortages. Shortages drive up the price. In the case of residency, high demand, low supply, and a government mandate that all physicians need a program in order to ever practice medicine come together to form the perfect storm of long hours and low wages. Period.

Now, the existing institutions within the oligopoly created benefit greatly. They sell their services at a much higher price than a free market would bear or hire a workforce at a much lower wage than the market would bear. Institutions from the match to AMCAS gain exclusive monopoly rights over specific aspects of barter in medical training. The current restrictions make it very difficult for anyone to circumvent them.

The benefit to trainees however, comes at the end. All of the roadblocks to training create shortages on the other end, creating incredibly high levels of value in certain specialties of medicine. Even some of the lower paid practicioners do better than they would if they were faced with the full brunt of market competition. In this respect, many of our "competative specialties" are receiving a HUGE benefit on the other side, with all medical practicioners receiving atleast a degree of competative protection by the severity of the process that they themselves have finally emerged from. Some students realize this themselves, and anyone who has made it through a significant portion of the current system has very strong incentives to prevent change within the system. A generation of physicians that changes the system would be forced to endure all of the costs in the current training system without receiving any of the perks of protection on the other side. Thus, I don't forsee change anytime soon.

Keep reading the blog. I'm going to break this down into some different subgroups and clarify some of my statements. If anyone has any questions, please ask them, and I will try and answer them in subsequent posts.


Blogger Midwife with a Knife said...

This is so true! And related to it are the fact that our licensing and certification exams are so expensive!

6:47 PM  
Blogger Someonetc said...

this was an interesting read. i would just like to bring up some points that you did not mention.

it is true it is not a free market. licensing boards have no concern for your convenience their concern is for the protection of the public. if you look at most of the rules for the ACGME or specialty boards, they really are trying to assure that a person meets a minimum standard.

as far as keeping the number of physicians artificially low, i do believe there is a move to increase the number of physicians

because there are so many restrictions, there is this belief that they are some how in working together. kind of like the thought that JACHO is a government agency that places the restrictions on hospitals, even though the reality is that it is an independent company that hospitals pay to review their hospitals. just about all of these systems in place are connected but not part of the same institution. federal - DEA, license - state, specialty boards - independent bodies, private university - private, public university - state. seems lots of different people tryin' to keep a brotha down man. it must be some kinda conspiracy.

9:41 PM  
Blogger MiamiMed said...


JCAHO may not be a government agency, but the government requires its approval in order to provide medicare dollars (Which have effectively taken over medicine), which makes its orders far more powerful than they would be in a free market. It is not all a conspiracy per se, but I think that it would be nieve to believe that it all didn't come together as a result of compounding market distortions.

Remember, the DEA, the public schools, the private schools, and the residency programs are ALL receiving money from the federal government. They get federal loan dollars, they get special stipends for students in many cases, and they often receive the majority of their research dollars from the government as well. It's not ALL a conspiracy, but it does fit together a little too nicely.

6:49 AM  
Blogger Someonetc said...

you are right it fits together very nicely. here is a question for you then. do you feel that there should be no standard? no one doing checks and balances on physician education?

8:11 AM  
Blogger MiamiMed said...

I believe that the market can do that job on its own, with various private accrediting bodies. The government, by and large, gives its accreditation based on political motives, while completely ignoring quality, need, or demand. I actually have a four part post on medical licensing that you can read in my archives, not too far back.

Remember, many of the specialty requirements in medicine have been driven by the market, not the government. Hospitals already choose to grant priveledges for individual services and procedures based on credentials in order to avoid liability and embarrassment. Private centers could stand or fallon their own merits (or lack thereof). Sorting out what is necessary and what isn't in terms of quality control is best done by the free market.

12:25 PM  
Blogger Someonetc said...

couple of things, medical licensing boards are governmental (state not federal); specialty boards are private not governmental.

problem is would you want to have many people practicing medicine without meeting some standard that was agreed upon? or would you rather have many separate private entities making rules on their own without someone to police them?

i will tell you this, it will never happen because they are all doing separate things.

if you look at licensing boards (medical licensing), they will say their role is to protect the public. credentialing in a hospital setting, they are trying to protect themselves. insurance credentialing, they are trying to protect both themselves and their constituents. specialty boards are trying to ensure that they protect the standard of "medical care" and to assure that patients are receiving "proper" somewhat evidence based treatments.

i do not have any disagreements with you remarks. what i have found when dealing with licensing boards, hospital credentialing and specialty boards, it is not about money it is to make sure that someone is looking out for the patient. you have come into a field that believes that because you care for others you have lost the right to privacy and the ability to choose a different way.

this is not a democratic process and definitely not a free market.

7:16 PM  
Blogger MiamiMed said...

I'm familiar with the differences between specialty licensing boards and medical licensing boards. I was trying to make a point. That being, that the market already has mechanisms that select for quality in the form of private board certification. However, medicare reimbursement practices distort this.

Also, if one took away the hospital pseudomonopolies that exist in the current system, competition between hospitals would drive up quality. Right now, anything that doesn't resemble a government approved hospital (that's right even the private ones) is instantly on the defensive. It is illegal to open hospitals without permission in most cases. In fact, even small concierge practices and surgicenters often come under fire.

I think our fundamental disagreement is that you don't believe that healthcare should be a free market. We'll have to disagree. I see no reason why my privacy or method of practice should come under extra scrutiny because I have entered a "helping profession." More importantly, I don't know why patients can't choose to make decisions that violate nanny state laws made for their "own good." I'd have fewer problems with licensing if it were a credential like a specialty certification. Individuals could choose to see a non-licensed practicioner at their own risk.

5:06 PM  
Blogger Someonetc said...

i actually don't disagree with you, "heath care" should be a free market. my statements, really not my opinion, bring up the fact that since the ultimate goal of the licensing board in to "protect the public," therefore private licensing boards will never occur.

here is a question for you then, do you believe in the FDA? should drug companies not go through a specific system to make sure a drug is safe?

doesn't someone have to make sure that a physician is safe?

i do believe that there has to be a system of checks and balances. i believe that someone has to set standard of what should be minimum for practice. what would happen if you had several different entities providing "licenses," then the one with the least restrictions would become more popular. or may be you would have someone else monitoring them.

i would ask you another question, should their be no standard of care or standard requirements for practice?

9:53 PM  
Blogger MiamiMed said...

On the contrary,

Healthcare providers at all levels would compete to meet the standards of the most stringent accreditation boards. They would then use this as a selling point to consumers. My problem is with the compulsion. Similarly, I think that the FDA is actually terrible for medicine. Current legislation in Congress (The safe medicine act or something like that) is even worse. There are many examples of politically motivated muscling of individuals out of the market, of unsafe drugs hitting the market anyway, and of people getting blackballed. The current system promotes the most expensive medications.

I DO NOT have a problem with an accredidation board that certifies drugs as safe or not. I just don't think that an informed consumer should be able to choose to ignore the boards warnings. If a consumer isn't educated enough to make these decisions, they can always turn to a physician.

Rather than a minimum standard for practice, drugs, etc.. Set up a system that keeps track of who does a good job, and let the public decide. Don't attach it to payment, as there are too many variables. If we get rid of the hospital pseudomonopolies, individual instituations would compete for patients by offering better services and showing better results. No coercion would be necessary. People would balance cost and quality and make their own choices of doctors and hospitals. Individual hospitals and doctors would choose to use the drugs and practices that got the best results, regardless of the existance of an FDA, JCAHO, etc...

7:15 AM  
Blogger MiamiMed said...

P.S. I know JCAHO is private, but it's attachment to medicare money makes it public by proxy. They act in a manner that only an institution with public backing can act and get away with.

7:17 AM  
Blogger Someonetc said...

i will say this, and i am sure you are aware, there are standards of practice being set already. hopspitals and physicians records in regards to M&M and outcomes such as infection rates and time to treatment (for say MI) are already being evaluated. private insurance companies are removing physicians from their plans based on cost and outcomes.

one of the initial pushes is to look at hospital post op infection rates for clean surgery cases. so many of these are underway as we speak.

i do agree with "educated" people being able to choose. but who protects the uneducated? i would argue that the educated are able to shop, as i see them all the time for their 3rd and 4th opinions.

an i would argue that hospitals already to some pretty serious competeing for patients currently. we are always lookin at ways to increase market share

7:42 AM  
Blogger MiamiMed said...


That seems like a good argument as to why the whole "quality control" licensing process is unnecessary. The market is already controlling quality. When it comes to the uneducated, they'll have to work with a physician. Again, I have no problem with a sort of accrediting process. That way, individuals can simply look for a mark of accreditation. Thus, the market will work, individuals can shop to the level of their own education, quality will be driven up through competition, and individuals who know less will have some quality control through and accreditation process.

Sounds like a win-win for everyone, minus individuals whose status is protected by licensing rather than ability. Good doctors and patients win.

10:33 AM  
Blogger Someonetc said...

i have a question for you. would you go to mexico for your medical care, that is a free market?

i don't know about licensing being a status. being board certified is a status. licensing is more a step in credentialling.

licensing and certifying entities primary goal again is to protect the public. our certifying exam (oral) is to evaluate you practice as a whole and to make sure you are not doing things that are not concidered standard of care. they both are there to prevent what happened in the 80's with dr. death in Ohio (dr. who killed multiple patients by poisoning) and the cardiothoracic surgeon who was practicing without completing meidcal school, residency, or fellowship but falsified all of his documents.

how would you prevent this?

are there that many people out there that are unable to be licensed because of some restriction? would you like to truely open the door for foreign physicians to come into the states to practice without restriction?

just questions ...

1:38 PM  
Blogger MiamiMed said...

Again, a licensing process that is more of an accreditation process would insure quality for those that want a guaranteed product. I won't go to Mexico, but many people do. It seems crazy to me that they have to do so. The examples you stated happened within the current system and are more of an example of its failure to control quality, rather than a mark against the free market. Atleast in that system, people won't blindly follow everyone claiming to be a doctor, assuming that the government will protect quality.

In the case of FMGs, I'll preface by saying that I am a US citizen at a US med school. I am not going to go into immigration policy, but I believe that immigrants who are legally in the US should be treated the same as everyone else. If their credentials are good enough for an accreditation body, they can then be accredited by that body in the free market. If their credentials don't meet the standards, they can practice anyway, as long as its clear that they aren't accredited.

Here in Miami, there are a HUGE number of clinics run by unlicensed physicians, who used to practice in Latin America. Many people use these clinics. They just operate underground. Every so often, someone screws up, and it makes the news. However, this is rare enough, that one really has to question why the government should care if a Cuban immigrant (or anyone else) wants to go see a Cuban doctor just because that doctor isn't licensed in the US. These physicians would probably not become accredited by a body with true standards, and hospitals would demand such an accreditation in a free market. They wouldn't end up in the EDs, because the market would probably keep them out. However, a market system would probably do a better job of differentiating based on quality, rather than nation of origin.

Man, I do say that we have gone on about this for a while. :)

3:58 PM  
Blogger Someonetc said...

we have gone on about this for a while. something i keep missing. having personally been licensed in 4 states, 6 hospitals, 1 board, and multiple insurance companies, the accreditation process for all is about the same. they all require degree (MD or DO), a residecy (at least 1 year), passage of exams (USMLE or COMPLEX), they do background checks, NPDB checks, etc. how would a free market be different other than allowing people who do not have X,Y,Z to practice?

just questions i have, i am always learning :) everyday is a school day.

5:24 PM  
Blogger MiamiMed said...

As of right now, within the current system, you are correct that not much would change. In fact, I don't really think that huge amounts would change in terms of expected training and expertise. Medical training could be streamlined to an extent, but a doctor will still have to know mostly the same things. What I honestly expect a free market to do is find innovative ways to teach those things (at a much faster rate of evolution) and to create some competition to keep the system on its toes. Also, some good market competition might drop prices and actually bring medical care back into the realm of affordability.

I realize that you are obviously much farther along than I in your training. Are you also the PediBoneDoc? If you are, I've read your blog as well, and I found one particular article on generational differences in learning styles particularly interesting. I think that the free market generally rewards innovative thinking. My goal, as is yours, is to increase the quality of medical care.

Stay tuned for a bit. I'm busy studying for my step exam, but I'll continue this series with more specifics in time. I look forward to your feedback.

8:14 PM  
Blogger Someonetc said...

those pesky exams. yes i am pedibone doc on SDN. thanks for the clarification. (and the light bulb goes on)

study hard young jedi, i will look forward to your next article.

5:29 AM  

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