• More on residency training slots

    Catherine Rampell has a follow-up to her earlier article on the primary care doc shortage (my thoughts on the original piece here). In this one, she delves into the funding of residency slots my Medicare. Here’s the part I think it really worth noting:

    In any case, in 1983, Medicare devised a new version of the training subsidy that has essentially carried over until today. The subsidy comes in two parts.

    The first is officially for the “direct” costs of training new doctors (like their salaries, benefits, and teaching costs). The second, larger part is officially supposed to pay for the “indirect” costs that hospitals and health care centers incur because trainees are expected to be slow, inefficient, and otherwise generally increase the cost of care.

    For example, let’s say a patient comes in with an ailment that Medicare usually pays $2,000 for the hospital to treat. Medicare will instead pay more than that if the hospital employs a lot of residents, with the exact increase in payment determined by a formula.

    This means hospitals used to have incentives to create new residency slots ad infinitum so they could keep on getting higher and higher payment rates from Medicare. Congress decided (perhaps understandably) that this was financially unsustainable; there was also some concern about creating an “oversupply” of doctors in the 1990s. So in 1997, Congress capped the number of positions that Medicare would underwrite, freezing the total at what it was the year before.

    Hospitals can still create (and have created) new, non-Medicare-financed residency slots, but they must do so using other sources of funds.

    As I noted in the column, there is debate about whether hospitals need these subsidies, since at some point in the training process the residents are most likely bringing in a lot of money for the hospitals on net. In fact, the Medicare Payment Advisory Commission has found that the indirect payment rate is almost twice as high as can be justified by empirical data, once you look at the costs of care at teaching hospitals versus nonteaching hospitals.

    I still recommend you read the whole thing.


    • Argh, residency spots are in no way the “the biggest bottleneck in the supply chain for doctors.”

      It’s the number of MD/DO medical school graduates.

      The transfer of foreign medical graduates to the US is probably one of the most regressive transfers of human capital, from poor nations to the US, in the entire world.

      “In some cases, either a state will have to fund new G.M.E. positions, or many of its new graduates will have to leave the state to find residency positions.”

      So what? Unless you live in Massachusetts, large portions of the graduating med student population already move to a different state for residency anyway.

    • I think that the problem is actually a little different. In the U.S. most primary care training occurs in hospitals. Managing heart failure, for instance, is very diffeent in the hospital than it is in the office. Residents are being paid to work in the hospital and resident clinics are treated as a tacked on annoyance. Additionally, the hospital based training for primary care is mostly treated as a stepping stone to subspecialty fellowships.

    • Medicine in Amerika is so weird. Amazon and Walmart serve millions with extreme efficiency. Do they talk about “residency slots”?

      I know I designed parts of rockets, fighters, bombers, ICBMs and nuclear weapons without ever filling a “residency slot”!

      • Sure. You never have 5-10 minutes to decide what to do, and then have the ability to do it, or have someone die. Life is a bit different sitting in front of a computer.


    • That may have been the case in the past, but not anymore. There has been a huge shift toward outpatient management of many things that used to lead to admission. Residents headed for spend a lot of their time working in outpatient venues. The misunderstanding comes perhaps because people do Internal Medicine followed by specialty training. Some Medicine residents go into general internal medicine while others become specialists. They may be on different tracks even during their residencies, but in any case neither group spends all its time on the inpatient service. Medicine has not been practiced like that for a long time.

      Of course, residents in, for example, family practice, train for what they will actually do, which is overwhelmingly outpatient.

      • Well, it varies from program to program. I was just talking to a peds resident a few weeks ago.. She has her hospital based fellowship all lined up. I don’t blame her. Primary care is still looked down on as a consolation prize for losers. We make too many subspecialty fellowship slots available. The money would be put to better use funding outpatient training, but that doesn’t mesh well with the hospital based payment model.

        In Europe, medical graduates either go into outpatient training directly or they do a year or two of academic research in a subspecialty before going directly into subspecialty training.

        Do family practice residencies still send residents to deliver babies and assist in surgery? Does malpractice insurance in any metropolitan area really cover the kindly GP who delivers a baby here and there?