> In recent years, the number of medical residents has become so restricted that even the American Medical Association is pushing to have the number of slots increased. The major obstacle at this point is funding. It costs a teaching hospital roughly $150,000 a year for a residency slot. Most of the money comes from Medicare, with a lesser amount from Medicaid and other government sources. The number of slots supported by Medicare has been frozen for two decades after Congress lowered it in 1997 at the request of the American Medical Association and other doctors’ organizations.
I was confused by that part too because the article goes on to say teaching colleges "have an incentive to offer residencies in specialties from which they can get the most revenue per resident."
My guess is the 150K number ignores the revenue contribution of the residents (which must be significant because they carry out a significant amount of the work that requires a doctor at a hospital)
I did a google search and found one article that seems to confirm this: "Whether the programs are ultimately costs or moneymakers for hospitals is mostly unknown. Expenses tied directly to the programs are tracked, but overall cost-benefit accounting that would take into account such things as savings or lower medical bills for patients from the use of lower-paid residents instead of practicing physicians isn't done." http://www.modernhealthcare.com/article/20150719/news/307199...
The argument that federal funding is the only way to create more educational "seats" for doctors seems strange since the article claims they are paid much more than other fields, and is not really laid out well in the article.
> but overall cost-benefit accounting that would take into account such things as savings or lower medical bills for patients from the use of lower-paid residents instead of practicing physicians isn't done
This is talking about the cost-benefit from a societal perspective, not from the accounting perspective of the hospital. From an accounting or business perspective, it's pretty clear that residency programs don't make money for hospitals.
An easy way to reason about this is to remember that nothing's stopping hospitals from opening up residency slots that they self-fund. If residency programs predictably broke even, you'd expect them to do that. Except, almost no hospital does this, because the programs don't predictably break even - in fact, they pretty predictably lose money.
It's not that strange. Medicare has a physician fee schedule (PFS). Hospitals don't receive a PFS payment for services provided by a resident, unless a teaching physician is physically present during the key portions of the service, or under certain primary care exceptions. I'm not sure how private insurance companies do it, but I wouldn't be surprised if their rules weren't similar.
A similar thing is happening in the legal field. Clients wont pay for work done by first or second year lawyers, so large firms are cutting back entry level hiring and many smaller firms have stopped hiring entry level lawyers entirely. Thus you have a bizarre situation where there is a huge oversupply of JDs, but private-practice associate salaries continue to go up because there is a limited supply of experienced attorneys.
They don't receive the PFS payment, but they certainly do for room fees, imaging, labs and other diagnostics, not to mention medications.
And the patient is still tended to by nurses, who do absolutely generate revenue for the hospital.
While they don't get a PFS payment, we also can't provide that Medicare pays for the residency and then everything else is a charity case for the hospital.
That argument doesn't respond to whether it's "strange" that residents are unprofitable. It's just the unsupported assertion that certain unquantified ancillary payments will exceed the unquantified costs of employing and supervising a resident. But clearly they don't, or else hospitals would create more resident positions.
The charge is that hospitals are not creating more residencies in order to collude to drive up doctor salaries. Even if residents were profitable, but less profitable than experienced physicians, it would still be a rational business decision—rather than improper collusion—to hire physicians instead of residents.
That explanation makes sense (except partially for the sibling comment's point) but there is still something strange there.
In market terms, this is clients saying entry-level workers with lots of education provide zero value, or the risk outweighs the benefits. If that's true, it means that people need training until 30-somethings before they are valuable to society. Or our education system is broken.
Or it's not true and it's market manipulation. Given the choice between "no service" and "pay a fair entry-level price", many people will pay something.
And if/when they cann't get a job, the state then revokes their credentials. Hilarity ensues.. Oh did I say hilarity? I meant the spiral of loss of job/homelessness/garnishment/destitution. And it's then illegal to use the credential to try to make money to recover from.
Talk about being sold a bill of goods - Come get a degree from here, and if you can't find a job, we'll garnish you and remove your ability to use the degree you're being garnished for.
Not if the government already pays for it. Why open up self-funded slots and show that the government doesn't need to pay for it? If you make a small profit, you are just putting the other pure profit slots at risk...
> Not if the government already pays for it. Why open up self-funded slots and show that the government doesn't need to pay for it? If you make a small profit, you are just putting the other pure profit slots at risk...
I somehow doubt Hospital A, which has zero residency slots and receives zero residency funding from Medicare, cares if Hospital B down the road somehow loses their subsidies.
There is no "pure profit slot". Residency programs do not make money for the hospital. If they did, hospitals that do not have residency programs would open self-funded residency programs, and/or hospitals that already do have residency programs would expand theirs.
It is possible that if the AMA or others is intentionally restricting the supply then any hospital that started its own residency could have trouble hiring regular doctors. I am not claiming this is the case, but it is one reason that hospitals might avoid something that the free market would indicate.
Hospitals do not do their accounting in a normal way. When you or your insurance gets a bill, the doctors are often listed separately. In other words, patients pay for them directly for services, they are not paid as employees of the hospital. That means for residents, someone's got to pay for them. They are not seen as lower cost labor because doctors are not accounted for as high cost labor. I'm not sure how it's done, but it's not the same as interns in engineering.
> Are you sure it's not just a case of Hollywood style accounting?
Yes, for the reason I said:
> An easy way to reason about this is to remember that nothing's stopping hospitals from opening up residency slots that they self-fund. If residency programs predictably broke even, you'd expect them to do that. Except, almost no hospital does this, because the programs don't predictably break even - in fact, they pretty predictably lose money.
Even if you don't trust the accounting numbers, you have to trust the overall (lack of) incentive for hospitals to create self-funded programs.
I agree with this logic about "if residency programs predictably broke even" but I don't see any concrete support for that in the article. They don't have an accounting of revenue per doctor or at least the article has not shown one.
Saying the benefit is social benefit doesn't help here, obviously it is it's a hospital, there needs to be revenue numbers in the mix to talk about breaking even.
re-reading your comment "This is talking about the cost-benefit from a societal perspective, not from the accounting perspective of the hospital." I think perhaps you do not understand what residents do. Residents handle a portion of the patient workload. They provide direct economic benefit to the hospital by handling patient workload at a lower salary than more senior doctors. There is a hierarchical system by which work is reviewed by more senior doctors but this is used in all hospitals regardless of whether there are residents. The economic benefit to the hospital is that residents do the work for lower salary than doctors. Putting that into dollar terms is what this article has failed to do, likely because the data to do so is not there.
> I think perhaps you do not understand what residents do.
Given my background, I understand exactly what residents do.
My point still stands. Even if you don't trust the accounting numbers, you have to look at the end result.
Let's assume that residency programs are, at the margin, profitable for hospitals. Let's also assume that hospitals like profit.
- The statement "residency programs are profitable (at the margin) for the hospital" is logically equivalent to "increasing the number of residency slots (or programs) would be profitable for the hospital".
- If increasing the number of residency slots (or programs) would be profitable for the hospital, there would be more of them.
- However, there aren't - the number of self-funded residency programs has been (essentially) zero for decades.
Therefore, one of our two assumptions must be wrong. Either residency programs are not, at the margin, profitable hospitals, or hospitals just like turning down profit.
"residency programs are profitable (at the margin) for the hospital"
No, there are many options between 'profit' and 150k costs.
The question is can Medicare increase the number of residency's without increasing Medicare's costs. And because of the excessive number of specialists with higher associated costs the answer to that is clearly 'Yes'.
Thus, the cost of a residency slot is not inherently negative 150,000$/year. It's very possible for residency's to break even without hospitals to have any incentive to implement them, further that 150k/year provides profit even with the current mix.
> No, there are many options between 'profit' and 150k costs.
Why are you bringing $150,000 into this? That's the median debt load of a resident - it has nothing to do with what a hospital makes.
> The question is can Medicare increase the number of residency's without increasing Medicare's costs. And because of the excessive number of specialists with higher associated costs the answer to that is clearly 'Yes'.
I... don't even understand what point you're trying to make here. The point is that hospitals cannot generally provide self-funded residency programs, because they lose money on those programs.
Yeas, it's true that not all residency programs cost the same amount - some fields are more expensive than others. But it's not like we're trying to optimize for the total number of residents in the system at any time; the reason we have more expensive programs like neurology is because we need neurologists. Yeah, we could "save money" by training them in EM instead, but then that'd just mean an even greater shortage of neurologists (and even higher market wages for neurologists).
Because 150k/year is the current subsidy per resident. People may reasonably not want to spend more money on this, but it's hard to argue with spending money more efficiently.
You're demonstrating that hospitals do not consider residency programs to be worth funding, but you aren't helping us understand why, which is the far more interesting question.
There are multiple factors at work, only one of which is funding.
Residents are required to handle a minimum number of a large variety of cases by the time they graduate, in order to guarantee that they've seen a representative sample of cases in their field and have knowledge of all of them. E.g. a neurosurgery resident might need to do (completely fabricated numbers) 30 open vascular cases, 50 spine fusions, 40 tumors, etc. This is probably the primary limiting factor for specialist surgery residencies; these residents are profitable (they can handle the bulk of most simple cases fairly autonomously once they're a couple years into their training, and they stick around for 5-7 years), so many hospitals would like to hire more of them, but there are simply not enough patients with the necessary conditions for them to add more trainees.
For non-surgical residencies, the residencies are much shorter (so you have less time from highly-skilled residents), and the residents are less profitable, so funding is a significant limitation.
It's also important to note that residents are competing with mid-levels in the "less expensive practitioners" category, and mid-levels are a far better deal for the hospital in most specialties. They're somewhat more expensive in terms of raw salary, but they remain mid-levels, which means they have the time to develop near-perfect competence at the things they do handle, and they don't leave just when you've trained them up. A few good mid-levels make all the difference in keeping a department running smoothly.
> You're demonstrating that hospitals do not consider residency programs to be worth funding, but you aren't helping us understand why, which is the far more interesting question.
Because they... don't make money if they do?
I don't know how to make it any clearer. The costs of providing additional residency slots (paying resident salaries, paying additional attending salaries, paying taxes, paying insurance, etc.) don't bring in enough additional revenue or offset enough other costs to be worthwhile.
It's not particularly complicated math - it's the same arithmetic a McDonald's franchise owner has to do to decide whether to hire another person to flip patties, just with bigger numbers attached to it.
The way to make it clearer would be to discuss specifically why the services rendered by residents are not valuable enough to cover their costs.
A concrete example: I've had a resident do a checkup while I was in the hospital. If they hadn't done it, a fully trained doctor making a lot more per hour would have needed to. Did the hospital lose money on that checkup? If so, wouldn't they have lost more money if the fully trained doctor would have done it? If they make money on that sort of thing, what kinds of things are the opposite?
I don't know how it works, I've only ever been a patient. It seems like you might know, so I'm asking you how it works. Do you see how "they don't make money" is really not an answer?
> A concrete example: I've had a resident do a checkup while I was in the hospital. If they hadn't done it, a fully trained doctor making a lot more per hour would have needed to.
You're assuming that, in the absence of the resident, they'd be hiring an additional attending physician. In reality, they'd just have a smaller staff, and you'd have to wait longer, the doctor would have to work longer/harder/faster, etc to cover the same patient load.
Hiring a resident doesn't bring in additional revenue. Insurers don't reimburse more per patient just because an additional physician was involved. Hiring a resident doesn't bring more patients in the door, because that's not the bottleneck for hospitals anyway. It does increase costs, because it's an additional person on staff - they have to pay them an extra $51,000/year, plus 25% of the cost of an additional attending physician to supervise them (and three other residents), plus taxes, plus health insurance, plus insurance to practice medicine, plus licensing fees, and so on.
> Did the hospital lose money on that checkup?
Probably not, unless you're on Medicare or Medicaid - in which case, yes, they do lose money on you on a per-patient, per-service basis.
Great point about how it isn't a question of the same service at a different price but of avoiding poor service which would otherwise have to be accepted because of the distorted market for health care that makes it hard to effectively punish poor service.
Are residents that much less effective? Do they require so much supervision?
If residents are just cheaper doctors, then hospitals would optimize for a high resident:attending ratio.
So what is it? As far as I know, in hospitals residents are really cost effective doctors. Yes, sure, they don't do the big fancy operations, but they are very capable.
It might be that hospitals have other parameters to factor in. Maybe if there would be too many residents compared to regular doctors, people would flock to other hospitals. And so on.
Oh nice! This is what I'm interested in! What kinds of things can they and can't they do without supervision? What is common in practice? Is there a good place to read about how this all works?
Then ... that means the supervision of residents is not working. That basically means, it's useless. (Since it'd make sense to apply the maximum amount of supervision when a resident is new and as the resident gains trust, decrease it.)
Or of course it means, that attending doctors do a constant amount of (insufficient) supervision, or they ramp up supervision after someone screws up... :|
Residents are cheaper doctors, but they are cheaper because they are less trained, less experienced doctors. They aren't equally-capable doctors with lower salary demands.
Sure, but lots of real problems require more than the skill level expected of residents, if nothing else to have reasonably justified confidence that the problem isn't one which requires more specialized attention.
Some hospitals especially teaching hospitals are non-profits. So I don't think the profit motive is sufficient justification. I think it is more likely a capacity problem.
> Some hospitals especially teaching hospitals are non-profits. So I don't think the profit motive is sufficient justification. I think it is more likely a capacity problem.
Once again, "non-profit" or "government agency" doesn't mean "no profit motive". The profit motive affects all players.
This is not-even-wrong levels of reasoning here. Personally, your comments on this subthread, and the confidence with which you've delivered them, will stay with me for a long time, and whenever I find myself nodding along with something that is facilely convincing and authoritatively stated, I'll think back to your posts and remember to be a bit more skeptical, a bit more discerning. For that, I thank you.
For the rest, well, I can't be as laudatory.
>This is talking about the cost-benefit from a societal perspective, not from the accounting perspective of the hospital. From an accounting or business perspective, it's pretty clear that residency programs don't make money for hospitals.
"Medicare pays for services furnished in teaching settings through the Medicare Physician Fee
Schedule (PFS) if the services meet one of these criteria:
1 They are personally furnished by a physician who is not a resident
2 They are furnished by a resident when a teaching physician is physically present during the critical
or key portions of the service
3 They are furnished by a resident under a primary care exception within an approved Graduate
Medical Education (GME) Program"
Crucially, there is no distinction between how much a hospital can charge for services an attending working alone has delivered (1), and how much it can charge for services a resident has delivered, as long as the attending signs off on it (2). You might naively suppose that the "physically present" part of (2) means that both attending and resident are in the room for the dx differential, and through a Socratic back and forth they jointly treat the patient, and you'd be mistaken. And of course, if you're in your final year of residency, or you're a Chief Resident, the oversight an attending will choose to exercise will be perfunctory. Read more about just how much (or little) it take to technically comply with these rules: http://www.hcpro.com/HIM-283624-8160/Coding-billing-and-docu....
Then reread this short, moving piece published in the NYT mag for an illustration: https://www.nytimes.com/2017/10/24/magazine/the-rules-of-the.... As a resident in his third year out of medical school, how was it that the author was able to essentially run his own service if residents are really just stumps of malformed medical errata, all but useless unless they have their hands held by an attending?
Or just ask yourself: how is it that you can give a hospital a senior resident in radiology, or anesthesiology, or dermatology, who is just months away from demanding 350k+ on the job market, cap the resident's salary at 60k or less, and have the ability to work them for up to 80 hours, how is it that a hospital fails to make money here?
Sure, you can go through all the malpractice costs that have to be priced in, the free cafeteria food, the upkeep of the residents lounges. Sure, and Google spends a ton on the great insurance and fun perks it offers too. Somehow they manage to make sure they don't lose money on their employees.
>An easy way to reason about this is to remember that nothing's stopping hospitals from opening up residency slots that they self-fund. If residency programs predictably broke even, you'd expect them to do that. Except, almost no hospital does this, because the programs don't predictably break even - in fact, they pretty predictably lose money.
An even easier way to see you're making things up is to realize that medical residents can earn up to $100+/hr by moonlighting[0], all while they're apparently causing their home institutions to "predictably lose money" while earning an 10% hourly rate.
[0] https://www.staffcare.com/medical-moonlighting-for-residents... and the doctors discussed in this article aren't getting these opportunities after some long rigorous period. One of them was in his second year of residency once he decided to start moonlighting, literally a year out of med school. Again, this goes to show residents are pretty valuable right off the bat, are (overall, generally speaking) a bargain for their home institutions, and only get more financially profitable as time goes on.
> This is not-even-wrong levels of reasoning here. Personally, your comments on this subthread, and the confidence with which you've delivered them, will stay with me for a long time, and whenever I find myself nodding along with something that is facilely convincing and authoritatively stated, I'll think back to your posts and remember to be a bit more skeptical, a bit more discerning. For that, I thank you. For the rest, well, I can't be as laudatory.
Look, I could respond to each of the points you bring up in turn, and explain how it's actually quite easy for those individual statements to be true but still impossible for most residency programs to turn a profit.
But I've been on Hacker News long enough to know that, when someone begins a lengthy comment with an insult that underhanded and that personal, there's no way that they're in the mood for a good-faith discussion, and attempting to engage further in a reasoned debate is a recipe for frustration.
I see you're a relatively new commenter here, so I'll just say: on the off-chance that this interpretation is wrong, and you were looking to have a good-faith discussion on the topic, I'd recommend next time leaving off the personal insults.
Hmm I don't read the quoted text as a personal attack (snarky, okay fine) and I certainly don't see anything "underhanded" about what I posted, but if you think I'm posting in bad faith (all too endemic online, unfortunately), I don't think you can be faulted for not wanting to engage. That's certainly fair. And honestly, if you felt it was personal, I can apologize. Sorry.
That being said, you've made ~15 comments itt, in which you're variously appealed to your own authority ("Given my background, I understand exactly what residents do". Actually, I don't know any medical resident who could make such a statement, given how broad and diverse the fields that postgraduate medical training encompasses are, but sure.), and made repeated statements about what residents are and aren't capable of, all seemingly without citation or reference.
All of which is to say, I think if you could have made the case that the facts and figures posted above, and in this thread, are perfectly compatible with your contention about medical residents being a net financial drain for hospitals and academic centers, you would have done it by now. In that sense, I agree further debate would probably not be very productive.
I was confused by that part too because the article goes on to say teaching colleges "have an incentive to offer residencies in specialties from which they can get the most revenue per resident."
One way this makes sense is how Medicare pays teaching hospitals. A hospital gets $X for a procedure code. If they are a teaching hospital, they get $X+2% (can't remember the exact bump but it's relatively small).
The more expensive the procedure, the bigger the bump for being a teaching hospital. That's the incentive to get residents practicing expensive specialties.
Does it cost $150k/yr of actual concrete costs or does it cost $150k/yr because that's what they're used to receiving and they want the gravy train to continue?
> Does it cost $150k/yr of actual concrete costs or does it cost $150k/yr because that's what they're used to receiving and they want the gravy train to continue?
There's no "gravy train" - residency programs are not self-sufficient without this money from Medicare. It costs a lot to train a doctor, and that's even paying doctors less than minimum wage in many areas[0].
If they were, hospitals would be free to open as many residency programs as they wanted without Medicare's subsidies, except they generally don't. There are very few non-Medicare funded residency positions, and they tend to be very special cases in obscure regions.
[0] The average resident salary comes out to $12.25/hour, which is literally less than minimum wage in some areas.
The fact that residents aren't paid much by the hospitals doesn't mean that the hospitals aren't making a net profit, it would normally be evidence that it is profitable for the hospitals. Even working 100 hour weeks all year that salary would only come to $65k leaving another $85k to be accounted for. Some of that is benefits and some is the time used by doctors to train the residents and by hospital administrators to oversee them. But the residents also do work for the hospital that would otherwise have to be done by doctors or nurses. So I'd expect that they are profit centers for the hospital but I'm willing to be convinced otherwise if someone can come up with numbers.
The hospital doesn't directly receive money for work done. In many cases they get paid for a procedure done by a doctor, but don't get paid for the exact same procedure done by a resident, so it matters who does the work because that directly affects revenue.
They still bill a healthy profit on the procedure done by the resident by way of room fees, equipment fees, lab fees, imaging fees, diagnostic fees, nursing care fees, PT fees, and so forth.
> You have too much faith in the free market. There are all kinds of things that could cause hospitals to not hire more residents.
So far, in this entire thread, nobody has been able to offer one explanation that doesn't ultimately boil down to either "hospitals don't actually want to increase their profit".
Here's a purely economic argument: if there is an expected profit from self-funding but it is less than that from receiving the Medicare funding, and there is a perception that the Medicare funding only exists because the argument has successfully been made that self-funding is not profitable, then making the smaller profit from self funding would put at risk the possibility of receiving the larger profit through Medicare funding, and administrators might determine it is not worth the risk.
Here's a practical argument: perhaps combined with the uncertainty of the above calculation, administrators are humans, for whom the inertia of the status quo "this is just how it's done" is powerful.
That's all speculation, just like your purely economic argument is just speculation. What would provide actual insight would be some understanding of why residencies are unprofitable, if it's true that they are.
> Here's a purely economic argument: if there is an expected profit from self-funding but it is less than that from receiving the Medicare funding, and there is a perception that the Medicare funding only exists because the argument has successfully been made that self-funding is not profitable, then making the smaller profit from self funding would put at risk the possibility of receiving the larger profit through Medicare funding, and administrators might determine it is not worth the risk.
No, that doesn't add up. Hospitals only receive $80,000 per resident from Medicare. If residency programs were profitable at level P, they could increase them from N residents to M residents, where (80000 + P)N < P M[0].
Furthermore, hospitals that currently don't receive any money from Medicare would simply expand self-funded programs, because they wouldn't be losing anything by doing so[1].
There's also no way that hospitals would be doing so much to preserve a mere $80,000 stipend, because increasing the number of physicians is in their best interest - it allows them to decrease their expenses (physician salaries) in the long run.
> That's all speculation, just like your purely economic argument is just speculation.
No, it's not speculation; it's exactly what hospitals, government employees, elected officials, and industry analysts have pretty much all been saying for decades. And it's supported by the actual evidence at hand, including all of the financial figures that they publish.
[0] Of course this doesn't work if P is a decreasing function of either N or M, which is the entire point - it is decreasing, and in fact, is already negative for the current value of N.
[1] Except, of course, if P is negative - which it is.
As we've gone on in this thread, you've provided an increasing amount of actual details on how this works (thanks!) and now express knowledge of external sources that back this up (though citations to those would be useful). Your initial claim read to me as just, "it's simple free market incentives", which is not the same as the more full picture we've gotten as we've gone on, which now includes more analysis of how the Medicare incentive might play out for different decision makers. I feel like that was peoples' point (at least it was mine): an indirect "follow the money and don't worry about why it works the way it does" argument was not sufficient. So thanks for taking the time to fill in a bunch of gaps!
I still think you may be downplaying the impact of the risk calculation hospitals have to make regarding their ability to receive the stipend now or in the future. It may be only 80k, but clearly that 80k is enough to incentive many hospitals to have residents, so it must be material to them to some extent.
Your point about increasing supply of doctors being in hospitals' interest in the long run is interesting, but this is the same training conundrum everyone has: it is often difficult to make the decision to invest in the near term when the payoff is not realized until much later.
I'm sure you're right about all this in general - training people is a tricky and expensive problem for every industry.
Not really, it's just that most people here are simply relying on the very good heuristic that most markets, government (mis-)managed or free, are chock-full of perverse incentives.
In this case, the likely culprit is that accepting residents for less than $150k/yr in sponsorship sabotages their ability to claim that the fair market value of residency training is $150k/yr, and they've calculated that the marginal benefit from accepting a single resident at a lower cost does not outweigh the risk of being forced to provide the same discount to their existing residency positions.
> In this case, the likely culprit is that accepting residents for less than $150k/yr in sponsorship sabotages their ability to claim that the fair market value of residency training is $150k/yr, and they've calculated that the marginal benefit from accepting a single resident at a lower cost does not outweigh the risk of being forced to provide the same discount to their existing residency positions.
So you're saying that hospitals which receive no funding from Medicare eschew this potential profit center (a residency program) so that their rival hospitals can keep receiving funding from Medicare and make an even larger profit?
This makes even less sense than the other theory being proposed, which is that hospitals are eschewing short-term profit in order to increase the expenses they have to pay in the long-term.
> they've calculated that the marginal benefit from accepting a single resident at a lower cost does not outweigh the risk of being forced to provide the same discount to their existing residency positions.
only holds up for schools with existing residency positions, which there are many without. If a residency were profitable without the subsidies, one would expect to see those non-teaching hospitals launching residency programs. Especially so because they don’t have to worry about threatening the subsidies which they aren’t receiving.
> So far, in this entire thread, nobody has been able to offer one explanation that doesn't ultimately boil down to either "hospitals don't actually want to increase their profit".
My wife is in med school, here's my argument based on what I see in her education.
Training doctors is fucking hard.
Profits and business and all of that jazz plays a part, sure.
What I've seen is none of that really matters because hospitals can't even get enough qualified staff to support more residency positions. It takes a lot of work for a senior physician to include a medical student or resident in their daily activities. On top of already having a stressful job, dealing with naivety and inexperience of young doctors makes it very unattractive for doctors to want to participate in the process.
> Training doctors is fucking hard. What I've seen is none of that really matters because hospitals can't even get enough qualified staff to support more residency positions.
Yes, and I don't mean to discount the challenges in finding and compensating enough physicians properly for even agreeing to do this in the first place!
Put another way, what I was saying before is that, even if the costs were linear, hospitals couldn't pay for it (without external funding). But as you point out, the costs aren't linear, which makes it even harder.
Or put yet another way, we can't easily increase the number of residents we train to practice medicine, because we don't have enough people trained to practice medicine in order to train them.
This isn't unique to medicine; we have the same problem with law too[0]. Heck, I even know startups that have complained that they don't have the bandwidth they need to hire and train more people.
In other words, doctors salaries are so extreme because it saves the state government a few bucks when training doctors.
This is pretty common knowledge among doctors of course, who starting at least a decade ago, have started clamoring for more and cheaper places in education programs. These it's tough finding any doctors at all who aren't asking for more doctors in training.
But systematic decisions to defund education, starting a long time ago (like 30 years ago or so) and have continued under every government since. That is the root cause here.
Or you know, hospitals with residency programs could just use of the massive insurance money they make to fund residency positions. It's not like the residents aren't employees or something.. Even the medicaid/medicare procedures are reimbursable.
Medical stuff is incredibly complex. Hospitals aren't making massive amounts of money -- overall the situation is that there are too many hospital beds as insurers push more and more procedures into outpatient settings with better outcomes and lower shared cost.
That's why medical networks are forming -- they put the GPs on a salary, cram in more nurse practitioners and PAs, avoid union contracts that are more common in hospital settings and extract more money from those settings.
So you have lots of implicit and explicit subsidy. Hospitals lose money on Medicare and some medicaid patients, and on no-pay patients who lack insurance. When my wife had my son, the unplanned c-section cost over $40k, largely because of those insane overheads that require subsidy.
i think one of the most interesting things about healthcare is how local it is. Most hospitals around the country are struggling, but there is a subset of large powerful hospitals that are making money hand over fist. They are basically buying physician networks so that 1) they can charge more for the same services by getting facility fees and higher negotiated rates and 2) they can control patient flow from primary care all the way to the hospital. And often that means treating a patient in the most profitable setting to the health system
Sutter is a shining example of this type of health system -- get huge regional scale, vertically and horizontally integrate, control patient flow, and crush payers at the negotiating table. Their prize is having some very profitable hospitals, including the second most profitable in the nation (almost $300M / year in profit at one hospital). And this profit is after paying their execs handsomely
Hospital spending is the biggest driver of cost, in no small part because of practices like the above
Oh totally. These networks engage in all sorts of unethical and self-dealing practices as well.
The Catholic hospital and medical network in my region was swallowed up with Trinity Health, which is a national medical network. Your interaction with a doctor or hospital is entering a sales funnel, where each additional interaction is engineered to generate more revenue for the network.
A family member had a stroke, which was debilitating and had a bunch of after affects. Prior to hospital discharge, the social worker (aka salesperson) drops a packet of nursing homes in the room and demands that it gets filled out by the end of that day. (which is illegal) That packet doesn't include acute rehab facilities, which is contrary to their physician's guidance. The list is sorted by available beds and exclusively consists of nursing homes owned by the medical network.
> Their prize is having some very profitable hospitals, including the second most profitable in the nation (almost $300M / year in profit at one hospital).
Yea, but this is on over $12 billion in revenue. That's less than 2.5% margin.
the article i saw said that the $270M profit was for a single hospital, sutter memorial hospital in sacramento, which does revenue of $3B per a separate article i found.
it is interesting that sutter's overall system-level profit is $370M. i think they have a few other very profitable hospitals as well. they must spend a lot on corporate sg&A and executive salaries (their CEO has a $7-10M salary IIRC)
I think sutters CEO is in the top 3 or so highest paid non profit CEOs, and sutter may be the biggest / second biggest non profit health system in the country, so I don't know that there are many industry comparables
I'd love to see a breakout of corporate g&a vs provider level g&a at sutter vs a set of comparable systems. All that "non-profit" profit has to go somewhere
> Even the medicaid/medicare procedures are reimbursable.
Medicare reimburses rates below-cost. About 7% below COGS, which means they lose money per-patient, even before they have to pay doctors, nurses, janitorial staff, etc.
> Or you know, hospitals with residency programs could just use of the massive insurance money they make to fund residency positions.
The "massive insurance money" is used to subsidize the losses that hospitals make on Medicare patients.
> It's not like the residents aren't employees or something
Great point. And that's why companies generally don't hire employees unless they work they do is profitable for the company. As it turns out, residents are not profitable for hospitals, which is why hospitals don't "just hire more of them".
> As it turns out, residents are not profitable for hospitals, which is why hospitals don't "just hire more of them".
This isn't quite in line with reality. If you familiarize yourself with specific hospital system figures, you find gems like this: Of Beaumont Hospital's 395 residents, 91 are not covered by Medicare and so are paid for by Beaumont. The $57 million for GME represents 4.73% of Beaumont's net patient revenue in 2013, or about $189,368 per resident. [0]
> The 91 residents that are trained within the hospital system without medicaid funding speaks to the fact that residents are in fact employees
...nobody ever said that residents weren't employees? The point is that they are and hospitals aren't going to go out and hire more unless it's profitable for them to do so. (Which it isn't, or else they would have done so, and that article even says as much).
For profit hospitals and doctors do not have to accept medicare or medicaid patients. Non-profits are required to to get non-profit tax exempt status. Some providers are more efficient then others so a statement that medicare reimburses below cost is not accurate. Maybe some procedures reimburse below cost but not all do. It is also not rational for these profit seeking doctors/hospitals to accept medicare patients but they do which directly conflicts with your statement that hospitals only do profitable things. One could argue that medicaid and medicare patients are sicker and there are more of them than most so they provide a larger revenue stream than private insurance covered patients (and they also require more procedures). If you didn't have these patients then your utilization would be lower and therefore your COGs would be higher as well. Also you might not be able to scale your hospital to take on the profitable procedures. Residents are also lower paid which give the hospital greater incentive to have them treat the medicaid/medicare patients as well. So logically it is better to employ more residents if you have sufficient patient load since it would reduce COGs.
> Some providers are more efficient then others so a statement that medicare reimburses below cost is not accurate. Maybe some procedures reimburse below cost but not all do.
I never said all do - I said that in aggregate, Medicare reimbursements are 7% less than COGS. "Efficiency" doesn't really enter the
picture, because COGS isn't driven by efficiency (ie, overhead); it's driven by upstream costs.
> So logically it is better to employ more residents if you have sufficient patient load since it would reduce COGs.
Nope, none of the stuff you mentioned falls under COGS.
> One could argue that medicaid and medicare patients are sicker and there are more of them than most so they provide a larger revenue stream than private insurance covered patients (and they also require more procedures)
This is the classic "we'll lose money per customer, but make it up in volume" argument.
You keep giving me the sense (like with your "7% below COGS" statistic) that you do actually know why residencies aren't profitable, but you keep making an indirect economic argument instead of talking about that directly.
All anyone in this thread is trying to figure out is why folks getting paid poorly to do work that we know costs tons of money (because we see the bills) would incur net negative profit.
> All anyone in this thread is trying to figure out is why folks getting paid poorly to do work that we know costs tons of money (because we see the bills) would incur net negative profit.
Because hospitals have to pay:
- residents' salaries
- attendings' salaries
- health insurance
- residents' insurance (for practicing)
- licensing fees
- taxes
It turns out, that all comes out to a lot of money. And hiring additional residents doesn't really save them much money, or bring in much additional revenue. The costs are greater than the revenue or savings. So, it's not profitable.
> to do work that we know costs tons of money (because we see the bills)
That's a question of medical billing, which is a whole other separate topic. In short: hospitals don't receive anywhere near the sticker amount for those bills, and a massive chunk of reimbursements from privately-insured patients goes towards recouping the losses that Medicare and Medicaid patients incur (as explained elsewhere, hospitals lose money on a per-patient basis for publicly-insured patients).
It seems to me that all of that (both the fully loaded costs of an employee, and the complexity of medical billing) applies equally to any other doctor, with a single exception. The exception is the portion of the attendings' costs that can be "charged" to each resident.
Is it that the additional cost in attendings' time, along with the reduced ability to earn larger sums for complex unsupervised procedures, outweighs the lower salary?
> Or allow people to do internships with normal, non-ER doctors.
Huh? What does that even mean? The only people who do their residency training with EM physicians are residents training in... EM.
> Or eliminate the residency requirement completely.
So... have people who aren't qualified to practice medicine be allowed to practice medicine?
Residency isn't just some arbitrary requirement - it's how neurosurgeons actually train in neurosurgery[0], and so on.
[0] Well, to be pedantic, neurosurgery also requires a post-residency fellowship. But you'd be hard-pressed to make the argument that neurosurgery fellowships could somehow eschew the residency requirement - it's a prerequisite for a reason.
> Well, to be pedantic, neurosurgery requires a post-residency fellowship.
Doubly pedantic: further specialization within neurosurgery (complex spine, vascular, tumor, peripheral ...) is done via fellowship, but plenty of practicing general neurosurgeons ended their training with residency. Source: wife is in her final year of neurosurgery residency. Of the folks in her program who have graduated while she's been around, about 1/2 did a fellowship, the other half went straight into practice.
(I hesitate to post this extremely minor correction, because everything you've said in this thread is absolutely spot-on and a very welcome dose of facts.)
Now that we are discussing facts... please tell us how many doctors you have personally visited that have been required to perform neurosurgery on you? I can't think of a single incident where that has been necessary in my own experience, and yet every doctor I have seen has been required to have residency experience. Rather counterintuitively, most of the time that has seemed unnecessary, and the work was done by a low-paid nurse or technical staff with the doctor waltzing-in at the end to "sign-off" on the results in order to fulfill the requirements of the insurance companies and ensure the hourly-billing rate was well-above what it would have cost to pay a private clinic staffed by the same nurses to do the same work.
So please enlighten me instead of just slamming what seems a fairly obvious point without adding anything of actual substance to the discussion. Because from the perspective of an actual patient it seems rather silly that a nurse can't take a blood test, and a paediatrician-in-training can't study with a family doctor or another paediatrician in a private practice. And it seems absurd that extensive state funding is now accepted as necessary simply to certify someone to oversee tasks like prescribing antibiotics, or signing-off on STD tests, or allowing patients to get blood test results.
No-one is suggesting that neurosurgery should be done by people without specialized training (I would actually think that "residency" is a poor way of measuring competence in that field as well, fwiw). And by reducing the complaints to this rather silly level all you are really suggesting you have no practical answer to the question of why "residency" is a reasonable bottleneck blocking the certification of doctors and keeping the costs of general medical care far above what is actually needed to deliver the vast majority of it that doesn't involve cutting into people's brains.
EDIT: I love the downvotes people, but you would be better off answering the question since I have karma to burn and enough experience with the US medical system to know that "residency" hasn't been necessary for almost any of the medical care I have received.
Residency at an ER isn't necessary for someone to become a pediatrician. Pediatricians do a pediatric residency. You seem to be very, very confused.
> Why have you elevated some bottleneck guild requirement into a general license to write prescriptions? Or sign-off on an STD test? Or allow patients to get blood tests? Or to inform them of said test results?
Literally everything you listed here can be done by a mid-level (i.e. non-MD), and commonly is (though the scope of prescriptions they can write is limited by states, IIRC).
> by reducing the argument to this level you are only suggesting you have no adequate response to the actual problem
I have no idea what you're talking about; I posted a minor factual correction to someone else that has nothing to do with this point. Again, you seem to be very, very confused.
----
In your edit you say:
> I would actually think that "residency" is a poor way of measuring competence in that field as well
Residency is not a tool for measuring competence. It is the means by which that competence is acquired[1]. You demonstrate competence by passing the written and oral boards in your specialty.
> "residency" hasn't been necessary for almost any of the medical care I have received.
May this continue to be true. If everyone were so lucky, the medical system would be much, much simpler.
[1] Foreign doctors who may already be competent are required to go through residency in the US as well; there probably should be a way to short-circuit that and allow them to demonstrate competence.
> Residency at an ER isn't necessary for someone to become a pediatrician.
You may simply be talking past each other here. All of my (now doctor) friends who went through residency pulled at least one, and usually more than that, rotations through ED. I can't imagine all 3 hospitals had wildly different residency programs than the rest of the nation, so I imagine 3-6mo of ED rotation is quite common during residency.
Yes, a 3-6 mo ED rotation is quite common for medicine docs (so is an ICU rotation for surgeons), but that's wildly different from an actual emergency medicine residency.
> In recent years, the number of medical residents has become so restricted that even the American Medical Association is pushing to have the number of slots increased.
This does not sound like a system where students can fulfill their residency requirements working at general care facilities with trained doctors who have years of experience.
> The major obstacle at this point is funding. It costs a teaching hospital roughly $150,000 a year for a residency slot.
So why exactly is there a slot shortage if people can literally fulfill their residency requirements pretty much anywhere? There are plenty of hospitals that could easily use the labor.
Scroll up, Stephen. These quotes are in the thread at the heart of this discussion, and they are pulled directly from the article.
I mean... I appreciate getting downvoted for reading the article and addressing it directly, but if there are indeed adequate residency spots then you are disagreeing with the article and would be better served to focus on what it gets wrong instead of attacking me for making rather rudimentary observations that follow from its core premise.
Right, but I never said there were adequate residency spots. In fact, I think that there aren't[1]. So again, why are you replying to this thread in particular?
[1] however, from what I've seen it isn't a critical issue for US healthcare; we need more mid-levels and to expand their scope of practice more than we need residents. For residents, it would be far more effective to reduce the span of pre-residency training somehow, so that people aren't starting residency with $300k in debt.
I think it is correct. They pushed for a cap, but are now pushing for an increase. ...the AAMC is now calling for an annual increase of 3000 Medicare-funded slots.
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4978854/
According to the above article, new programs are not capped. However, the bureaucracy hurdles you are required to jump to establish such a residency program is huge.
> In recent years, the number of medical residents has become so restricted that even the American Medical Association is pushing to have the number of slots increased. The major obstacle at this point is funding. It costs a teaching hospital roughly $150,000 a year for a residency slot. Most of the money comes from Medicare, with a lesser amount from Medicaid and other government sources. The number of slots supported by Medicare has been frozen for two decades after Congress lowered it in 1997 at the request of the American Medical Association and other doctors’ organizations.