- Machiavelli's Laboratory is a free ebook that I published on April 13, 2010. It is a satiric discourse on scientific ethics, from the perspective of an unethical scientist. Please don't take any of the advice and opinions in the book (or the excerpts featured in this blog) seriously.
This blog entry continue's yesterday's blog, "Physician workforce: supply and demand".
The most enduring symbol of TV doctor shows is the over-worked, chronically fatigued intern. If you believe everything you watch on TV (and who doesn't?), you will believe that the permanently-strapped-for-cash clinic has done all it can to adequately staff the ER, but there's just no money to spare for intern salaries!
Ha!
That's just not how hospital staffing works. Interns are no-cost slaves that work impossible hours. Medicare compensates hospitals for the salaries of interns, and much more! If it were up to hospital administrators, patients would need to push their way through an army of interns just to get from the parking lot to the hospital lobby.
There have always been overworked, chronically fatigued interns because that is what the U.S. economic model for physician manpower requires. It has nothing to do with cash flow problems in inner city emergency rooms; the same rules apply to poor and wealthy hospitals.
Here is a short course on graduate medical training economics in the U.S.
When students finish medical school, they enter a graduate medical education program. Interns are doctors in their first year of post-graduate training. Following internship comes residency, where doctors get training in their specialty of choice. Residency training can take anywhere from 2 years to 6 years depending on their field. After residency, some doctors enter fellowships, for even more specialized training. To make things simple, we'll refer to all post-medical schools trainees as residents.
Four government sources pay for almost every resident trained in the U.S.: Medicare, Medicaid (through State governments), the Veterans Administration, and the Department of Defense. Of these agencies, Medicare has been the number one payer since 1965 (when it was created), and currently pays about $10 billion dollars each year to support interns and residents (1-2).
Under Medicare, the Health Care Financing Administration (HCFA) gives hospitals about $100,000 for each resident. The hospital pays the resident anywhere from $20,000 to $50,000 and the hospital pockets the remainder (3). Hospitals do not generally inform their residents about their sweet deal with HCFA. The resident, unaware of the economic realities, believes that his salary comes from the hospital's general budget. When hospitals face economic shortfalls, residents generally accept salary cuts, just like everyone else. It's beautiful!
Because the government is virtually the only payer for residency slots, the government can fully control the total number of slots and the total number of trained physicians that enter the workforce each year.
In the U.S. there are about a 800,000 physicians (4). The total number of resident slots paid by Medicare each year is about 24,000 (of which about 16,000 are filled with graduates of U.S. and Canadian medical schools). This number is intended to replace the number of doctors who leave the profession each year. By keeping the number of physicians more-or-less steady, this payment system has kept the average salaries of physicians in most medical specialties from declining. It has also kept hospital administrators happy, by providing free professional labor.
The only flaw with this system is that not every hospital runs in the black. For many hospitals that run on a thin margin of financial solvency, the money received for residents is the only thing that keeps them afloat. When Medicare reduces the total number of funded residents (as they will do in a manpower oversupply year), at-risk hospitals slide into bankruptcy.
In New York State, hospitals came up with an ingenious plan to bring in Medicare funding without training an excess of residents. New York hospitals convinced HCFA to pay them for "empty" residence slots. In effect, they asked Medicare to pay them NOT to train residents (3). And it worked!
Under the New York plan, hospitals cut their resident slots by 25% but were paid as though they were filling 100% of their slots (3). Hospitals would continue to provide the same care, but with fewer residents to do the job. Financially troubled hospitals got the additional funds they needed, and the total number of newly trained doctors did not rise. The only drawback in the plan was that the flesh-and-blood residents all had to work harder to compensate for the phantom residents who were paid at the same rate.
There you have it. The reason that hospitals employ so few residents to do so much work is simple: this keeps the number of physicians released into the workforce low, thus keeping physician salaries high..
Every few years, one committee or another scrutinizes funding programs for U.S. graduate medical training. They make feeble recommendations such as the following:
"The Secretary should conduct workforce analysis to determine the number of residency positions needed in the United States in total and by specialty. In addition, analysis should examine and consider the optimal level and mix of other health professionals. This work should be based on the workforce requirements of health care delivery systems that provide high-quality, high-value, and affordable care. (1)"
Medicare has been paying resident salaries, one way or another, since 1965. How is it that in 2010, we still can't seem to match residency funding with actual healthcare needs? The answer is simple: physicians and hospitals benefit from the status quo, the public, unaware that Medicare pays the bills for residency training, doesn't want government interference in medicine. It's all good.
REFERENCES
- 1. Medical Planning Advisory Commision). Graduate medical education financing: focusing on educational priorities. Medpac report to the congress: aligning incentives in Medicare. Chapter 4. June 2010.
- 2. Rich EC, Liebow M, Srinivasan M, Parish D, Wolliscroft JO, Fein O, Blaser R. Medicare financing of graduate medical education. J Gen Intern Med 17:283-292, 2002.
- 3. Korcok M. New York hospitals paid to teach fewer physicians. Can Med Assoc J 157:1263-1264, 1997.
- 4. The Physician Workforce: Projections and Research into Current Issues Affecting Supply and Demand U.S. Department of Health and Human Services Health Resources and Services Administration Bureau of Health Professions, December 2008.
Jump to tomorrow's post, "Medicine: fast care and slow care"
- © 2010 Jules Berman
key words: medical-industrial complex, American healthcare, physician reimbursement
