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.

Well, there's the perspective that it's not "unprofitable" to use a resident, but it's _more_ profitable to use a physician.

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.