Why on earth would medicare have anything to do with residency spots to start with? Why wouldn't the hospitals use this as an apprenticeship program and pay the residents and charge appropriately for their services?

Because hospitals generally don't have the funding (in the case of rural or urban trauma barely balancing the books) or inclination (in the case if wealthy suburb, managed facilities trying to maximize profit by running minimal staff) to do this.

Ergo, like education in general, it's funded from the federal government.

If hospitals don't have the revenue, they should charge the cost of services to balance their books.

I think government involvement in the residency program is problematic distortion, causing hospitals to chase a scarce resource instead of working to expand the supply pipeline.

Among other laws, there's the EMTALA that prevents charging the cost of services.

https://en.m.wikipedia.org/wiki/Emergency_Medical_Treatment_...

This is not a free market and you won't accomplish anything by telling hospitals what they "should" do. Prices are largely fixed by Medicare/Medicaid reimbursement rates. Whenever prices are fixed, shortages are pretty much inevitable.

Relying on Medicare to pay for residency programs isn't an ideal situation. But the reality is that there are no other major players in the system with both the money and incentive to cover those costs. That won't change without a complete restructuring of the entire system, and achieving the political consensus to do that will be extremely difficult.

If you have a few million dollars to spare then feel free to donate it to your local teaching hospital. They'll be happy to take your money to expand their residency program. There is an opportunity for philanthropists to do some real good in reducing the physician shortage.

I dont think I agree. Medicare/medicaid rates change constantly. The cost of retaining physicians is part of cost of providing healthcare, so there is no reason to carve it out. Hospitals have a natural incentive to have doctors on staff. The only reason they dont have incentive today is because there is someone else taking on the cost.

I would argue that it is easier and more realistic to simply include it in the price than expect congress accurately predict future demand, and continually pass legislation to that effect. We dont need a congressional act to subsidize hospital janitors- Somehow hospitals figure out how to include them in their operational expenses because they need them.

Furthermore, it wouldnt break the bank of most of these hospitals. Take one of the largest teaching hospitals in the world, Cleveland clinic, with 2000 residents. at typical resident grant of 100k, that is 200 million. The Cleavland clinic annual revenue is >13 Billion.

That is not a realistic or sensible proposal. Only a subset of hospitals do graduate medical education. If teaching hospitals raised their prices to cover the overhead of residency programs then that would put them at a competitive disadvantage relative to hospitals that don't train residents at all. In order to keep residency programs financially sustainable there has to be a separate revenue source.

Cleveland Clinic is a non-profit. Their total revenue is irrelevant. If you'd like them to spend an extra $200M on their residency program then they would have to spend less on other stuff. Take a look at their financial statements and then you can tell them exactly where they ought to cut back in order to fund your proposal. Please be specific.

https://my.clevelandclinic.org/about/overview/financial-info...

Of course their revenue is relevant? IF they can stack 2 billion per year onto their endowment every year, they could spend 200 million on residents.

That is my specific proposal. If they refuse to raise prices, grow the endowment by 200 million less per year and provide the same services. Essentially grow their stock portfolio a little more slowly. It is bad enough that a non-profit charges 20% more than the cost of their services. They would be fine if they were only making 18% more than their costs.

It is basicity the same as if Harvard college claimed it cant afford to train teachers aids while charging students more than enough to cover expenses and sitting on a 50 billion endowment that grows ever larger each year.

> We dont need a congressional act to subsidize hospital janitors- Somehow hospitals figure out how to include them in their operational expenses because they need them.

Observation that the lead/training time for additional hospital janitors is a couple weeks.

An additional resident takes 4+4=8 years.

My point was with respect to billing, and the idea that hospitals couldn't use revenue to pay for residents and offset their cost. The idea that medicare costs are "fixed" and doesn't include residents is besides the point. Hence, medicare doesn't janitors, but hospitals figure out a way to pay them as an operational expense

They’ll take your money, and it will go straight to exec bonuses.

You just need to look at an EoB statement to realize the sheer volume of revenues earned by Residents (thought not retained by residents). They are huge profit centers for the medical system with millions in earned revenue annually.

Medicare does not need to pay for residents, they are massively net positive revenue. The AMA boards create artificial scarcity and "medicare" is the boogeyman word.

But if those residents were paid by hospitals, they wouldn't be huge profit centers.

Or, to put it another way, if hospitals have difficulty balancing the books with free resident labor, adding additional paid residents wouldn't necessarily fix the financial problem in most hospitals.

>> But if those residents were paid by hospitals, they wouldn't be huge profit centers.

Paying residents is not the blocker here, Residents are already paid by hospitals. They are paid a fraction of revenues, which is normal for any profitable business.

https://www.ziprecruiter.com/Salaries/First-Year-Medical-Res...

Hospitals absolutely have the funding. Residents make a shit load of money for the hospitals they work for.

Some hospitals allow residents to moonlight (e.g. practice in off hours) and pay $300+/hour.

Medicare pays for the residency spots.

https://www.cms.gov/medicare/payment/prospective-payment-sys...

https://crsreports.congress.gov/product/pdf/IF/IF10960

There are a lot of bizarre path dependence issues and misaligned financial incentives in the US healthcare system. Most teaching hospitals are non-profits, often run by university systems or governments. Those hospitals get much of their revenue from Medicare/Medicaid. Reimbursement rates are fixed and hospitals have no ability to raise prices to cover increased training expenses. So, the only solution has been to get separate GME funding from Medicare.

There are other GME funding sources such as private charitable foundations but still the majority of the money comes from Medicare.

Residencies lose money, so they're reliant on federal subsidies.

> Residencies lose money,

Do they though? Or is that mostly creative accounting. I've heard claims in both directions but like anything in medical billing in the US, it's all pretty murky.

The general impression is that AMA is basically giving lip service to that goal. In public, that may be their goal. In private, it's certainly not happening.

Most states are begging for more qualified providers. Many are looking to mid-levels to fill the gaps. If the AMA were serious, they'd be working with all of these states to fill those gaps with physicians.

The primary bottleneck today is caused by lack of residency slots. The AMA isn't doing anything to prevent states from putting more money into residency programs. In fact they are actively encouraging it.

https://www.ama-assn.org/education/gme-funding

And if you think they're saying something else in private then let's see proof. This is not a place for baseless conspiracy theories.

> And if you think they're saying something else in private then let's see proof. This is not a place for baseless conspiracy theories.

With all due respect, not everything that lacks proof is a conspiracy theory. I've spent a bunch of time in discussions with physicians. There's a consensus that AMA is largely ineffective and it's implied that it's ineffectiveness is valuable for inflating physician salaries.

This is a great write up that highlight how the AMA created the situation to begin with: https://blog.petrieflom.law.harvard.edu/2022/03/15/ama-scope...

------

I did find a great example of AMA's double speak on this issue. A bunch of states have started looking for alternatives for providing care to their populations. Some states are now loosening regulation to allow mid-levels to practice. 6 states are now allowing physicians to practice (in certain fields) without completing residency.

That sounds great right? All of these groups have completed 3 to 4+ years of graduate medical education. They might not be as skilled as a physician, but they can certainly provide basic care. AMA doesn't think that's great.

> The AMA opposes enactment of legislation to authorize the independent practice of medicine by any individual who has not completed the state’s requirements for licensure to engage in the practice of medicine and surgery.

https://www.ama-assn.org/sites/ama-assn.org/files/corp/media...

The AMA doesn't actually want to engage in any of these solutions because it threatens their golden goose.

Not that long ago (through at least 1997), the AMA was doing the opposite. They were instrumental (but not alone) in creating the shortage.

Residency slots are the bottle neck because the AMA requires residency to be the bottleneck.

There is literally no path to becoming a physician other than the blessed med school + residency path. By contrast, you can become a lawyer simply by passing the bar exam.

Some states are starting to allow physicians to practice without residency and the AMA is vehemently against it.