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Is this part of the article incorrect? > In recent years, the number of medical residents has become so restricted that even the American Medical Association i

by zellyn 9y ago

Is this part of the article incorrect? > 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.

jjoonathan 9y ago
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?
- chimeracoder 9y ago
  > 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.
  - Symmetry 9y ago
    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.
    - chimeracoder 9y ago
      > The fact that residents aren't paid much by the hospitals doesn't mean that the hospitals aren't making a net profit, No, the fact that hospitals don't just hire more residents is what demonstrates that it's not profitable for hospitals to simply hire more residents.
      - akvadrako 9y ago
        You have too much faith in the free market. There are all kinds of things that could cause hospitals to not hire more residents.
        chimeracoder 9y ago
        > 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".
        jjoonathan 9y ago
        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.
        chimeracoder 9y ago
        > 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.
  - candiodari 9y ago
    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.
jacobrobbins 9y ago
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/307199999 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.
- chimeracoder 9y ago
  > 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.
  - canes123456 9y ago
    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...
sjg007 9y ago
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.
- chimeracoder 9y ago
  > 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".
  - sanderjd 9y ago
    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.
    - chimeracoder 9y ago
      > 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).
mattmcknight 9y ago
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/ 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.

by zellyn 9y ago

jjoonathan 9y ago

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?

chimeracoder 9y ago
> 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.
- Symmetry 9y ago
  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.
  - chimeracoder 9y ago
    > The fact that residents aren't paid much by the hospitals doesn't mean that the hospitals aren't making a net profit, No, the fact that hospitals don't just hire more residents is what demonstrates that it's not profitable for hospitals to simply hire more residents.
    - akvadrako 9y ago
      You have too much faith in the free market. There are all kinds of things that could cause hospitals to not hire more residents.
      - chimeracoder 9y ago
        > 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".
        jjoonathan 9y ago
        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.
        chimeracoder 9y ago
        > 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.
- candiodari 9y ago
  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.

jacobrobbins 9y ago

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/307199999 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.

chimeracoder 9y ago
> 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.
- canes123456 9y ago
  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...

sjg007 9y ago

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.

chimeracoder 9y ago
> 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".
- sanderjd 9y ago
  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.
  - chimeracoder 9y ago
    > 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).

mattmcknight 9y ago

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/ 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.