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> 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 contin

> 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.
        jjoonathan 9y ago
        If there's nobody else willing to pay $150k/yr (because it isn't a fair market rate), how would they turn it into a profit center, exactly?
- PeterisP 9y ago
  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.
  - FireBeyond 9y ago
    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.
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.

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.
        jjoonathan 9y ago
        If there's nobody else willing to pay $150k/yr (because it isn't a fair market rate), how would they turn it into a profit center, exactly?
PeterisP 9y ago
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.
- FireBeyond 9y ago
  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.

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.