The U.S. spends $13 billion a year subsidizing graduate medical education. Yet almost all of this money winds up producing the wrong kinds of doctors in the wrong places, with America’s most elite teaching hospitals being the worst offenders.
The only major element of residency programs that is not dealt with in Scrubs is the fact that government money is propping up every scene. No one talks about this in the show because, as in real life, no one has to account to the public for what kind of education this money is buying. Rather, the money simply flows like an entitlement. Scrubs is quite forthright in depicting the role of money in other domains of health care, such as when it builds episodes around poor or uninsured patients being denied care. But the residents seem unaware that even as the hospital treats them like serfs, it is most likely making money on each one of them, thanks to the government subsidies that come on top of the value of their labor.
How did America’s system for training doctors come to be like this, and what can be done about it now? The story begins in the Progressive Era, when reformers made great strides in improving the quality of medical schools, with institutions like Johns Hopkins leading the way in infusing the core curriculum with scientific rigor. But by the 1920s it was already clear that universities and their medical schools were uninterested in taking responsibility for providing on-the-job training for their graduates, much as law schools to this day do not concern themselves with providing newly minted lawyers with apprenticeships. A few individual hospitals and medical societies stepped in by developing residency programs, but on an ad hoc basis, and with no public subsidies.
This began to change after World War II, when Omar Bradley, the storied “soldier’s general,” took over the Veterans Administration and forged a historic partnership with the nation’s medical schools. Under this partnership, medical schools were allowed to use VA hospitals as teaching facilities and to get paid for doing it. For many decades afterward, the VA was the largest sponsor of residency programs, and even now roughly a third of all practicing doctors in the U.S. have at one point or another trained in VA facilities.
The quantum leaps in federal support for graduate medical education came, however, with the passage of Medicare in 1965. Ever since, Medicare has paid graduate medical programs a direct subsidy, including the cost of the stipends residents receive. Since the mid-1980s, Medicare has also kicked in the so-called indirect medical education adjustment, an extra flow of money with which teaching hospitals can pretty much do whatever they want.
“Program directors often complain that they are hampered in achieving their educational missions,” notes a report by MedPAC calling for reform, “because hospitals do not pass through an adequate portion of their reimbursement for the conduct of programs.” Today, Medicare pays about $10 billion a year in subsidies for residency programs. Of this amount roughly a third cannot be “empirically justified,” according to MedPAC, meaning that no one can tell where the money goes, let alone whether it is being spent effectively.
This lack of accountability also has deep roots. All along, government has bent to the power of established medicine by allowing the regulation of residency programs to be left in the hands of medical societies dominated by specialists. Constant feuding among different factions eventually led to the creation of liaison groups that tried to smooth out the tensions, but power over how residency programs use government money still resides within the medical profession itself. The primary body for regulating residency programs is a private organization called the Accreditation Council for Graduate Medical Education, which in 2011 collected accreditation fees of more than $34 million from the programs it certifies. Its board comprises representatives from its membership organizations, which are the American Board of Medical Specialties, the American Hospital Association, the American Medical Association, the Association of American Medical Colleges, and the Council of Medical Specialty Societies.
For decades now, reformers have continued to cry out that this governance structure produces dysfunctional results. As early as the 1960s, the problem of overspecialization in American medicine was well established by such leading medical authorities as Dr. Kerr White, who documented the increasing fragmentation of the American health care delivery system as the number of general practitioners declined and the number of specialists grew. In 1971, Congress tried an end run around the residency programs that were churning out these specialists by creating a program that specifically funded residencies in general pediatrics, general internal medicine, and the emerging discipline of family medicine. But the funding remained minuscule, and attempts to gain any government regulation over how residency programs spent taxpayer dollars were consistently beaten back.
As an indication of just how perennial this behind-the-scenes struggle has been, in 1980 a federal advisory panel on graduate medical education was already criticizing the system for pumping out an excess supply of specialists. By 1985, none other than then Senator Dan Quayle was penning an article for the policy journal Health Affairs calling for Medicare to stop subsidizing residency programs that didn’t send at least 70 percent of their graduates into primary care. By 1989, the Institute of Medicine was weighing in, saying that graduate medical education programs were too concentrated in hospitals and were failing to provide proper training for primary care physicians. Yet despite the alliance of conservatives alarmed by the mounting cost of Medicare and reformers intent on improving the practice of American medicine, nothing changed, thanks to the entrenched powers of specialists within both academic medicine and the health care system generally.
By 1997, Congress basically threw up its hands and reached for the only politically available lever it had to reduce the growing expense of subsidizing residency programs. Unable to find the votes to hold existing programs accountable for their use of public funds, it simply froze the number of resident slots it would finance. This was a crude measure. While it held down government costs in the short run, it did nothing to arrest the growing ranks of specialists in places they weren’t needed, nor to turn around the increasing scarcity of primary care doctors and other generalists. The increasingly specialized academic medical centers that sponsor most residency programs simply reduced the number of primary care residency slots and boosted the number producing specialists. Congress’s failure to address both trends in turn deepened the mismatch between the composition of the health care workforce and the needs of the health care system, leading to inefficiency, higher costs, and, ultimately, worse health outcomes. After some sixteen years of this, you would think that we might do better, or at least that the public would wake up to the problem.
Federally Designated Primary Shortage Areas, 2013
In search of solutions, I recently traveled to Scranton, Pennsylvania, and met with Dr. Linda Thomas-Hemak and her colleagues, who have forged a new model for residency programs that points to the future.
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