Medical Care, Medical Training and Financial Incentives

Two new essays in Washington Monthly examine the inbuilt financial advantage of medical specialist reimbursement and residency training

Phil Longman, author of a coruscating book on the Veterans Health Administration has penned an extended critique of the current system of U.S. medical education. He questions the return on investment from the federal dollars that academic medical centers receive to train the next generation of physicians:

[Residency] programs turn out too many specialists who go on to practice in places where such doctors are already in oversupply, and where, according to numerous studies, they often inflate health care spending by engaging in massive amounts of unnecessary surgery and other forms of over-treatment. Meanwhile, residency programs are producing a dwindling number of primary care physicians and other generalists, who are already in chronically short supply in most parts of the country and are desperately needed to implement the kind of reforms to the health care delivery system necessary to improve its quality and efficiency.

Longman believes that putting conditions on the medical training subsidy is a good way to force residency programs to train more primary care docs. I agree with much of what Longman says, but doubt that this is where the public policy leverage truly resides. The preference of many aspiring doctors-to-be and academic medical centers for specialist training has little to do with the subsidy for residency training and a lot to do with specialist care being reimbursed at a much higher rate than primary care. Until that is changed, tinkering with the comparatively small amount of money that is devoted to medical education ($19 billion) is not going to motivate much reform in a three trillion dollar health care system.

I raised this in a friendly email exchange with Longman, and he helpfully directed me to another essay on this very point in the same issue of Washington Monthly. In it, Haley Sweetland Edwards makes the case that the reason why specialist care is so much more richly compensated than primary care is simple: The reimbursement rates are set by a Medicare advisory committee composed largely of specialists.