Tuesday, March 2, 2010

How Medical Education Has Impacted Health Costs

I have discussed in a previous blog (2/23/10) how economic regulation will not solve the problems of rising health costs.. In the last blog (2/26/10) I discussed how medical research and development leads to rising costs. In this posting, I will lift up the role of medical education.

The Carnegie Foundation published a report prepared by Abraham Flexner in 1910 on the state of American medical education . The report addressed many much needed issues involving the quality and amount of education needed for the training of doctors. Particularly helpful was its emphasis on clinical training.

Other aspects proved to be unfortunate, however. Flexner stated that half of the medical schools should be closed.. Whatever the merits of the suggestion may have been at the time, the American Medical Association embraced that part of the report and engaged in a determined campaign to restrict entry into medicine so as to raise the income of the doctors.

The campaign has been quite successful. As our population has expanded and with the ever growing varieties of specialties that have emerged, medical schools have continued to educate only a small portion of the doctors needed to serve our population.

The University of Alabama is a typical example.. They receive about 2000 applications a year and produce only about 175 doctors. With at least 8 hospitals, over a thousand faculty members, and a budget of perhaps a hundred million dollars, the medical school’s failure to produce more doctors cannot be considered to be a matter of necessity but of choice..

UAB is not the culprit, though. They are applying generally accepted standards which have evolved out of the Flexner Report. High quality education has served as a cover up for the less admirable goal of excessively restricting practice of medicine to a select few.

The adverse effects of restricted entry into the profession cannot be overstated. Nobel Laureate Milton Friedman pointed out in the early forties the restricted entry into medicine has been an efficient means of raising the prices above the competitive level.

Today the scarcity of doctors is growing. Small towns in Alabama must go to India to find a doctor to serve them. Internal medicine doctors can simply open their office and obtain a full stable of patients in a short time. One doctor recently commented to my daughter that if an internal medicine practitioner can see you, you probably do not want him. Doctors with waiting rooms stacked full of patients too often refer even the minor emergencies to emergency rooms because of their inability to adequately serve all of their patients.. Moreover, virtually all doctors in all specialties have little incentive to be competitive in their pricing because of the paucity of competition in their fields. The medical profession has become a gigantic cartel.

Ironically Blue Cross, which Congress wants to demonize, and Medicare are the only two entities of which I am aware that have the economic power to put any brakes on the reckless expansion of charges for medical services.

Medical education needs to be extensively overhauled whereby they will supply sufficient doctors to make the profession competitive. If this is not done from within, then outside forces should be applied to them in much the same manner as the automobile companies were forced to make high gas mileage products.

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