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Yes, but correlating USMLE scores with selection of future residents is the issue. The purpose of the exam is for qualifying for a medical license only. Period. The dentistry profession has also realized this and recently converted the NBDE exams to Pass/Fail and they also apply to residencies as well - Orthodontics, Periodontics, etc. and even they don't see value in a numerical score on their board exams with residency performance: http://www.studentdoctor.net/2012/0...toral-dental-applicants-passfail-nbde-part-i/Just because it wasn't designed for that purpose, doesn't mean it can't be used for it. The exam does give a score, so clearly it feels it can differentiate candidates, which is exactly what is needed when you're filtering out tons of great candidates for limited spots. In any case, it isn't the NBME's place to tell the individual programs how to select their candidates.
I can say that I felt it was a fair exam and the smartest people that I know did very well on the exam. If you are one of those people that doesn't traditionally do well on standardized tests, you should know that and put more time and effort into it. If, as you say, a "reasonably smart person" can pull 240 with the appropriate preparation, what does that say about your friend that failed it twice? He either wasn't "reasonably smart" or wasn't willing to prepare appropriately. And anyway, there are always outliers.
Unless residency is only taking multiple choice exams (which it isn't - not even close), correlating your Step 1 score with supposed future residency performance is silly. There are SO MANY other competencies that you have to have to be a successful resident that just can not be tested in a multiple choice exam.
That being said, I do think GutOnc's example is a huge outlier, but in life there will always be.