Private Equity Is Trying to Sell Medical Residencies for Profit

This forum made possible through the generous support of SDN members, donors, and sponsors. Thank you.

PathDoctor

Membership Revoked
Removed
Joined
Sep 30, 2019
Messages
49
Reaction score
44
Here is why this is so frustrating for prospective doctors: To practice medicine, trainees are required to complete a three- to seven-year residency at an accredited hospital program. (This is following four years of medical school.) Unlike the traditional labor market, medical students don’t choose where they work; they are assigned and locked into multiyear employment contracts with a single hospital via the Match, a standardized application process based on the 1962 Gale-Shapley algorithm, which is controlled by nonprofit teaching hospitals. Each year in mid-March, anticipation and anxiety permeate the air of medical school atriums as fourth-year medical students receive envelopes matching them to residency programs.

Student preferences for where they would like to work are taken into account, but ultimately, trainees are left with little bargaining power once they have been assigned positions. This allows teaching hospitals and the Accreditation Council for Graduate Medical Education to set both compensation and work conditions for residents as they deem fit. This dynamic, where everything is optimized in one sweeping scramble, also makes finding a new residency position after a hospital closes excruciatingly difficult.

The Centers for Medicare & Medicaid Services, or CMS, funds a fixed number of graduate medical education positions with $15 billion in taxpayer funds, paying $100,000 to a hospital per hired trainee. But a typical salary range for residents is around $50,000 to $65,000 (though each hospital will pay an additional $15,000 per resident in educational and malpractice spending). This means that not only are hospitals generating at least a 20 percent profit margin on this government funding, but the amount also excludes the market value of the medical services provided by those residents—which the hospitals still bill for—and the additional $168,000 to $218,000 in total operating cost savings for hospitals per employed resident. It’s no surprise, then, that hospitals are fervently bidding for Hahnemann’s coveted residency slots. A consortium of Northeast hospitals bid $55 million for the 550 positions. A bid of $60 million came in from a California health care firm shortly after.


Members don't see this ad.
 
Not quite sure what your point is.

Medical school does not actually teach you the skills needed for clinical practice. That comes in residency.

The match is not "controlled by teaching hospitals", and suggesting that students don't get to choose where they work as residents is ludicrous. Students interview for positions, and build a rank list of where they want to go. Hospitals build a list of the people they want. The match finds the "best" solution to the problem. No one is sent to a place they did not rank.

Compensation and working conditions are disclosed in the interview process, much like any other job. Can working conditions be different than advertised? Sure, although that's unfortunate. True residents can't negotiate for their salaries since each hospital has a standardized pay scale -- but that;s how lots of industries work at the lower levels. You are somewhat correct that switching from one residency program to another mid stream for a resident can be a challenge -- but that has nothing to do with the match. It's because each hospital only has a limited number of residency spots, and can't just create new spots unless it finds a way to pay for them and proves to the ACGME that they have the educational resources to manage the xtra resident. This is in everyone's best interest -- you don't want some fly-by-night program opening with crappy training (much like the for-profit college industry).

The other issue is that residency academic years run from july to June, so if you want a spot in April you can't easily find one. But there are some off cycle spots that open up.

When a program closes, the rules are different. Funding tends to follow the resident, and the ACGME is very liberal with allowing programs to take extra orphaned residents. I don't need to actually have an opening -- I just need to be in good standing with the ACGME and ask for the extra temporary spot. It gets approved very quickly so we can manage the transfer.

The funding issue is much more complicated than you suggest. Those funds help pay for resident salaries, also help pay for all of the other incidental costs including PD and APD salaries, program coordinator salaries, all of the fees we pay for ACGME and ABMS accreditation, recruiting costs, and on and on. We have to fund a GME office also along with all of it's support. Many specialties include elective time for residents, which doesn't generate any additional clinical income. And not all spots in a program get funding.

That all said, do I think that residency funding slots should be sold as an asset? Nope, I think it's a bad idea but not for any of the reasons that you've detailed here. I think this is a bad plan because programs that purchase these slots might just allocate them to their current slots -- i.e. they will now get paid for current unpaid slots. This will generate a net loss of positions for the whole system. There is a current system for reallocating slots -- first the current orphaned resident funding flows to their new programs. Once they graduate, the slots go into a process where programs can apply for them, but they need to be linked to new positions.

The system clearly needs a fix, but your post has missed the core issue IMHO.
 
  • Like
Reactions: 3 users
If you're looking for economic truth or legal wisdom, an article written by a surgery resident and published in Slate would not be my first choice. :rolleyes:

There's already a thread on this on SDN. The people trying to sell these these residency slots are trying to recoup their losses in a bankruptcy. Economically their position is understandable but this whole deal is in litigation and this "sale" will probably not fly.
 
  • Like
Reactions: 1 user
When a program closes of this magnitude, however, you don’t exactly have a choice of where you can go particularly in this case with so many residents and the area hospitals could only take so many without compromising their own residents education. I was one of the residents here and it was absolute chaos. Imo this is a violation of the premise of the match to begin with. It is supposed to be a solution to an imperfect issue but in this setting the academic contract or agreement promised by Drexel was violated. This goes way beyond just the program closures and the individual feelings there-predatory landlords took advantage of people who had to leave the city without being able to find a spot (and there was a lot of competition due to the volume of residents displaced). Going beyond that residents who marched into an advanced program but who were set to begin their prelim year had to re enter the match as they were not in the hospital on their displacement date. Isn’t the “match” supposed to prevent all this?
The acgme did not expedite programs looking for lateral transfers. Offers were rescinded due to holdup with funding-they were powerless but they did nothing. Having to restart and establish as an upper year resident at a different place is extremely difficult in a lot of ways and it is extremely disruptive to an education to make the switch. The match is a one sided contact but there are supposed to be some things in our academic agreement that were entirely violated. Perhaps if this was a more equitable situation or a free market situation things might have been different-maybe not but maybe it could have been.
 
Top