Incorrect? No. Wildly incomplete? Yes.
To be a good physician, you have to be academically sound. You have to be able to take in a relatively large amount of information and apply it. Nobody questions that. This is why we prefer our applicants for medical school to have strong MCAT scores and for residency to have strong Step 1 scores. But, does a better step 1 score mean that you are of higher quality than someone with a lower score? After a certain point, this is definitely not the case.
In addition to having sound academics, you have to be able to learn to be a physician. Residency is more apprenticeship than it is schooling. If you are less capable of functioning on a team, working with superiors, colleagues and minions, you are not going to be trained as well. It doesn't matter if you have a 260+ Step 1 score. You are not as good as that candidate with a 230 who can actually be taught. I have been on the wards for 6 years now. I have seen far more errors and patient safety issues secondary to hubris than lack of knowledge. There is a reason that nurses sometimes develop the attitude of "We are protecting patients from doctors."
We are getting ready to interview for our residency program. We had well over 100 applications for 2 spots. We didn't consider anyone with a Step 1 score below a 230 because, well we only have 2 spots and we have dozens of people with 250+ applying to our program. But, now that that initial screen is complete, we care very little about if you have a higher Step 1 score. It is all about fit. These are residents that will be with us for 5-7 years. They will have to function as an intern, junior resident and then as a chief. They will have to interact with attendings, co-residents above and below them, residents on other services, NPs, PAs, RNs, social workers, case managers, hospital administrators, etc. Hubris is pathological. And, vascular surgery is sobering.
In short, good doctors are good students. Bad people make bad doctors.