What's the difference between these two terms?

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Internship is your first year of residency. You do it after your last year of medical school. Shadowing is following a doctor and seeing what he does. You do it during college.
 
Also, in undergrad internships are quite popular for students not going to professional or graduate school. It usually involves spending a summer or a semester working full-time (for no or little pay) at some company--say an accounting firm if your an accounting major--in hopes of gaining valuable real-world experience and maybe even getting a job offer from them upon graduation.

Some schools (I know mine does) has what's called a "Health professions internship" where over a semester the school arranges several shadowing opportunities for you (~4 hr/wk) and you enroll in a 1 credit class where you turn in a diary of your experiences and have some minor homework that is basically researching different fields of medicine.

If you are going to apply to med school, don't waste your time with an internship unless its like what I just described. You should do shadowing and you should get involved in some kind of research.
 
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