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Comment by jacobrobbins | Hacker News Reader

I was confused by that part too because the article goes on to say teaching colleges "have an incentive to offer residencies in specialties from which they can get the most revenue per resident."

My guess is the 150K number ignores the revenue contribution of the residents (which must be significant because they carry out a significant amount of the work that requires a doctor at a hospital)

I did a google search and found one article that seems to confirm this: "Whether the programs are ultimately costs or moneymakers for hospitals is mostly unknown. Expenses tied directly to the programs are tracked, but overall cost-benefit accounting that would take into account such things as savings or lower medical bills for patients from the use of lower-paid residents instead of practicing physicians isn't done." http://www.modernhealthcare.com/article/20150719/news/307199...

The argument that federal funding is the only way to create more educational "seats" for doctors seems strange since the article claims they are paid much more than other fields, and is not really laid out well in the article.

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> but overall cost-benefit accounting that would take into account such things as savings or lower medical bills for patients from the use of lower-paid residents instead of practicing physicians isn't done

This is talking about the cost-benefit from a societal perspective, not from the accounting perspective of the hospital. From an accounting or business perspective, it's pretty clear that residency programs don't make money for hospitals.

An easy way to reason about this is to remember that nothing's stopping hospitals from opening up residency slots that they self-fund. If residency programs predictably broke even, you'd expect them to do that. Except, almost no hospital does this, because the programs don't predictably break even - in fact, they pretty predictably lose money.

Are you sure it's not just a case of Hollywood style accounting?

> Are you sure it's not just a case of Hollywood style accounting?

Yes, for the reason I said:

> An easy way to reason about this is to remember that nothing's stopping hospitals from opening up residency slots that they self-fund. If residency programs predictably broke even, you'd expect them to do that. Except, almost no hospital does this, because the programs don't predictably break even - in fact, they pretty predictably lose money.

Even if you don't trust the accounting numbers, you have to trust the overall (lack of) incentive for hospitals to create self-funded programs.

I agree with this logic about "if residency programs predictably broke even" but I don't see any concrete support for that in the article. They don't have an accounting of revenue per doctor or at least the article has not shown one.

Saying the benefit is social benefit doesn't help here, obviously it is it's a hospital, there needs to be revenue numbers in the mix to talk about breaking even.

re-reading your comment "This is talking about the cost-benefit from a societal perspective, not from the accounting perspective of the hospital." I think perhaps you do not understand what residents do. Residents handle a portion of the patient workload. They provide direct economic benefit to the hospital by handling patient workload at a lower salary than more senior doctors. There is a hierarchical system by which work is reviewed by more senior doctors but this is used in all hospitals regardless of whether there are residents. The economic benefit to the hospital is that residents do the work for lower salary than doctors. Putting that into dollar terms is what this article has failed to do, likely because the data to do so is not there.

> I think perhaps you do not understand what residents do.

Given my background, I understand exactly what residents do.

My point still stands. Even if you don't trust the accounting numbers, you have to look at the end result.

Let's assume that residency programs are, at the margin, profitable for hospitals. Let's also assume that hospitals like profit.

- The statement "residency programs are profitable (at the margin) for the hospital" is logically equivalent to "increasing the number of residency slots (or programs) would be profitable for the hospital".

- If increasing the number of residency slots (or programs) would be profitable for the hospital, there would be more of them.

- However, there aren't - the number of self-funded residency programs has been (essentially) zero for decades.

Therefore, one of our two assumptions must be wrong. Either residency programs are not, at the margin, profitable hospitals, or hospitals just like turning down profit.

You're demonstrating that hospitals do not consider residency programs to be worth funding, but you aren't helping us understand why, which is the far more interesting question.

> You're demonstrating that hospitals do not consider residency programs to be worth funding, but you aren't helping us understand why, which is the far more interesting question.

Because they... don't make money if they do?

I don't know how to make it any clearer. The costs of providing additional residency slots (paying resident salaries, paying additional attending salaries, paying taxes, paying insurance, etc.) don't bring in enough additional revenue or offset enough other costs to be worthwhile.

It's not particularly complicated math - it's the same arithmetic a McDonald's franchise owner has to do to decide whether to hire another person to flip patties, just with bigger numbers attached to it.

Are residents that much less effective? Do they require so much supervision?

If residents are just cheaper doctors, then hospitals would optimize for a high resident:attending ratio.

So what is it? As far as I know, in hospitals residents are really cost effective doctors. Yes, sure, they don't do the big fancy operations, but they are very capable.

It might be that hospitals have other parameters to factor in. Maybe if there would be too many residents compared to regular doctors, people would flock to other hospitals. And so on.

> Are residents that much less effective?

Yes, because they aren't yet trained to practice medicine. Residency is where they are trained to practice medicine.

> Do they require so much supervision?

Yes, both by practicality and by law.

> If residents are just cheaper doctors

They're not "just" cheaper doctors

> then hospitals would optimize for a high resident:attending ratio.

They tried. Patients died. Now we cap both the number of hours they can work per week (80 hours/week) and the resident:attending ration.

Oh nice! This is what I'm interested in! What kinds of things can they and can't they do without supervision? What is common in practice? Is there a good place to read about how this all works?

There a black joke amongst doctors in the UK where all the junior doctors start in the same week each year the mortality rates go up :-)

Indeed, and it's not even a joke, but a real phenomenon.

Sources :

https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2896592/ https://www.ncbi.nlm.nih.gov/pubmed/21747093

Then ... that means the supervision of residents is not working. That basically means, it's useless. (Since it'd make sense to apply the maximum amount of supervision when a resident is new and as the resident gains trust, decrease it.)

Or of course it means, that attending doctors do a constant amount of (insufficient) supervision, or they ramp up supervision after someone screws up... :|

> If residents are just cheaper doctors

Residents are cheaper doctors, but they are cheaper because they are less trained, less experienced doctors. They aren't equally-capable doctors with lower salary demands.

Sure, but the 90% of problems don't require brain surgery and a consult from a team of specialists.

Sure, but lots of real problems require more than the skill level expected of residents, if nothing else to have reasonably justified confidence that the problem isn't one which requires more specialized attention.

At that point someone with WebMD and a scriptbook of a random House MD season is more efficient anyway.

But maybe the problem is that if we would have more generalists that'd just shovel more load on the specialists.

probably not 90% once your actually admitted to hospital especially if the hospital is a centre for the trickier problems.

Some hospitals especially teaching hospitals are non-profits. So I don't think the profit motive is sufficient justification. I think it is more likely a capacity problem.

> Some hospitals especially teaching hospitals are non-profits. So I don't think the profit motive is sufficient justification. I think it is more likely a capacity problem.

Once again, "non-profit" or "government agency" doesn't mean "no profit motive". The profit motive affects all players.

Someone has to pay for it, at the end of the day.

The way to make it clearer would be to discuss specifically why the services rendered by residents are not valuable enough to cover their costs.

A concrete example: I've had a resident do a checkup while I was in the hospital. If they hadn't done it, a fully trained doctor making a lot more per hour would have needed to. Did the hospital lose money on that checkup? If so, wouldn't they have lost more money if the fully trained doctor would have done it? If they make money on that sort of thing, what kinds of things are the opposite?

I don't know how it works, I've only ever been a patient. It seems like you might know, so I'm asking you how it works. Do you see how "they don't make money" is really not an answer?

> A concrete example: I've had a resident do a checkup while I was in the hospital. If they hadn't done it, a fully trained doctor making a lot more per hour would have needed to.

You're assuming that, in the absence of the resident, they'd be hiring an additional attending physician. In reality, they'd just have a smaller staff, and you'd have to wait longer, the doctor would have to work longer/harder/faster, etc to cover the same patient load.

Hiring a resident doesn't bring in additional revenue. Insurers don't reimburse more per patient just because an additional physician was involved. Hiring a resident doesn't bring more patients in the door, because that's not the bottleneck for hospitals anyway. It does increase costs, because it's an additional person on staff - they have to pay them an extra $51,000/year, plus 25% of the cost of an additional attending physician to supervise them (and three other residents), plus taxes, plus health insurance, plus insurance to practice medicine, plus licensing fees, and so on.

> Did the hospital lose money on that checkup?

Probably not, unless you're on Medicare or Medicaid - in which case, yes, they do lose money on you on a per-patient, per-service basis.

Great point about how it isn't a question of the same service at a different price but of avoiding poor service which would otherwise have to be accepted because of the distorted market for health care that makes it hard to effectively punish poor service.

There are multiple factors at work, only one of which is funding.

Residents are required to handle a minimum number of a large variety of cases by the time they graduate, in order to guarantee that they've seen a representative sample of cases in their field and have knowledge of all of them. E.g. a neurosurgery resident might need to do (completely fabricated numbers) 30 open vascular cases, 50 spine fusions, 40 tumors, etc. This is probably the primary limiting factor for specialist surgery residencies; these residents are profitable (they can handle the bulk of most simple cases fairly autonomously once they're a couple years into their training, and they stick around for 5-7 years), so many hospitals would like to hire more of them, but there are simply not enough patients with the necessary conditions for them to add more trainees.

For non-surgical residencies, the residencies are much shorter (so you have less time from highly-skilled residents), and the residents are less profitable, so funding is a significant limitation.

It's also important to note that residents are competing with mid-levels in the "less expensive practitioners" category, and mid-levels are a far better deal for the hospital in most specialties. They're somewhat more expensive in terms of raw salary, but they remain mid-levels, which means they have the time to develop near-perfect competence at the things they do handle, and they don't leave just when you've trained them up. A few good mid-levels make all the difference in keeping a department running smoothly.

"residency programs are profitable (at the margin) for the hospital"

No, there are many options between 'profit' and 150k costs.

The question is can Medicare increase the number of residency's without increasing Medicare's costs. And because of the excessive number of specialists with higher associated costs the answer to that is clearly 'Yes'.

Thus, the cost of a residency slot is not inherently negative 150,000$/year. It's very possible for residency's to break even without hospitals to have any incentive to implement them, further that 150k/year provides profit even with the current mix.

> No, there are many options between 'profit' and 150k costs.

Why are you bringing $150,000 into this? That's the median debt load of a resident - it has nothing to do with what a hospital makes.

> The question is can Medicare increase the number of residency's without increasing Medicare's costs. And because of the excessive number of specialists with higher associated costs the answer to that is clearly 'Yes'.

I... don't even understand what point you're trying to make here. The point is that hospitals cannot generally provide self-funded residency programs, because they lose money on those programs.

Yeas, it's true that not all residency programs cost the same amount - some fields are more expensive than others. But it's not like we're trying to optimize for the total number of residents in the system at any time; the reason we have more expensive programs like neurology is because we need neurologists. Yeah, we could "save money" by training them in EM instead, but then that'd just mean an even greater shortage of neurologists (and even higher market wages for neurologists).

> Why are you bringing $150,000 into this?

Because 150k/year is the current subsidy per resident. People may reasonably not want to spend more money on this, but it's hard to argue with spending money more efficiently.

> They provide direct economic benefit to the hospital by handling patient workload at a lower salary than more senior doctors

But do they do so at lower total cost including both their direct costs and the additional cost of supervision by a more senior doctor?

Not if the government already pays for it. Why open up self-funded slots and show that the government doesn't need to pay for it? If you make a small profit, you are just putting the other pure profit slots at risk...

> Not if the government already pays for it. Why open up self-funded slots and show that the government doesn't need to pay for it? If you make a small profit, you are just putting the other pure profit slots at risk...

I somehow doubt Hospital A, which has zero residency slots and receives zero residency funding from Medicare, cares if Hospital B down the road somehow loses their subsidies.

There is no "pure profit slot". Residency programs do not make money for the hospital. If they did, hospitals that do not have residency programs would open self-funded residency programs, and/or hospitals that already do have residency programs would expand theirs.

It is possible that if the AMA or others is intentionally restricting the supply then any hospital that started its own residency could have trouble hiring regular doctors. I am not claiming this is the case, but it is one reason that hospitals might avoid something that the free market would indicate.

Hospitals do not do their accounting in a normal way. When you or your insurance gets a bill, the doctors are often listed separately. In other words, patients pay for them directly for services, they are not paid as employees of the hospital. That means for residents, someone's got to pay for them. They are not seen as lower cost labor because doctors are not accounted for as high cost labor. I'm not sure how it's done, but it's not the same as interns in engineering.

It seems pretty strange that even after years of medical school, a hospital can't find a way to use a resident's skills to pay their salary.

It's not that strange. Medicare has a physician fee schedule (PFS). Hospitals don't receive a PFS payment for services provided by a resident, unless a teaching physician is physically present during the key portions of the service, or under certain primary care exceptions. I'm not sure how private insurance companies do it, but I wouldn't be surprised if their rules weren't similar.

A similar thing is happening in the legal field. Clients wont pay for work done by first or second year lawyers, so large firms are cutting back entry level hiring and many smaller firms have stopped hiring entry level lawyers entirely. Thus you have a bizarre situation where there is a huge oversupply of JDs, but private-practice associate salaries continue to go up because there is a limited supply of experienced attorneys.

And if/when they cann't get a job, the state then revokes their credentials. Hilarity ensues.. Oh did I say hilarity? I meant the spiral of loss of job/homelessness/garnishment/destitution. And it's then illegal to use the credential to try to make money to recover from.

Talk about being sold a bill of goods - Come get a degree from here, and if you can't find a job, we'll garnish you and remove your ability to use the degree you're being garnished for.

They don't receive the PFS payment, but they certainly do for room fees, imaging, labs and other diagnostics, not to mention medications.

And the patient is still tended to by nurses, who do absolutely generate revenue for the hospital.

While they don't get a PFS payment, we also can't provide that Medicare pays for the residency and then everything else is a charity case for the hospital.

That argument doesn't respond to whether it's "strange" that residents are unprofitable. It's just the unsupported assertion that certain unquantified ancillary payments will exceed the unquantified costs of employing and supervising a resident. But clearly they don't, or else hospitals would create more resident positions.

Well, there's the perspective that it's not "unprofitable" to use a resident, but it's _more_ profitable to use a physician.

The charge is that hospitals are not creating more residencies in order to collude to drive up doctor salaries. Even if residents were profitable, but less profitable than experienced physicians, it would still be a rational business decision—rather than improper collusion—to hire physicians instead of residents.

That explanation makes sense (except partially for the sibling comment's point) but there is still something strange there.

In market terms, this is clients saying entry-level workers with lots of education provide zero value, or the risk outweighs the benefits. If that's true, it means that people need training until 30-somethings before they are valuable to society. Or our education system is broken.

Or it's not true and it's market manipulation. Given the choice between "no service" and "pay a fair entry-level price", many people will pay something.

This is not-even-wrong levels of reasoning here. Personally, your comments on this subthread, and the confidence with which you've delivered them, will stay with me for a long time, and whenever I find myself nodding along with something that is facilely convincing and authoritatively stated, I'll think back to your posts and remember to be a bit more skeptical, a bit more discerning. For that, I thank you.

For the rest, well, I can't be as laudatory.

>This is talking about the cost-benefit from a societal perspective, not from the accounting perspective of the hospital. From an accounting or business perspective, it's pretty clear that residency programs don't make money for hospitals.

It's pretty clear you are wrong here. Let's look at actual sources for a change: https://www.cms.gov/Outreach-and-Education/Medicare-Learning...

"Medicare pays for services furnished in teaching settings through the Medicare Physician Fee Schedule (PFS) if the services meet one of these criteria: 1 They are personally furnished by a physician who is not a resident 2 They are furnished by a resident when a teaching physician is physically present during the critical or key portions of the service 3 They are furnished by a resident under a primary care exception within an approved Graduate Medical Education (GME) Program"

Crucially, there is no distinction between how much a hospital can charge for services an attending working alone has delivered (1), and how much it can charge for services a resident has delivered, as long as the attending signs off on it (2). You might naively suppose that the "physically present" part of (2) means that both attending and resident are in the room for the dx differential, and through a Socratic back and forth they jointly treat the patient, and you'd be mistaken. And of course, if you're in your final year of residency, or you're a Chief Resident, the oversight an attending will choose to exercise will be perfunctory. Read more about just how much (or little) it take to technically comply with these rules: http://www.hcpro.com/HIM-283624-8160/Coding-billing-and-docu....

Then reread this short, moving piece published in the NYT mag for an illustration: https://www.nytimes.com/2017/10/24/magazine/the-rules-of-the.... As a resident in his third year out of medical school, how was it that the author was able to essentially run his own service if residents are really just stumps of malformed medical errata, all but useless unless they have their hands held by an attending?

Or just ask yourself: how is it that you can give a hospital a senior resident in radiology, or anesthesiology, or dermatology, who is just months away from demanding 350k+ on the job market, cap the resident's salary at 60k or less, and have the ability to work them for up to 80 hours, how is it that a hospital fails to make money here?

Sure, you can go through all the malpractice costs that have to be priced in, the free cafeteria food, the upkeep of the residents lounges. Sure, and Google spends a ton on the great insurance and fun perks it offers too. Somehow they manage to make sure they don't lose money on their employees.

>An easy way to reason about this is to remember that nothing's stopping hospitals from opening up residency slots that they self-fund. If residency programs predictably broke even, you'd expect them to do that. Except, almost no hospital does this, because the programs don't predictably break even - in fact, they pretty predictably lose money.

An even easier way to see you're making things up is to realize that medical residents can earn up to $100+/hr by moonlighting[0], all while they're apparently causing their home institutions to "predictably lose money" while earning an 10% hourly rate.

[0] https://www.staffcare.com/medical-moonlighting-for-residents... and the doctors discussed in this article aren't getting these opportunities after some long rigorous period. One of them was in his second year of residency once he decided to start moonlighting, literally a year out of med school. Again, this goes to show residents are pretty valuable right off the bat, are (overall, generally speaking) a bargain for their home institutions, and only get more financially profitable as time goes on.

> This is not-even-wrong levels of reasoning here. Personally, your comments on this subthread, and the confidence with which you've delivered them, will stay with me for a long time, and whenever I find myself nodding along with something that is facilely convincing and authoritatively stated, I'll think back to your posts and remember to be a bit more skeptical, a bit more discerning. For that, I thank you. For the rest, well, I can't be as laudatory.

Look, I could respond to each of the points you bring up in turn, and explain how it's actually quite easy for those individual statements to be true but still impossible for most residency programs to turn a profit.

But I've been on Hacker News long enough to know that, when someone begins a lengthy comment with an insult that underhanded and that personal, there's no way that they're in the mood for a good-faith discussion, and attempting to engage further in a reasoned debate is a recipe for frustration.

I see you're a relatively new commenter here, so I'll just say: on the off-chance that this interpretation is wrong, and you were looking to have a good-faith discussion on the topic, I'd recommend next time leaving off the personal insults.

Hmm I don't read the quoted text as a personal attack (snarky, okay fine) and I certainly don't see anything "underhanded" about what I posted, but if you think I'm posting in bad faith (all too endemic online, unfortunately), I don't think you can be faulted for not wanting to engage. That's certainly fair. And honestly, if you felt it was personal, I can apologize. Sorry.

That being said, you've made ~15 comments itt, in which you're variously appealed to your own authority ("Given my background, I understand exactly what residents do". Actually, I don't know any medical resident who could make such a statement, given how broad and diverse the fields that postgraduate medical training encompasses are, but sure.), and made repeated statements about what residents are and aren't capable of, all seemingly without citation or reference.

All of which is to say, I think if you could have made the case that the facts and figures posted above, and in this thread, are perfectly compatible with your contention about medical residents being a net financial drain for hospitals and academic centers, you would have done it by now. In that sense, I agree further debate would probably not be very productive.

I was confused by that part too because the article goes on to say teaching colleges "have an incentive to offer residencies in specialties from which they can get the most revenue per resident."

One way this makes sense is how Medicare pays teaching hospitals. A hospital gets $X for a procedure code. If they are a teaching hospital, they get $X+2% (can't remember the exact bump but it's relatively small).

The more expensive the procedure, the bigger the bump for being a teaching hospital. That's the incentive to get residents practicing expensive specialties.

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