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U.S. Will Pay Med Schools To Reduce Glut of Doctors

By Amy Goldstein
The Washington Post

The federal government has agreed to pay hospitals around the country hundreds of millions of dollars not to train doctors in a highly unorthodox initiative aimed at alleviating a growing glut of physicians.

The initiative, embedded in the new federal budget agreement, extends to all 1,025 of the nation's teaching hospitals an offer similar to a controversial experiment approved for New York earlier this year.

That experiment, which will pay hospitals in that state $400 million over the next several years while they gradually decrease the number of young doctors they train, drew an outcry from teaching hospitals elsewhere that felt New York had wangled a lucrative special deal. Their protests attracted the sympathy of congressional Republicans who decided that, instead of trying to block the money for New York, they would expand the opportunity nationwide.

The payments represent a rare attempt by the federal government to use subsidies as leverage to shrink a particular work force. "I know of no profession where there has been as much federal effort to regulate," said Uwe Reinhardt, a health economist at Princeton University. "You don't do it for economists, for architects, for engineers."

The payments also are the government's first effort to constrict the pipeline of people entering the medical profession. Several influential groups have warned lately that the nation has too many doctors, particularly specialists, and have urged the federal government to impose limits on the number of recent medical school graduates, known as residents, who pursue several years of advanced training before beginning to work on their own. But until now that advice has met with legislative resistance.

The New York experiment and the nationwide initiative hinge on changes in Medicare, the large federal insurance program for the elderly and disabled. Since it began, Medicare has underwritten residency training programs heavily and has, in effect, made residents a prized, inexpensive kind of labor for their hospitals. Taxpayers spend $7 billion a year on such training.

Until now, many teaching hospitals have been reluctant to cut back, because every resident translates into an average subsidy of $100,000 a year. "It has not been financially rewarding to downsize," said Muncey Wheby, associate dean for graduate medical education at the University of Virginia.

Under the budget agreement, hospitals that downsize will not get extra money outright. But if they volunteer to reduce their residency programs by 20 percent or 25 percent over five years, Medicare will cushion the financial blow. For the first two years, it will pay the whole subsidy for the missing residents. After that, the payments will taper off for three years.

The agreement also for the first time essentially forbids hospitals to increase the sizes of their residency programs.

Administration health officials and leading Republicans say that the initiative will give hospitals a powerful incentive to train fewer doctors and that Medicare will save money in the long run. After five years, the payments will cease and the program will have fewer residents to underwrite.

But others suggest that hospitals will be rewarded needlessly for cutbacks that some have started to make without being paid to do it. Some say the initiative is the medical equivalent of discredited agricultural programs that have paid farmers not to grow certain crops.

"I don't know where the hell a Republican Congress gets off doing labor force planning for the medical profession," said Robert E. Moffit, deputy director for domestic policy studies at the Heritage Foundation, a conservative think tank. "As an economic principle, it is absurd."

How many physicians the nation produces has important effects on the cost of the health care system. The greater the number of doctors, research has shown, the more medical tests and expensive specialty treatment patients tend to receive, because physicians find subtle ways to keep themselves employed.

With more than 700,000 physicians, the United States has more doctors per capita than virtually any other country. In particular, it has a vast supply of specialists, who are starting to find themselves in less demand as more patients are insured through "managed care" plans that favor treatment by lower-cost medical generalists.