Wednesday 2 April 2014

The doctoring cartel

If rules around medical licensing were designed to protect patients, they'd look one way. If they were designed as cartel enforcement, they'd look another way.

Suppose the government decided that reputation wasn't enough and that patients couldn't really adequately judge the quality of doctors. I'd think they're wrong, but that's a different argument.* In that world, a certified doctor would have to have demonstrated competence in some robust way. The point of the certification would be to set a minimum quality bar, but it could also provide notes of particular distinction for exceptional competence. Rules around which type of medical professional could provide which type of service would prevent restrict open heart surgery to, say, surgeons, but would allow nurse-practitioners to provide prescriptions for routine things. Rules around what's over-the-counter and what requires a prescription would be designed to guard against potential dangerous interactions or side-effects.

Now suppose that the government wanted to enforce a medical cartel to provide rents to doctors and other medical professionals. In that world, the certification process would mostly serve to limit entry. Meeting the minimum requirements wouldn't be enough: the bar would move to restrict entry based on the number of current doctors or the number of current positions. The rules around which medical professionals could provide which services would be designed to protect those professionals' rents rather than simply matching skills to tasks. We'd keep lots of things prescription-only even if there were no particular medical basis for it.

The US is definitely in the second scenario. New Zealand, well:
The doctors graduated from medical schools in non-North American or non-Western European countries, including Britain, which means they are required to pass the New Zealand Registration exam when they emigrate here.
About 6 percent of the 1200-1400 international medical graduates who seek registration as doctors in this country need to sit exam.
However, the Medical Council last week reduced the number of examinations it offers, saying there is a limited number of internship, or postgraduate training, positions in hospitals for the candidates.
Health authorities say that's because higher numbers are graduating from New Zealand's medical training universities, Otago and Auckland, and fewer new graduates are heading overseas as jobs are tight there.
Rather than check out all of the regulations here myself, and likely mess things up, I've engaged in a bit of outsourcing. I'm copying in the following email from a Loyal Reader Whose Knowledge And Judgement On This Issue I Trust. My correspondent tells me the following:
Today’s Radio New Zealand article “Foreign doctors demandingaction on jobs” is the start of a  health workforce “Training Tsunami” wave which New Zealand’s medical authorities have known for years.  It’s the tip of a whole series of policy directions which control the health sector’s workforce and make little sense except from a rent-seeking perspective. 
We don’t let everyone into the medical profession.  But even if you’ve been accepted into the medical profession by the Medical Council, your employment options are strictly limited to District Health Boards (DHB) employers.  DHBs have the work and want to employ more junior doctors, but the cost of a junior doctor is strictly control by national Multi Employer Collective Agreements (MECA) which make no sense,  make sure the cost of a junior doctor can only ever increase, and prevents DHBs affording to employ more qualified workforce if trained overseas candidates are actually available. 
The junior doctor MECA is the real impediment preventing doctors graduating from overseas medical schools getting employment.  But even if you’re a junior doctor wanting to become a senior doctor, monopoly training practices operate to limit the entry into vocational specialities, resulting in Des Gorman’s words, a clogging [of] the training "pipeline". 
Getting a Foot in the Medical Door
The Health Practitioners Competency Assurance Act 2003, confers on the Medical Council of New Zealand the right to say who is and who is not a doctor qualified to practice medicine.  The Medical Council do this through issuing suitably qualified people a “Scope of Practice” which says what type of medical services they can provide, how much supervision they need during their work, and where they can perform their services.  
Here’s the rules for an overseas (ie not for Australia or New Zealand) trained doctor. So if you graduate from the University of Alberta, have worked for 33 months of the past 2 4 years, have been registered by the Medical Council equivalent within Alberta and you can speak English, it looks like from option four, you're capable of being registered for a general scope of practice.
Great!  But you're not in yet.  Next, according to the Med Council, you need to pass the NZRex exam which gets you a provisional general scope of practice, and means you can now work in a very very limited sense in the health sector for someone (a District Health Board).  You can't work in the private sector for a GP at this stage; you must work for a District Health Board.
After you're provisionally general scoped, THEN you can get a job and do some clinical time which, after 2 years, get you a general scope of practice.
Getting a Job
Which gets back to Des Gorman's point:
"On top of that, says Health Workforce New Zealand executive chair Des Gorman, many local doctors several years after graduating are not making key decisions about what specialisations to pursue and are clogging up the training "pipeline" by remaining in jobs too long."
Junior doctor jobs in New Zealand DHBs are full.  There’s few vacancies at the current price of a junior doctor.  DHBs would employ more, if junior doctors were affordable.  Under the Junior doctor MECAs, junior doctors automatically advance through the MECA pay scales each year with the bands themselves adjusted by inflation.  A first year doctor starting work in 2008 and working under 45 hours a week earnt $52,843 in their first year.
On the 2008 salary bands by 2012, four years into their training, without any additional payments or hours worked, they could expect to receive $62,679 an average annual salary increase of 4.8%.  However, in 2012, they become governed by the 2012 MECA salary bands which place a 4th year registrar house surgeon on $66,252 per year, producing an automatic entitlement to an effective average salary increase of 5.8% per annum.
By the Law of Demand, as the price of something increases, its demand goes down.  In the face of an automatic 5.8% increase in junior doctor salaries and wages, is anybody surprised that Junior doctor jobs in New Zealand DHBs are failing to meet demand?  ACE, the matching system DHBs employ for allocating graduates to places isn’t the problem – it’s the lack of places and the inability of DHBs to employ more at the current price of junior labour.
Workforce Forecasting with your Eyes Closed
But here's something else: the medical training sector has known for some time of an ensuing workforce “training tsunami”.  Over the past decade, Australiasian Schools of Medicine have ramped up threefold their medical training numbers.  
Through a combination of bad industrial relations policy and bad overly restrictive employment practices, the frustrations experienced by overseas medical graduates will only increase.  
… But of course, those who are making the rules also have jobs… 

So endeth the missive from my Loyal And Informed Correspondent Whose Knowledge and Judgement I Trust.

Can you come up with a plausible reason why a certified doctor from Alberta shouldn't be able to hang out a shingle and start a GP practice here? Maybe that doctor would want to take a short seminar course explaining medical administration, billing, and Pharmac, and another short course on "Illnesses you might encounter here in New Zealand that you might not have thought to look for back home." But otherwise, can you think of any reason to bar that doctor's entry other than rent-seeking and cartel protection?

Maybe I'm just insufficiently imaginative.

I tend to think that small countries should be real quick to accept certification from other reasonable places rather than add to the already high fixed costs of living in a small place.

Update: Gareth Morgan here isn't bad either.

* These kinds of informational asymmetries get bridged by a quality certification agent in other markets. Before you say that this would just lead to bogus certifiers who'd confuse people, recall that we already have this. There's a board that certifies chiropractors, and another that certifies naturopaths. The existing system hardly keeps shysters out.


  1. Regarding the Alberta doctor - I would think it would depend on whether the local registering authorities new enough about Albertan training and certification - and whether they felt they could rely on it! Do you know whether it equates to NZ certification requirements.

  2. If a doctor is currently practising as a GP in Alberta and has whatever registration is needed to allow that doctor to practice there, that's good enough for me. I'd tend to figure that any country ranking at or above us in the OECD on GDP per capita should be deemed trustworthy on this stuff by default unless we have some specific reason to think that they're not.

  3. "...have worked for 33 months of the past 2 years..."

    A fairly demanding requirement.

    Kiwi Dave

  4. about Doctors NZ

  5. An approach that could leave you dead though. Your comment reminded me of an incident a week ago involving a Canadian, who I understand is perfectly well qualified in canada, who got put in charge of an expensive piece of equipment and as she would have done in canada turned it up to 500 degrees. It seems that is a perfectly safe and sensible temperature in Canada, but in the rest of the world it fries the equipment (if left for more more than a critical length of time). Fortunately it was only a machine and no-one depended on it for their safety

  6. Ha! I expect that was meant to be 3 years.

  7. I did say it'd be a good idea for them to have a couple short courses on the kiwi med bureaucracy and on different treatment practices / common diseases here.

  8. I have no fond memories of having to get the kids prescriptions for minor eye infections. It was always the same thing with always the same prescription. But always the hassles of getting an appointment...

  9. Those sort of things can be a pain. A more helpful doctor would have done what our local medical centre does for things like that - allow patients to get prescriptions refills over the phone. (I doubt they will do this for everything, I hope not anyway - but it works for common repeating ailments)