Thursday 22 December 2022

Economics of regulation and medical licensing

The economic theory of regulation, following Peltzman, highlights regulation as a bargain that's subject to cost pressures. Change the cost conditions enough and you'll change the equilibrium.

Regulation of medical services seems ripe for disruption.

Over at The Conversation, Johanna Thomas-Maude documents the problems facing foreign-trained medical professionals wanting to work in New Zealand. It's basically impossible. And that's by design. 

The system is set, deliberately, to frustrate entry, with chokepoint after chokepoint. The player at each chokepoint will blame all the other chokepoints for the problem. 

Want to train more doctors? Ah, we can't. Only two med schools and they only can train so many.

Want to open a new med school? Ah, we can't. The universities' cartel reminds us that there aren't enough supervised positions at the hospitals, so even if more graduates were trained, there wouldn't be places at the hospitals for them to get their final sign-off. We'd just be training doctors to go and practice abroad. And who wants to put taxpayer money into that?

Want to solve it with foreign-trained doctors? Can't do that either. Not enough supervised positions at the hospitals. And even if someone's demonstrated competence elsewhere, that's just not good enough for New Zealand. No. They have to prove it in a supervised role here too. But there aren't any supervised roles for them. 

Want to increase the number of supervised slots? Afraid we also can't do that. None of the doctors want to take on more supervisions, you see. They're all flat out because there aren't enough doctors. 

It has long been a horrible cartel - one of the ones protected against ComCom action by the Commerce Act exemption of statutory regimes, even if they are absolutely a cartel. 

But the conditions seem ripe for change. When doctors are leaving the profession or the country because working conditions are terrible because there aren't enough doctors, there's opportunity to fix the regulations so that competent doctors from elsewhere could practice more easily. 

Here's Johanna:

Potentially hundreds of other doctors already in New Zealand are also waiting to take the required local clinical skills exam (NZREX), which is only open to 30 people at a time. The exam has only been offered four times – instead of the usual nine – in the past three years, with only one currently scheduled for 2023.

A few hundred doctors may not sound like much, but patients are being turned away from GPs all over New Zealand. Up to half of practices are not accepting any new patients.

Just one GP can safely have around 1,400 patients on their books, although this number is currently up to 2,500 for many overworked GPs.

Dr Orna McGinn, Chair of the New Zealand Women in Medicine (NZWIM) Charitable Trust, recently surveyed almost a thousand doctors working in New Zealand. McGinn noted that doctors’ concerns around a medical workforce crisis have been dismissed and diminished.

Read her whole column; I'd chatted with Johanna a few months ago as she was getting going on this project. She's been interviewing foreign-trained doctors who want to practice here. Simplest seems to be to pass the exam here, then go and practice in the UK for three years, and then consider coming back. 

All of it feels like it's ripe for change. The doctors' survey suggests lack of colleagues is biting, and that'll eventually have to feed its' way up into the licensing cartel. 

If the Commerce Commission did decide to take up medical services for its next market study rather than some populist boondoggle demanded by the Minister in an election year, it could do an awful lot of good. 

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