May 7, 2002
New York Times
Medical Students Sue Over Residency System
By ADAM LIPTAK
Every March, graduating medical school students wait anxiously for Match Day, when a computer tells them where they will spend the next several years as medical residents in teaching hospitals.
A class-action lawsuit to be filed in Washington today challenges the matching program on antitrust grounds. The suit says the defendants, including seven medical organizations and more than 1,000 private hospitals, have used the program to keep residents' wages low and hours long. Almost all first-year residents make less than $40,000 a year and often work 100-hour weeks.
If the suit is successful, the nation's health care system faces an enormous financial liability and the prospect of being forced to change the way that generations of doctors have been trained.
More than 80 percent of first-year residency positions are offered exclusively through the program, known formally as the National Resident Matching Program. The matches are based on ranked lists submitted by hospitals and the 15,000 or so students, and both sides agree in advance to accept the match.
There is no room for negotiations about wages, hours or other terms of employment. As a consequence, the plaintiffs say, the hospitals, which share detailed salary information with each other, can force residents to accept below-market wages for the three to eight years, depending on specialty, of their residencies.
"The match basically controls where you are going to spend the first part of your professional life," said Dr. Paul Jung, one of the plaintiffs, who is now a fellow at Johns Hopkins University. Yet, he said, "you're expressly forbidden from having any kind of agreement about any kind of salary or anything."
Lloyd Constantine, who was New York's top antitrust official for a decade and is not involved in the suit, said the case raised important issues. "If this were coal or steel or autos, it would flat out be a felony and would probably be prosecuted criminally," he said of the matching system.
Alvin Roth, an economics professor at Harvard, redesigned the system in 1997. He said it merely ensured that medical students obtain the best residencies they could. This fosters competition, he said, which the antitrust laws are meant to protect.
But James F. Blumstein, an expert in health care regulation at Vanderbilt Law School in Nashville, said that the matching program "does prevent competition in the sense that you can't entertain competing offers."
"It's not only salaries but also access to opportunities," he said. "It's hard to see what the pro-competitive justification is here."
Defenders of the matching program say that it is a mistake to think about it in purely commercial terms. They say residencies serve an important social purpose in training doctors and providing care for patients. Whether the antitrust laws should take account of these kinds of arguments is the subject of debate.
"It's not exactly a job, it's a continuation of a medical education," said Kevin Jon Williams, a professor of medicine at Thomas Jefferson University in Philadelphia, who has written extensively on the matching program.
Sherman Marek, a Chicago lawyer whose law firm, along with 14 others, represents the plaintiffs, said there was nothing special about jobs that educate. "In any employment, the employee is acquiring skills that can then be taken elsewhere, so there is always an education element," he said. "Nevertheless, market forces are allowed to operate."
Lawyers for the plaintiffs declined to speculate on how much residents' salaries might change if the matching program were eliminated.
Representatives of the medical organizations declined to comment on the lawsuit or did not return calls.
Residents' wages are certainly both low for the profession and uniform. According to the Association of American Medical Colleges, which operates the program and is a defendant in the suit, the average first-year resident, having completed four years of medical school, is paid $37,383. In the Northeast, the average is $39,060; in the South, the average is $35,552.
Hundred-hour workweeks for residents are common, meaning that they often make less than $10 an hour.
"They get less money than nurses and physician's assistants," said Michael J. Freed, a lawyer for the plaintiffs.
The plaintiffs' legal papers say the uniformity of the wages proves that something is wrong.
"Employers pay residents standardized salaries, regardless of such factors as program prestige, medical specialty, geographic location, resident merit and year of employment," the papers argue. "With few exceptions, employers pay salaries very close to the national average and very close to each other. By contrast, post-residency physicians earn widely varying compensations based on these factors, especially geographic location and medical specialty."
But Professor Roth, the system designer, said the similarities in wages by themselves prove nothing. "If you're looking at prices, both competition and collusion look similar," he said. Moreover, "people would be willing to pay to take these slots," he said, referring to the most desirable positions.
George L. Priest, a professor at Yale Law School who was a consultant to the plaintiffs, disagreed. "The salary data is highly suspicious," he said. "There is no good reason why doctors after four years of graduate school should make a quarter of what lawyers make."
The low wages and long hours have serious consequences, Dr. Jung said. "I had to constantly battle fatigue as a factor affecting the quality of my life and the lives of my patients," he said.
Dr. Jung, 32, said his residency at the MetroHealth Medical Center in Cleveland was dispiriting.
Hospitals "use residents as cheap labor," he said. "I had the expectation, maybe na?vely, that a lot of time would be spent with patients."
Instead, Dr. Jung said, he performed many menial and administrative tasks. "It was a lot more hours and a lot less patient care than I expected," he said.
He added: "Residents want to be treated fairly, and patients want to be treated well. Patient care will improve if you let residents have more say in their working conditions."
The Justice Department looked into the residency matching program in the mid-1990's. It reached a settlement with an association that administered a separate program for family practice residencies, but did not challenge the main program. Professor Roth said this meant the government had given the hospital matching program "a clean bill of health."
Mr. Constantine said that the professional training aspect of residents' work made it difficult to predict the outcome of the case. "There is a level of sentimentality" among judges, he said. "They will listen to excuses they would not listen to in the context of a purely commercial situation," he said.
Professor Blumstein said those excuses should not play a role in antitrust analysis. "The better view and the correct view is that antitrust law does not allow for worthy purposes to offset the anticompetitive actions," he said.
The closest analogy, Mr. Constantine said, is the civil suit that the federal government brought a decade ago against the eight Ivy League colleges and the Massachusetts Institute of Technology challenging their cooperation in setting student financial aid. The case ended in settlements that limited the amount of information the institutions could share.
Such information sharing is even more problematic when salaries are involved, he said. "The medical world really is closer to coal, steel and autos than to colleges giving out financial aid," he said.
Critics compare the residency matching program to early decision programs at colleges. They say that colleges accepting applicants through early decision can offer less attractive financial aid packages because there is no competition for those students, just as hospitals can pay residents low wages because they have nowhere else to go.
The stakes in the new suit are high. The complaint does not specify how much money the plaintiffs seek, but they claim to represent a class of 200,000 residents. If residents' fair market salaries were determined to be $100,000, say, the sums at issue for a single year would exceed $12 billion, and since this is an antitrust case, the damages would be automatically tripled.
"It's not obvious that it's in the interests of the plaintiffs to bankrupt every hospital in the country," Professor Priest said. "But it's going to change the nature of medical care. They are going to have to bid for the services of these medical residents, and they won't be able to work them 120 hours a week."
New York Times
Medical Students Sue Over Residency System
By ADAM LIPTAK
Every March, graduating medical school students wait anxiously for Match Day, when a computer tells them where they will spend the next several years as medical residents in teaching hospitals.
A class-action lawsuit to be filed in Washington today challenges the matching program on antitrust grounds. The suit says the defendants, including seven medical organizations and more than 1,000 private hospitals, have used the program to keep residents' wages low and hours long. Almost all first-year residents make less than $40,000 a year and often work 100-hour weeks.
If the suit is successful, the nation's health care system faces an enormous financial liability and the prospect of being forced to change the way that generations of doctors have been trained.
More than 80 percent of first-year residency positions are offered exclusively through the program, known formally as the National Resident Matching Program. The matches are based on ranked lists submitted by hospitals and the 15,000 or so students, and both sides agree in advance to accept the match.
There is no room for negotiations about wages, hours or other terms of employment. As a consequence, the plaintiffs say, the hospitals, which share detailed salary information with each other, can force residents to accept below-market wages for the three to eight years, depending on specialty, of their residencies.
"The match basically controls where you are going to spend the first part of your professional life," said Dr. Paul Jung, one of the plaintiffs, who is now a fellow at Johns Hopkins University. Yet, he said, "you're expressly forbidden from having any kind of agreement about any kind of salary or anything."
Lloyd Constantine, who was New York's top antitrust official for a decade and is not involved in the suit, said the case raised important issues. "If this were coal or steel or autos, it would flat out be a felony and would probably be prosecuted criminally," he said of the matching system.
Alvin Roth, an economics professor at Harvard, redesigned the system in 1997. He said it merely ensured that medical students obtain the best residencies they could. This fosters competition, he said, which the antitrust laws are meant to protect.
But James F. Blumstein, an expert in health care regulation at Vanderbilt Law School in Nashville, said that the matching program "does prevent competition in the sense that you can't entertain competing offers."
"It's not only salaries but also access to opportunities," he said. "It's hard to see what the pro-competitive justification is here."
Defenders of the matching program say that it is a mistake to think about it in purely commercial terms. They say residencies serve an important social purpose in training doctors and providing care for patients. Whether the antitrust laws should take account of these kinds of arguments is the subject of debate.
"It's not exactly a job, it's a continuation of a medical education," said Kevin Jon Williams, a professor of medicine at Thomas Jefferson University in Philadelphia, who has written extensively on the matching program.
Sherman Marek, a Chicago lawyer whose law firm, along with 14 others, represents the plaintiffs, said there was nothing special about jobs that educate. "In any employment, the employee is acquiring skills that can then be taken elsewhere, so there is always an education element," he said. "Nevertheless, market forces are allowed to operate."
Lawyers for the plaintiffs declined to speculate on how much residents' salaries might change if the matching program were eliminated.
Representatives of the medical organizations declined to comment on the lawsuit or did not return calls.
Residents' wages are certainly both low for the profession and uniform. According to the Association of American Medical Colleges, which operates the program and is a defendant in the suit, the average first-year resident, having completed four years of medical school, is paid $37,383. In the Northeast, the average is $39,060; in the South, the average is $35,552.
Hundred-hour workweeks for residents are common, meaning that they often make less than $10 an hour.
"They get less money than nurses and physician's assistants," said Michael J. Freed, a lawyer for the plaintiffs.
The plaintiffs' legal papers say the uniformity of the wages proves that something is wrong.
"Employers pay residents standardized salaries, regardless of such factors as program prestige, medical specialty, geographic location, resident merit and year of employment," the papers argue. "With few exceptions, employers pay salaries very close to the national average and very close to each other. By contrast, post-residency physicians earn widely varying compensations based on these factors, especially geographic location and medical specialty."
But Professor Roth, the system designer, said the similarities in wages by themselves prove nothing. "If you're looking at prices, both competition and collusion look similar," he said. Moreover, "people would be willing to pay to take these slots," he said, referring to the most desirable positions.
George L. Priest, a professor at Yale Law School who was a consultant to the plaintiffs, disagreed. "The salary data is highly suspicious," he said. "There is no good reason why doctors after four years of graduate school should make a quarter of what lawyers make."
The low wages and long hours have serious consequences, Dr. Jung said. "I had to constantly battle fatigue as a factor affecting the quality of my life and the lives of my patients," he said.
Dr. Jung, 32, said his residency at the MetroHealth Medical Center in Cleveland was dispiriting.
Hospitals "use residents as cheap labor," he said. "I had the expectation, maybe na?vely, that a lot of time would be spent with patients."
Instead, Dr. Jung said, he performed many menial and administrative tasks. "It was a lot more hours and a lot less patient care than I expected," he said.
He added: "Residents want to be treated fairly, and patients want to be treated well. Patient care will improve if you let residents have more say in their working conditions."
The Justice Department looked into the residency matching program in the mid-1990's. It reached a settlement with an association that administered a separate program for family practice residencies, but did not challenge the main program. Professor Roth said this meant the government had given the hospital matching program "a clean bill of health."
Mr. Constantine said that the professional training aspect of residents' work made it difficult to predict the outcome of the case. "There is a level of sentimentality" among judges, he said. "They will listen to excuses they would not listen to in the context of a purely commercial situation," he said.
Professor Blumstein said those excuses should not play a role in antitrust analysis. "The better view and the correct view is that antitrust law does not allow for worthy purposes to offset the anticompetitive actions," he said.
The closest analogy, Mr. Constantine said, is the civil suit that the federal government brought a decade ago against the eight Ivy League colleges and the Massachusetts Institute of Technology challenging their cooperation in setting student financial aid. The case ended in settlements that limited the amount of information the institutions could share.
Such information sharing is even more problematic when salaries are involved, he said. "The medical world really is closer to coal, steel and autos than to colleges giving out financial aid," he said.
Critics compare the residency matching program to early decision programs at colleges. They say that colleges accepting applicants through early decision can offer less attractive financial aid packages because there is no competition for those students, just as hospitals can pay residents low wages because they have nowhere else to go.
The stakes in the new suit are high. The complaint does not specify how much money the plaintiffs seek, but they claim to represent a class of 200,000 residents. If residents' fair market salaries were determined to be $100,000, say, the sums at issue for a single year would exceed $12 billion, and since this is an antitrust case, the damages would be automatically tripled.
"It's not obvious that it's in the interests of the plaintiffs to bankrupt every hospital in the country," Professor Priest said. "But it's going to change the nature of medical care. They are going to have to bid for the services of these medical residents, and they won't be able to work them 120 hours a week."
