Antitrust claims of medical residents.

I've always thought that the medical residents' antitrust challenge to the National Resident Matching Program -- in which hospitals and graduates alike agree not to compete for positions but to accept the computer-generated pairings -- had considerable merit. Here's one analyst's take on the plaintiffs' theory:

"The antitrust lawsuit against the ACGME claims that the Match is anticompetitive because it eliminates the influence of free markets on salaries. Although the Match does not technically fix prices, it prohibits residency programs from making offers outside of the Match. This rule wipes out the market for medical residents and undermines price competition, because it prevents students from negotiating with the different hospitals. Without an offer in hand, students have no power to negotiate with the programs, and programs do not need to compete for residents through salary or other monetary benefits. Programs are also deterred from increasing salaries to compete for students, because they cannot be guaranteed that the students whom they really want (and whom they believe are worth a higher price) will be matched with them. Therefore, programs have, in effect, set a flat salary of roughly $40,000 for all members of house staff throughout the country, irrespective of the specific demand for their labor." (Sanders Chae, "Is the Match Legal?", 348 N. Eng. J. Med. 352 (2003) (extract; full text requires subscription))

At the same time, it is difficult to imagine the staffing chaos -- and the impact on the availability of much needed health care services -- that would be produced by a market-driven, frankly competitive system in which no one knows where all the residents will be working until June 30. Apparently the defendants think there might be some merit in those claims, as well. Of course, inconvenience and higher costs are not defenses to an antitrust suit, but they find support in various courts' analyses of the "procompetitive effects" of otherwise anticompetitive behaviors and can provide reasons to take the defenses very seriously. Here's the same analyst's view of the "procompetitive" defense:

"Specifically, the Match appears to increase the choice of residency programs for medical students by allowing them to interview at multiple programs. It also prevents insiderism and thus might enhance diversity."

According to an article by Neil Lewis in today's New York Times, they are trolling the halls of Congress looking for legislative protection from potentially devastating monetary damages. (A spokesman for the Association of American Medical Colleges, one of the defendants, denies any such implication and insists that the legislation is being sought precisely because they believe the suit has no merit.) In addition to generating fees for lobbyists and defense attorneys, the antitrust suit appears to have had another impact as well. The governing board of the Match voted at their May meeting to delay implementation of a new policy that would require all participating institutions to register all of their positions with the Match ("only" about 80% are currently listed), a policy that could have the effect of compounding the antitrust injury -- if any -- currently produced by the Match. There is a nonfrivolous argument that the Match does not produce antitrust injury, as explained by the same NEJM analyst:

"Antitrust claims under Section 1 must show that the restrictive practice has anticompetitive consequences, such as an inefficient transfer of wealth due to higher prices, a reduction in output, or a diminished quality of goods or services.4,5 It is not obvious that teaching hospitals are underpaying residents in order to transfer wealth from resident to hospital as excess revenue or profit. However, there may be a transfer of wealth when residents care for the private patients of attending physicians who do not participate substantially in resident training. It is also hard to believe that the Match reduces output by decreasing the amount of health care that teaching hospitals provide. Indeed, low salaries might increase output by enabling teaching hospitals to hire more residents, leading to more health care. A final difficulty is that Medicare pays salaries through a fixed sum paid to the hospitals. If Medicare would not provide higher salaries in a freemarket system, the Match might not be responsible for low salaries."

If you're interested in Dr. Chae's full analysis, address reprint requests to Dr. Chae at the Department of Medicine, Columbia University College of Physicians and Surgeons, 622 W. 168th St., New York, NY 10032, or at sanderschae@post.harvard.edu.