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Comment by jjoonathan | Hacker News Reader

Not really, it's just that most people here are simply relying on the very good heuristic that most markets, government (mis-)managed or free, are chock-full of perverse incentives.

In this case, the likely culprit is that accepting residents for less than $150k/yr in sponsorship sabotages their ability to claim that the fair market value of residency training is $150k/yr, and they've calculated that the marginal benefit from accepting a single resident at a lower cost does not outweigh the risk of being forced to provide the same discount to their existing residency positions.

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> In this case, the likely culprit is that accepting residents for less than $150k/yr in sponsorship sabotages their ability to claim that the fair market value of residency training is $150k/yr, and they've calculated that the marginal benefit from accepting a single resident at a lower cost does not outweigh the risk of being forced to provide the same discount to their existing residency positions.

So you're saying that hospitals which receive no funding from Medicare eschew this potential profit center (a residency program) so that their rival hospitals can keep receiving funding from Medicare and make an even larger profit?

This makes even less sense than the other theory being proposed, which is that hospitals are eschewing short-term profit in order to increase the expenses they have to pay in the long-term.

If there's nobody else willing to pay $150k/yr (because it isn't a fair market rate), how would they turn it into a profit center, exactly?

S/he’s saying that this argument

> they've calculated that the marginal benefit from accepting a single resident at a lower cost does not outweigh the risk of being forced to provide the same discount to their existing residency positions.

only holds up for schools with existing residency positions, which there are many without. If a residency were profitable without the subsidies, one would expect to see those non-teaching hospitals launching residency programs. Especially so because they don’t have to worry about threatening the subsidies which they aren’t receiving.

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