Transaction Costs Killed the Medical Stars

Send us Fan MailWe try to make sense of a real problem many of us feel: paying a lot for U.S. healthcare while still waiting months to see a doctor. We trace how engineered transaction costs, from the Flexner Report to modern residency caps, restrict physician supply and protect price power while leaving clinicians overworked and patients stuck. • getting “fired” by a health system and what it reveals about access • why shortages don’t clear when prices rise, and how transaction costs block entry • the Flexner Report as quality reform and supply restriction • evidence of conflicts of interest and rushed methods behind the Flexner narrative • Ruben Kessel’s puzzle on persistent price discrimination in medicine • hospital privileges and county medical societies as cartel discipline • why advertising bans and professional norms can function as anti-competition tools • how residency caps and accreditation keep the bottleneck in place today • a listener letter on data center payments as compensation versus bribes • book of the week recommendation and a few parting thoughts **************************************As I note in the episode, thanks to Dr. Lance Stell, Davidson College Department of Philosophy (emeritus).  Lance offered this note about the epidsode:There's a footnote to the Flexner report. It killed the Davidson medical college - NC"s first. The school was founded by a DC faculty as a proprietary school. After 10 years operating on campus, it moved to Charlotte where it had a clinical relationship w/ the Good Samaritan Hospital - a black hospital, becoming the first medical school in the country to have such a relationship. I can send you an article about it written by Dr. Eddie Hoover, MD, a surgeon and Editor of NC"s black medical journal. Flexner execrated proprietary medical schools and it was his goal to "close them." His damning review of the Davidson medical School, renamed The NC Medical College, was successful.Thanks, Lance, I did not know that!  I added that link, below. ****************************************Links:The infamous Flexner Report:  http://archive.carnegiefoundation.org/publications/pdfs/elibrary/Carnegie_Flexner_Report.pdfHiatt and Stockton on the Flexner Report:  "The Impact of the Flexner Report on the Fate of Medical Schools in North America After 1909"Hiatt: "Around the Continent in 180 Days." Hiatt: "The Amazing Logistics of Flexner's Fieldwork."Kessell, Journal of Law and Economics, 1958:  "Price Discrimination in Medicine." Eddie L Hoover, Catherine R Lewis.  2006.  Journal of the National Medical Association. "Good Samaritan Hospital and the North Carolina Medical College circa early 1900: the first major affiliation between a black hospital and a white medical college." Ernest Jones, "The God complex" in Essays in Applied Psycho-Analysis. Earliest source I could find for the TWEJ:  https://www.netfunny.com/rhf/jokes/old89/godplay.840.htmlPA data center story: https://www.thecentersquare.com/pennsylvania/article_3b615fd8-5d36-45c4-bfb6-4a3162104f0b.htmlBook-o-da-week:  Daniel Hannan, Inventing Freedom, Broadside Press. https://www.amazon.com/Inventing-Freedom-English-Speaking-Peoples-Modern/dp/006223174X/If you have questions or comments, or want to suggest a future topic, email the show at [email protected] !You can follow Mike Munger on Twitter at @mungowitz