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Rethinking Medical Residency Programs in Georgia

According to the Law of Georgia on Medical Activity[1], postgraduate medical education can take place only in accredited institutions and/or medical schools from March 2009 onwards. This seems to be a good initiative. Presumably, the goals of this law were to promote higher quality education for future doctors in the country and to deliver higher quality healthcare to the population of Georgia. These are relevant goals, of course, as the life of a human being in terms of both length and quality is and should be the most serious concern for every country...

Even so, it is difficult to judge, especially for an economist, the current quality of the healthcare system in place. The only thing that can be detected is that, given the supply of doctors and the quality of their services in our country, the average willingness to pay for healthcare is quite low. The figure 1 below illustrates this by benchmarking Georgia against other countries according to the number of doctors and per capita expenditure on health (even if heavily subsidized that can serve as a proxy for the average willingness to pay).


THE OVERSUPPLY OF PHYSICIANS IN GEORGIA'S HEALTHCARE SYSTEM

Figure 1. Per capita expenditure (PPP $) on health and physicians per 10,000 population in 2009[2]

Looking at Georgia’s position against other countries, we see that it is clearly an outlier. In 2009 Georgia had low expenditure per capita on health and a physicians to population ratio unusual for this level of expenditure. Out of the countries of the world reporting in 2009, only two (Greece and Belarus) had more physicians per capita than Georgia and both of those spent more on healthcare in per capita terms. The black points on the scatter plot are former Soviet republics, which are characterized by low health expenditures and high physicians to population ratios. So, some part (maybe even a substantial part) of the stock of doctors in Georgia is a Soviet legacy. Even so, Georgia’s physicians to population ratio is still high even compared to post-Soviet republics. Only Belarus passes ahead of Georgia. At the same time, even those economically developed countries with the highest health expenditures, such as the USA and Luxembourg, have about twice as few physicians per capita compared to Georgia. Overall, our position against both former Soviet republics and other countries of the world is the first indicator of the oversupply of physicians in the healthcare system of Georgia.

Looking at prices asserts the hypothesis of oversupply once again. Low per capita expenditure and poor compensation for medical doctors in Georgia are two other indicators of this phenomenon. The average monthly salary of 523 GEL per month in the health and social work sector is just 80% of the national average[3]. Even though the latter might not be strong evidence regarding the compensation of narrower category of the sector, namely physicians; recent studies of Georgian healthcare have also found that surgeons (who in general are better paid than other physicians) are paid between 150 GEL and 300 GEL per month in the regions of Georgia[4].


THE EFFECTIVENESS OF THE "CORRECTION" MECHANISM

From an economic viewpoint, in the short run the quantity of doctors supplied is quite insensitive to wages, as future doctors need training for at least eight years. So it is really difficult (if not impossible for an 18-year-old) to take into account all the labor market requirements a decade in advance, especially since they are changing so quickly. Additionally, there are not many places elsewhere in the world where physicians trained in Georgia can work. This makes the quantity of physicians supplied even more wage inelastic.  To “correct” this kind of mismatch, the Ministry of Labor, Health and Social Affairs (MoLHSA) is responsible for setting the number of medical residency students in accordance with labor market needs.

However, this kind of “correction” mechanism is seemingly ineffective. To give an example, while Tbilisi State Medical University accepted 350-500 students a year at the undergraduate level from 2007 onwards, the quotas for medical residency programs are becoming more and more restrictive.

There are at least two caveats in this arrangement. First, the state invests in the preparation of graduates (so called, “certified medicals”) for 6 years (compared to 4 years of undergraduate study in other fields) only for most of these individuals to then not be to become doctors in their country. So, the main purpose for the state financing them in the first place is not accomplished because of the state regulation regarding medical residency student placements. One justification for this could be that selecting medical residency students from a larger pool of graduates would lead to higher quality. However, this does not really seem to be the case. The selection procedure allows older participants to compete with saved scores and does not allow for any adjustments to be made in order to take account of graduate entrance examination tests becoming gradually more complicated.

Second, no other ways of becoming a physician “beyond the state order” in Georgia (junior doctor or postgraduate education alternatives to medical residency programs) are arranged in quality-promoting ways. Once the pre-defined barrier is passed, the student who gets the information about quotas and registration dates first, transfers their fee and registers first, gets the place. All these procedures potentially foster nepotism and “medical elitism”.

As a result, none of the ways of postgraduate medical education foster quality as we would like it.

Additionally, “certified medicals” who do not receive a placement can work just as junior doctors (and, given the compensation of senior physicians, one can guess that the salaries of juniors are even lower). The other options available to these graduates ineligible for medical residency programs, are changing their profession, unemployment or further education abroad, in which case they would need to start from the beginning again and the likelihood of their returning to Georgia after that seems low. In all of the abovementioned cases public funds are simply wasted.


A POSSIBLE SOLUTION

First of all, Georgian healthcare regulators should decide between quantity and quality. Given the current situation of oversupply, choosing quantity would arguably not be very reasonable. Conversely, upgrading quality is always relevant. Nevertheless, as resources are scarce and moreover even fixed in the short run, the quality-quantity trade-off usually implies more quality and, less quantity. So, if this is the choice we have to make, two things need to be done urgently: 1) We need to ensure that all new arrangements are quality-enhancing and 2) In order to avoid the mismatch for at least the coming generations, we need to improve the awareness of society about long-term priorities and, if necessary, even limit the number of places at the undergraduate level.


 

[1] Available in Georgian at http: http://laws.codexserver.com/991.DOC
[2]  Source: WHO Health Systems Data and Statistics
[4] Transparency International Georgia. Health Care in Georgia. Tbilisi, 2012.
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Guest - Lasha on Saturday, 02 February 2013 18:47

Yap, Regulators are those Guys, who know how to make decision about quality/quantity :)

Yap, Regulators are those Guys, who know how to make decision about quality/quantity :)
Guest - Nino on Sunday, 03 February 2013 15:55

I think I understood your point, Lasha :)Nevertheless, I would love to believe badly that to some extent these decisions will serve the long-term interests of the society, as they have to...

I think I understood your point, Lasha :)Nevertheless, I would love to believe badly that to some extent these decisions will serve the long-term interests of the society, as they have to...
Guest - Lasha on Monday, 04 February 2013 06:05

I would love to believe that you can believe something more creative :)
If you have time have a look at works of Stigler, Petztzman, Tullock.

I would love to believe that you can believe something more creative :) If you have time have a look at works of Stigler, Petztzman, Tullock.
Guest - Nino on Monday, 04 February 2013 12:56

I would love to believe that you would love to believe that I would love to believe something more creative :):):) I will, thanks for suggestions.

I would love to believe that you would love to believe that I would love to believe something more creative :):):) I will, thanks for suggestions.
Guest - George Lominadze on Monday, 04 February 2013 16:24
http://glominadze.wordpress.com/2012/05/11/medical-education/
Guest - Nino on Monday, 04 February 2013 17:27

Seems to be an interesting analysis, George. I will try to look in more details and share the ideas later.

Seems to be an interesting analysis, George. I will try to look in more details and share the ideas later.
Guest - Irakli Khabeishvili on Friday, 08 February 2013 03:48

thank you to author for such short but informative review of medical residency who studies and works in health care system knows that this oversupply of assistent medical doctors is a result of
1) irresponsible work of State Medical Universities and Institutes which recieve enormous quantity of students and they are more interested in making more and more money and they are less interested were there graduates will work or continue study in residency programs
2) Hospital sector is consists with private clinics and they are not interested in medical residency programs, because it's not profitable.
3) Main reason is that goverment is not interested in healthcare system development.

Therefore I can't agree with author of this article in second Social bureaucratic regulation for problem solution because it won't decide problem in comercial medical market. Main thing what must be done this is to sold and make state medical universities as a private profitable organ beacause hospital sector in georgia is profitable also and therefore free competitive comercial market will raise automaticaly quality of Doctor knowledge and regulates quantity painless in time. And in result patients will recieve high quality health service.

thank you to author for such short but informative review of medical residency who studies and works in health care system knows that this oversupply of assistent medical doctors is a result of 1) irresponsible work of State Medical Universities and Institutes which recieve enormous quantity of students and they are more interested in making more and more money and they are less interested were there graduates will work or continue study in residency programs 2) Hospital sector is consists with private clinics and they are not interested in medical residency programs, because it's not profitable. 3) Main reason is that goverment is not interested in healthcare system development. Therefore I can't agree with author of this article in second Social bureaucratic regulation for problem solution because it won't decide problem in comercial medical market. Main thing what must be done this is to sold and make state medical universities as a private profitable organ beacause hospital sector in georgia is profitable also and therefore free competitive comercial market will raise automaticaly quality of Doctor knowledge and regulates quantity painless in time. And in result patients will recieve high quality health service.
Guest - Nino on Friday, 08 February 2013 18:38

Irakli, thank you for your comment.
It is true that competitive market can regulate quantity and promote quality but such a radical change is really unlikely in Georgia in the nearest future. That is why, I did not go that far and my recommendations concerns just the short-run. On the other hand, I can already see some complications that could impede the efficient functioning of these markets.
1)If the residency program is not profitable, will the undergraduate program necessarily be profitable? Morever, are there incentives for the doctors in the system to share their expertise with the future generations? Keeping in mind the fact that they are the future competitors to them, and salaries are already low. This is medical elitism argument.
2)Another point concerns matching. The issue is that not many families in Georgia would be able to afford 6 years of medical education fee at the private university. My impression is that good pupils mostly go to state-subsdized specialties (in other word, they respond to financial incentives). Now, when state is not interested in "producing" new doctos, it is unlikely that they will subsidize. As a result, we get that future doctors are the children of rich families. And I believe that wealth is not necessarily a good predictor of medical abilities.
These are two potential complications that came to my mind, there might be some others also. As far as I know, none of the healthcare systems of the world are absolutely free of regulations.

Irakli, thank you for your comment. It is true that competitive market can regulate quantity and promote quality but such a radical change is really unlikely in Georgia in the nearest future. That is why, I did not go that far and my recommendations concerns just the short-run. On the other hand, I can already see some complications that could impede the efficient functioning of these markets. 1)If the residency program is not profitable, will the undergraduate program necessarily be profitable? Morever, are there incentives for the doctors in the system to share their expertise with the future generations? Keeping in mind the fact that they are the future competitors to them, and salaries are already low. This is medical elitism argument. 2)Another point concerns matching. The issue is that not many families in Georgia would be able to afford 6 years of medical education fee at the private university. My impression is that good pupils mostly go to state-subsdized specialties (in other word, they respond to financial incentives). Now, when state is not interested in "producing" new doctos, it is unlikely that they will subsidize. As a result, we get that future doctors are the children of rich families. And I believe that wealth is not necessarily a good predictor of medical abilities. These are two potential complications that came to my mind, there might be some others also. As far as I know, none of the healthcare systems of the world are absolutely free of regulations.
Guest - Irakli Khabeishvili on Sunday, 10 February 2013 19:27

Yes nino competitive market can regulate quantity and promote quality and today we must start to build such health care system where competitive market will play great role in delivering high class medical services to patients. I already agree that this won't be an ideal system but every normal democratic developed country manages health care system with this postulate.
now what about 1 and 2 questions:

1.
I agree that today residency programs aren't profitable beacause on market there are already many doctors, but this is formal quantity which has license and doesn't promote active clinical practice, e. g.: ministry of labour health and social affairs of georgia in 2011 published his strategy for health care system development where was written: in georgia doctor-patient ratio per 100,000 people is 462 physician. which means that we have aproximately twice more physicians than in european countries. you already mentioned on you review this fact. But there was also has written that if we compare this doctor-patient ratio to quantity of medical service which was promoted by doctor was very low, beacause there was written: "in georgia 1 doctor who works in hospital treats 2,6 patient during 1 month and 1 polyclinic doctor 3 patient during 1 day, this means that doctors load is low, than must be necessary for keeping medical skills and knowledge of doctors". but we must also foresee that at this time medical insurance had populations only 30% approximately (also these insured people also had problems with financing from insurance companies because these companies have created financing problems artificially and still creates because they recieve great profits with such things) and rest of the population payed for medical services from his own pocket therefore quantity of patients who addressed hospital sector was very low. Now quantity of insured people is more than was and quantity of patients who address hospital sector is high, there fore load of doctors have increased and soon, I think it will be in 1-2 years residency programs will be profitable for hospitals which can promote private residency programs, but cost will be high.

2.
And what about private medical universities in which students will recieve high quality medical education, yes, of course, the price of education will be high, but there are also exists education credits for students that are issued by banks and will be available to all. However, these private universities are responsible for the high quality education of its graduates and they are also responsible or hiring there graduates in payed hospital sector and delivering residency programs.

In concluasion these are the basic one of the main principles on which the high quality competitive market health care system should be developed. Create such system is difficult and needs time therefore we must start doing this today.

Yes nino competitive market can regulate quantity and promote quality and today we must start to build such health care system where competitive market will play great role in delivering high class medical services to patients. I already agree that this won't be an ideal system but every normal democratic developed country manages health care system with this postulate. now what about 1 and 2 questions: 1. I agree that today residency programs aren't profitable beacause on market there are already many doctors, but this is formal quantity which has license and doesn't promote active clinical practice, e. g.: ministry of labour health and social affairs of georgia in 2011 published his strategy for health care system development where was written: in georgia doctor-patient ratio per 100,000 people is 462 physician. which means that we have aproximately twice more physicians than in european countries. you already mentioned on you review this fact. But there was also has written that if we compare this doctor-patient ratio to quantity of medical service which was promoted by doctor was very low, beacause there was written: "in georgia 1 doctor who works in hospital treats 2,6 patient during 1 month and 1 polyclinic doctor 3 patient during 1 day, this means that doctors load is low, than must be necessary for keeping medical skills and knowledge of doctors". but we must also foresee that at this time medical insurance had populations only 30% approximately (also these insured people also had problems with financing from insurance companies because these companies have created financing problems artificially and still creates because they recieve great profits with such things) and rest of the population payed for medical services from his own pocket therefore quantity of patients who addressed hospital sector was very low. Now quantity of insured people is more than was and quantity of patients who address hospital sector is high, there fore load of doctors have increased and soon, I think it will be in 1-2 years residency programs will be profitable for hospitals which can promote private residency programs, but cost will be high. 2. And what about private medical universities in which students will recieve high quality medical education, yes, of course, the price of education will be high, but there are also exists education credits for students that are issued by banks and will be available to all. However, these private universities are responsible for the high quality education of its graduates and they are also responsible or hiring there graduates in payed hospital sector and delivering residency programs. In concluasion these are the basic one of the main principles on which the high quality competitive market health care system should be developed. Create such system is difficult and needs time therefore we must start doing this today.
Guest - Irakli Khabeishvili on Sunday, 10 February 2013 19:32
Guest - Hans Gutbrod on Friday, 30 May 2014 15:52

I today heard that 5000 doctors are trained every year, but that only 5% will ever practice. Is that number correct? This puts a number on the mismatch, no. Imagine these people were trained as engineers.

I today heard that 5000 doctors are trained every year, but that only 5% will ever practice. Is that number correct? This puts a number on the mismatch, no. Imagine these people were trained as engineers.
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