Re: The History Of The AMA



100 Years of Medical Robbery
By Dale Steinreich
Posted on 6/10/2004


Our mentor has always been Hippocrates, not Adam Smith --President of
a County Medical Society at an AMA meeting quoted in the February 16,
1981 issue of the New York Times.
This weekend (June 11-13, 2004), the American Medical Association
(AMA) will celebrate the 100th anniversary of its Council on Medical
Education. The medical establishment understandably sees the formation
of the Council as a good thing. However, some patients aren't ready to
celebrate yet, and their instincts may be good.

History

The American Medical Association (AMA) was founded in 1847 around two
propositions: one, all doctors should have a "suitable education" and
two, a "uniform elevated standard of requirements for the degree of
M.D. should be adopted by all medical schools in the U.S." [1] In the
days of its founding AMA was much more open--at its conferences and in
its publications--about its real goal: building a government-enforced
monopoly for the purpose of dramatically increasing physician incomes.
It eventually succeeded, becoming the most formidable labor union on
the face of the earth.

AMA's initial drive to increase physician incomes was motivated by
increasing competition from homeopaths (AMA allopaths use treatments--
usually synthetic--that produce effects different from the diseases
being treated while homeopaths use treatments--usually natural--that
produce effects similar to those of the disease being treated). This
competition did serious damage to the incomes of AMA allopaths. In the
year before AMA's founding, the New York Journal of Medicine stated
that competition with homeopathy caused "a large pecuniary loss" to
allopaths. [2] In the same issue, the dean of the school of medicine
at the University of Michigan railed against competition because it
made treating sickness "arduous and un-remunerative." [3]

Apart from reversing rapidly declining incomes, allopaths also wanted
to rescue their public reputations, which quite reasonably suffered
given their proficiency in killing patients through such crude
practices as bloodletting ("exsanguination") or mercury injections
(poisoning). A few allopaths desired adulation normally reserved for
star athletes and actors. The Massachusetts Medical Society opined in
1848 that physicians should be "looked upon by the mass of mankind
with a veneration almost superstitious." [4]

Shut 'em Down

The curse of medical education is the excessive number of schools--
Abraham Flexner, 1910.

To accomplish the twin goals of artificially elevated incomes and
worship by patients, AMA formulated a two-pronged strategy for the
labor market for physicians. First, use the coercive power of the
state to limit the practices of physician competitors such as
homeopaths, pharmacists, midwives, nurses, and later, chiropractors.
[5] [6] Second, significantly restrict entrance to the profession by
restricting the number of approved medical schools in operation and
thus the number of students admitted to those approved schools yearly.
[7]

AMA created its Council on Medical Education in 1904 with the goal of
shutting down more than half of all medical schools in existence.
(This is the Council having its 100th anniversary celebrated in
Chicago this weekend.) In six years the Council managed to close down
35 schools and its secretary N.P. Colwell engineered what came to be
known as the Flexner Report of 1910. The Report was supposedly written
by Abraham Flexner, the former owner of a bankrupt prep school who was
neither a doctor nor a recognized authority on medical education.
Years later Flexner admitted that he knew little about medicine or how
to differentiate between different qualities of medical education.
Regardless, state medical boards used the Report as a basis for
closing 25 medical schools in three years and reducing the number of
students by 50% at remaining schools.

Since AMA's creation of the Council a century ago, the U.S. population
(75 million in 1900, 288 million in 2002) has increased in size by
284%, yet the number of medical schools has declined by 26% to 123.[8]
[9] In terms of admissions limits, the peak year for applicants at
U.S. schools was 1996 at 47,000 applications with a limit of 16,500
accepted. [10] This works out to roughly 64% of applications rejected.
[11] On a micro level, for the last six years the University of
Alabama (hardly a beacon of prestige in the medical discipline) has
averaged about 1,498 applicants per year with an average of about 194
accepted. This is about an 87% rejection rate. The sizes of the
entering classes have been of course even smaller, averaging about
161.

AMA would likely argue that there's nothing necessarily wrong with
very high rejection rates. This is correct, except for the fact that
these rates are being applied to pools of candidates who are cream-of-
the-crop in quality and have put themselves through a very costly
admissions process. [12] Current admissions practices could still be
justified by what Milton Friedman (1982, p. 153) refers to as a
"Cadillac standard." (Getting away from the pop-culture anachronisms
of the 1960s, let's say "Lexus standard" a la the government decides
that every driver today deserves nothing less than Lexus quality.)
Applied to health care, the benefits of a Lexus standard could
supposedly offset the costs of rejecting many ostensibly qualified
applicants.

Quality

The first problem with asserting the existence of a Lexus standard in
health care from very stringent admissions policies are the
contradictions introduced by current racial and sexual preferences.
The Center for Equal Opportunity found that at a sample of six medical
schools, more than 3,500 white and Asian candidates were not admitted
in spite of having higher undergraduate grades and MCAT scores than
Hispanic and African-American applicants who were admitted in their
place. The Center's study didn't touch on sex discrimination but
undergraduate science professors indicate that it clearly exists as
well. [13]

The second blowout on our shiny Lexus would be the number of
unnecessary/questionable procedures performed on patients every year.
Ex-surgeon Julian Whitaker (1995) tirelessly rails against the
excesses of angioplasty (PTCA), atherectomy (directional and
rotational), and coronary bypass. [14] Whitaker states that, with few
exceptions, all three procedures for heart-disease patients have been
empirically shown to be utter failures in terms of solving short-term
problems without creating long-term problems which are much worse.

The first complete study of bypass effectiveness was the Veterans
Administration Cooperative Study [15]. Between 286 patients who
received bypass surgery and 310 who did not, the survival rate at the
end of 3 years was 88% for the bypass group and 87% for the control
group. In an 8-year follow-up to a second VACS study [16] among 181
low-risk patients, the bypass group had a much higher cumulative
mortality rate (31.2%) compared to the non-surgery group (16.8%). This
was among a group of low-risk patients to begin with.

A Rand study [17] revealed that nearly 50% of bypass operations are
unnecessary. Whitaker [18] notes that the number of bypass surgeries
since this Rand study, which should have plummeted, has increased by
more than 50%. While the death rate from heart disease declined from
355 per 100,000 in 1950 to 289 per 100,000 in 1990, the amount of
bypass operations jumped from 21,000 in 1971 to 407,000 in 1991, a
increase of more than 1,838%. [19] Whitaker states that laypersons are
quick to attribute increases in life expectancy to surgery, but the
credit clearly belongs to greater exercise and healthier diets.

Other examples:

180 patients with osteoarthritis of the knee were given arthroscopic
débridement, arthroscopic lavage, or placebo surgery (skin incisions
and simulated débridement). In two years of follow-up the surgery
group reported no less pain or impaired joint function than the
placebo group. Six placebo patients liked their fake surgery so much
they wanted it performed on their other knee.[20] For other
arthroscopies, knee surgeon Ronald Grelsamer, M.D., states that at
some hospitals doctors are performing as many as "ten a week [where]
nine are unnecessary." [21]
Jens Ivar Brox, M.D., in a Norwegian study compared the effects of
spinal fusion surgery with non-surgical therapy for 64 patients with
chronic lower-back pain and disc degeneration. The non-surgical
treatment was as effective as surgery, but at a fraction of the cost
with no complications.[22] With regard to fusions for lower back pain,
Nortin Halder M.D., stated, "If this were a pill and I used it, I
would probably lose my license and go to jail." Nevertheless, there
are about 125,000 fusion surgeries a year at $30,000 each bringing
back surgeons a hefty yearly median income of $545,000.[23]
Stuart Spechler, M.D., studied 247 patients with severe acid reflux in
the 1980s and found that surgery was significantly more effective in
improving symptoms than lifestyle changes and drugs. [24] These
results reversed in the 1990s after the introduction of proton pump
inhibitors (today's Prevacid, Nexium). About 62% of surgery patients
still needed drugs to control reflux and had no less incidences of
esophageal cancer than non-surgery patients. [25] Mayo Clinic's Yvonne
Romero, M.D., is even more pessimistic, pointing out that in countries
where surgery has been performed longer than the U.S. (e.g., Brazil),
as much as 85% of surgeries fail after 15 years. Says Spechler, "When
you look at data it is hard not to be biased against surgery."
Nevertheless, about 65,000 Nissen fundoplications are performed each
year at a price of $10,000 each. [26]
Hysterectomy (uterus removal) is the probably the best example of an
often unnecessary surgery. While a necessity for uterine cancer
patients, gynecologist Michael Broder, M.D., found that in a sample of
about 500 women, about 70 shouldn't have received the surgery for any
reason whatsoever and about 350 hysterectomies had been performed
without any diagnostic tests to determine if the surgery was
appropriate in the first place. About 70 women with benign fibroids
had their uteruses removed without first trying drugs or other
treatments that could have been effective. [27]

A final challenge to the Lexus standard is the number of accidental
deaths occurring in U.S. hospitals every year. Harvard University's
Lucian Leape estimated that there are approximately 120,000 accidental
deaths and 1,000,000 injuries in U.S. hospitals every year. [28] To
understand what staggering figures these are, imagine a Boeing 777-200
with its maximum of 328 passengers crashing every day for an entire
year with no survivors. This would add up to 119,720 deaths, still not
as many as are killed through medical error in hospitals every year.
UCLA Professor of Medicine Robert Brook, M.D., told the Associated
Press, "The bottom line is we have a system that is terribly out of
control. It's really a joke to worry about the occasional plane that
goes down when we have thousands of people who are killed in hospitals
every year." [29]

Certainly not all accidental hospital deaths can be attributed to
institutionalized AMA mischief. Errors by nurses, pharmacists, and
sleep-deprived residents play a role as well. However, there's also no
doubt that AMA-backed restrictions against greater specialization have
helped wreak their havoc over time as well. [30] A later study by
Leape [31] showed that just the presence of a pharmacist on physician
rounds reduced adverse drug reactions from prescribing errors by 66%.
[32] [33] Despite some shortcomings, the U.S. system still has some of
the finest physicians, surgeons, research, and facilities in the
world. However, the best aspects of the system are due to whatever
vestiges of market freedom still survive, not some illusory Lexus
standard supposedly created by strict statist controls. [34]

The Exceptional World of the Modern Physician


AMA has built an impressive edifice, one that has completely insulated
physicians from recessionary ("cyclical") and until recently,
technological ("structural") unemployment. While decade in, decade
out, recessions, depressions, consolidations, and (recently)
outsourcing have dislocated millions of blue-collar, engineering,
computer programming, and middle management employees from jobs and
forced permanent career changes, physicians as a class have been
almost completely immune. Unlike workers in most other industries, a
competent, licensed physician with a clean record who remains
unemployed despite months and months of search for work is unheard of
in the U.S. [35]

Restricting labor supply has markedly boosted incomes. Median yearly
salaries for primary-care physicians are $153,000, for specialists
$275,000. [36] Another more recent survey across many specialties and
3+ years of experience makes hospitalists relative paupers of the
profession at $172,000 and spine surgeons at the high end raking in
$670,000.

Restricted supply aside, there's certainly nothing wrong with
competent physicians becoming fabulously wealthy at their craft and
nothing about a free market that would ever preclude such. Indeed one
of the worst transgressions of current system is allowing the most
rude, incompetent, and stupid physicians (e.g., Clinton Surgeon
General Jocelyn Elders who wanted public schools to teach first
graders how to masturbate) to earn incomes relatively close to
competent ones.

Of course life is not a complete bowl of cherries for all physicians.
Malpractice insurance premiums for some Ob/Gyns are now running as
high as $160,000 per year. Some Ob/Gyns have been lucky to have their
hospitals pick up the tab. Others have had to move to different
states. No one would disagree with AMA that paying $160,000 in
insurance premiums is outrageous.

The problem is that AMA's restriction of labor supply has made the
problem worse at the margin than it otherwise would be. Plus, exactly
how does a thoroughly rent-seeking organization such as AMA lecture
malpractice attorneys on the adverse consequences of wealth
redistribution? It can't with any convincing credibility, thus it has
no effective answer to some in the far Left either, who want to
conscript physicians to provide infinite "free" care to them because
they claim they have a "right" to it.

Robots to the Rescue?

Two recent articles on the Web show two divergent paths the U.S.
health care system can take. A recent story on MSNBC reflects the
worsening status quo. It was a report on a new robot ("robo-doc") that
roams hospital halls visiting patients in place of a physician (see
photos). The robot is controlled from remote location by a physician.
The device is an obvious implicit attempt to cope with the artificial
scarcity of physicians. Most of the patients, instead of laughing the
pathetic robot out of their wing, thought the idea was jim dandy.
Presumably they couldn't explain how the armless robot would
resuscitate them if their conditions took a sudden turn for the worse.

On the other hand, the great Ron Paul, M.D., has recently discussed
the trend of cash-only practices which reject all insurance as well as
Medicaid and Medicare. He profiles a Robert Berry, M.D., who charges
only $35 for routine visits. (This is about half to a third of what
I'm typically charged--with insurance at that--and yet my current
doctor, whose income in one year exceeds what I make in five, is
moving to another practice because she wants more money.) Cash-only
practices of course do nothing to address physician supply, but some
relief is better than none, especially when living in a clueless
American public that thinks robo-docs represent actual progress in
medicine.

A happy 100th birthday to the Council on Medical Education...and for
the sake of all our health, hopefully not too many more.

________________________

Dale Steinreich, Ph.D., is an adjunct scholar of the Mises Institute,
and contributor to AgainstTheCrowd.com. The author is indebted to
Llewellyn H. Rockwell, Jr., for his incisive synopsis of AMA history
in the June 1994 issue of Chronicles. Comments by economists L. Aubrey
Drewry, Jr., Ph.D., Paul A. Cleveland, Ph.D., and Richard O. Beil,
Ph.D., were of great value. dsteinreich@xxxxxxxx Comment on the Blog.

References
Friedman, Milton. Capitalism and Freedom. University of Chicago, 1982.
Langreth, Robert. "Is Elective Surgery Overdone?" Forbes. 27 Oct.
2003, 247+.
Rockwell, Llewellyn H., Jr. "Medical Control, Medical Corruption."
Chronicles. June 1994, p. 17-20.
Starr, Paul. The Social Transformation of American Medicine. Basic,
1982.
Tully, Shawn. "America's Painful Doctor Shortage." Fortune 16 Nov.
1992, p. 104.
Whitaker, Julian. Is Heart Surgery Necessary? What Your Doctor Won't
Tell You. Regnery, 1995.
Wolinsky, Howard and Tom Brune. The Serpent on the Staff: The
Unhealthy Politics of the American Medical Association. Tarcher
Putnam, 1994.

Notes
[1] Rockwell, p.17.
[2] ibid, p. 18.
[3] ibid, p. 18.
[4] ibid, p. 18.
[5] Chiropractors filed an antitrust suit against AMA and eventually
won on August 24, 1987. AMA had dismissed chiropractic as quackery
since at least 1925 and began an organized effort to shut it down in
1962. See Wolinsky and Brune, pp. 124, 139-40.
[6] Starr (1982) asserts that it is a myth that allopaths achieved
dominance by crushing homeopaths and eclectics. He claims that once
homeopaths and eclectics joined forces with allopaths for occupational
licensing and thus began to blur their distinctions, public approval
of homeopaths and eclectics died.
[7] Friedman (1982, p. 152): "To return to medicine, it is the
provision about graduation from approved schools that is the most
important source of professional control over entry. The profession
has used this control to limit numbers." Blocking entry is much more
effective than just raising the real price of a medical license; the
"far more important" measure is "establishing standards for admission
and licensure that make entry so difficult as to discourage young
people from ever trying to get admission" (p. 151).
[8] This actually understates continual declines. Starr (1982, p. 421)
reports that in 1965 only 88 schools existed meaning that the Council
almost reached its goal of a more than 50% closure of schools.
[9] The 123 AAMC listed schools include the newest at Florida State
University, but not the three med schools in Puerto Rico. Unlike
Puerto Rico, 19 states are limited to just one school.
[10] Assuming 125 schools at the time, including those in Puerto Rico.
This works out to about 132 new admissions per school.
[11] Source: John Ross, President of Ross University Medical School in
Domenica, 1997 interview on Westwood One's Jim Bohannon Show. Here for
recent stats.
[12] The admissions process involves sizable application fees and the
Medical College Admission Test (MCAT). MCAT can, with practically no
exceptions, only be taken twice.
[13] One chemistry instructor at the University of Alabama told me
strictly off the record, "If you're a white male who is 27 (not the
usual 21-23), you're an old man as far as med-school admissions goes.
They won't take you regardless of how good your GPA or MCAT looks. You
have to go to a Caribbean school or forget medicine as a career. For
white and especially black women, you can not only have mediocre
grades and a mediocre MCAT, but be as old as 35 and still have a
pretty good chance of getting into a U.S. school. I've seen it again
and again."
[14] Angioplasty involves inflating a small catheter balloon to clear
blocked arteries, atherectomy clears blockages with blades or burr
tips in lieu of a balloon.
[15] New England Journal of Medicine 311 (1984): 1333-1339.
[16] American Journal of Cardiology 74 (September 1, 1994): 454-58.
[17] Journal of the American Medical Association 260, no. 4 (July
22/29, 1988).
[18] p. 26.
[19] Whitaker, p. 71.
[20] New England Journal of Medicine, July 11, 2002
[21] Langreth, p. 248.
[22] Annual European Congress of Rheumatology, June 20, 2003
[23] Langreth, p. 248.
[24] New England Journal of Medicine, March 19, 1992
[25] Journal of the American Medical Association 2001; 285: 2331-2338.
[26] Langreth, p. 250, 254.
[27] Obstetrics and Gynecology 95:199, 2000.
[28] Leape's estimates are variously cited as running the gamut from
44,000 to 100,000 to 180,000.
[29] These estimates would ironically make hospitals America's
deadliest industry. Imagine the government inquisition that would move
against the airlines and Boeing if jet travel were as unsafe as
hospitals.
[30] Nurses' duties are heavily restricted in many jurisdictions by
state-level acts. By some estimates (Wolinsky, p. 142) nurses could
provide up to 80% of the care now delivered by primary-care physicians
at about 40% of the cost.
[31] Journal of the American Medical Association, July 1999
[32] Despite pharmacists being much more knowledgeable than M.D.s
about drugs, AMA not only stands in the way of pharmacists prescribing
drugs but destroyed their ability to write refills (Rockwell, p. 20).
[33] Another worthy topic for Leape might be a study of all the people
who unnecessarily die because they don't get to the hospital in time.
The estimates might dwarf Leape's alarming ones on errors. Severe
restriction of the number of hospitals in the U.S. and the workings of
the corrupt hospital cartel is material for another long and
depressing article.
[34] One final possible nail in the allopathic coffin is a fascinating
report in the U.K. Independent of the claims by Glaxo Smith Kline
geneticist Alan Roses, M.D. that "most [prescription] drugs do not
work for most patients."
[35] Some frictional unemployment certainly exists (e.g., after med-
school graduation). There has also been a bit of outsourcing in
radiology, although that will come to a quick end if the American
College of Radiology gets its way. What does not exist is a "shortage"
of physicians despite ample assertions to the contrary (see Tully). A
shortage exists in the case of a wage ceiling, where market wages are
fixed at a below-equilibrium level. First, physician wages aren't
fixed under equilibrium, and they're anything but too low.
[36] Langreth, p. 254.




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