To receive a medical license in the United States, a doctor must complete a residency program at a hospital. Hospitals are not free to expand their residency programs in a particular medical specialty without approval from a residency review committee (RRC), which is made up of physicians in that specialty. A hospital that does not abide by the rulings of the RRC runs the risk of losing its accreditation from the Accreditation Council for Graduate Medical Education (ACGME). The RRCs and ACGME argue that this system ensures that residency programs do not expand to the point where they are not providing residents with high-quality training.
a. How does this system help protect consumers?
b. Is it possible that this system protects the financial interests of doctors more than the well-being of consumers? Briefly explain.
c. Discuss whether you consider this system to be good or bad. Is your conclusion an example of normative economics or of positive economics? Briefly explain.