Medicine, Outsourcing, and Cartels


Frank Levy, an economist at the Massachusetts Institute of Technology,… teamed up with two other MIT researchers, Ari Goelman and Kyoung Hee Yu, and they dug into the global radiology business. In the end, they were able to find exactly one company in India that was reading images from American patients. It employs three radiologists. There may be other such radiologists scattered around India, but Levy says, “I think 20 is an overestimate.” …

To practice medicine in this country, doctors are generally required to have done their training here. Otherwise, it is extremely difficult to be certified by a board of other doctors or be licensed by a state government. The three radiologists Mr. Levy found in Bangalore did their residencies at Baylor, Yale and the University of Massachusetts before returning home to India.

“No profession I know of has as much power to self-regulate as doctors do,” Mr. Levy said.

So even if the world’s most talented radiologist happened to have trained in India, there would be no test he could take to prove his mettle here. It’s as if the law required cars sold here to have been made by the graduates of an American high school.

From the paper by Levy and Goelman:

One could imagine international agreements that allowed radiologists credentialed in one country to practice in another. In fact, no such agreements exist for radiologists practicing in the United States, a reflection, in part, of U.S. doctors’ group power. U.S. radiologists’ power to restrict foreign competition is reinforced by malpractice insurance, Medicare reimbursement regulations, and in all likelihood, consumer preference. Software professionals have few of these protections and so face strong foreign competition. [Levy & Goelman (pdf)]

I believe it was Milton Friedman who described the AMA as the country’s most successful cartel.