Money for nothing?: The net costs of medical training

A Masters Thesis, presented as part of the requirements for the award of a Research Masters Degree in Economics from NOVA – School of Business and Economics

The residency programme is the last stage of medical training, in which residents work under the supervision of a graduated physician. Hosting institutions often claim compensation for the training provided. According to our analysis, given the benefits arising from hosting residents, these institutions should provide medical training without additional compensations. We jointly consider two effects. Residents spend more resources in the production of health care, but at the same time they are a less expensive substitute to nurses and graduate physicians. We use the fact that residents, in Portugal, are centrally allocated to National Health Service hospitals to treat them as fixed exogenous production factors. The data comes from Portuguese hospitals and primary care centres. Even though teaching institutions have a higher cost level (2%), cost function estimates point to a small negative marginal impact of the residents in the cost structure of hospitals (-0.02%) and primary care centres (-1%).