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35 Law & Contemp. Probs. 267 (1970)
The A.M.A. and the Supply of Physicians

handle is hein.journals/lcp35 and id is 273 raw text is: THE A.M.A. AND THE SUPPLY OF PHYSICIANS*
RBEN A. Kssmi
This paper deals with two related topics: first, the role of the American Medical
Association (AMA) in determining the rate of output of physicians and, as a con-
sequence, the current stock of physicians, and, second, the role of organized medicine
-that is, the AMA-in circumscribing the choice of contractual relationships be-
tween physicians and their patients. Because it is my thesis that the famous Flexner
report of igio constituted the key to achieving control over the output of physicians
by the AMA, a substantial portion of this paper is devoted to this report and its
implications for understanding how our society produces physicians.
The history of public intervention in the market for medical services can be con-
veniently divided into two periods. The earlier begins with the publication of the
Flexner report and ends with the conclusion of World War II. During this period,
public intervention in the market for medical services had its principal effect on the
supply of physicians' services. Organized medicine-again, the AMA-, using powers
delegated by state governments, reduced the output of doctors by making the grad-
uates of some medical schools ineligible to be examined for licensure and by reducing
the output of schools that continued to produce eligible graduates. This led to the
demise of the schools producing ineligible graduates, since training doctors was their
raison d'tre. For the surviving schools, their costs of producing doctors increased
The later period, which begins with the end of World War II and continues to
the present moment, may be characterized as a period when governmental inter-
vention, through programs such as Kerr-Mills, Medicaid, and Medicare, operated to
increase the demand for the services of doctors.
The Flexner report has been hailed, even by critics of the AMA, as an action
of the AMA in the public interest. For example, Dr. John H. Knowles has said,
At the turn of the century, the AMA stood at the forefront of progressive
thinking and socially responsible action. Its members had been leaders in forming
0 Editor's Note: This article was prepared prior to the appearance of CARNEGm CoMmussIoN oN HIG R
EDucATION, REPORT ON MEDICAL EDUCATION (1970), which deals with some of the same subject matter
and reaches similar conclusions.
t-Professor of Business Economics, Graduate School of Business and Center for Health Administration
Studies, University of Chicago.
The following, who either were or are students at the Center for Health Administration Studies of the
University of Chicago, helped in the preparation of this paper: Charles Phelps, Duncan Neuhauser, Jerome
Hammerman, and Robert Lurie.

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