Should One Have (Anti)Trust in the National Residency Matching Program

Zachary Dulabon, CLS ’23

In the past few years authorities have begun to take an increasingly hard look at labor market restrictions and the potential application of antitrust scrutiny.^[1] Recent scholarship has used the National Residency Matching Program  (NRMP) as an example of how sharing of salary information among employers may be used as a facilitating practice to fix wages in labor markets, such that this practice in other labor markets is particularly ripe for antitrust scrutiny.^[2]  It is high time that the statutory exemption from antitrust scrutiny that the NRPM enjoys be reconsidered, as medical residents should have a meaningful say in the compensation, hours, and conditions associated with their employment.  Allowing for antitrust challenges to the system could lead to reforms, with courts considering less restrictive alternatives to the proffered procompetitive justifications for the NRMP.^[3]

Residency refers to the period of three to seven years following graduation from medical school that prospective physicians spend working and training before they can become a licensed physician.^[4]  On the third Friday of every March, applicants to residency programs are notified of the residency program to which they are matched.  This annual process is the culmination of months of stress for applicants, as the opaque process leaves them in the dark about where and in what practice area they will be working for the next several years.^[5]  According to the 2021 Report from the Association of American Medical Colleges (AAMC), the average salary for first year residents was $59,279 in 2021 with relatively little variation across both specialty and geographical location.^[6]  When adjusted for inflation, there has been a small decrease in the real wage for residents since 1972, and when taking into account that residents routinely work more than eighty hours per week, the hourly wage may be below the relevant jurisdiction’s minimum.^[7]

The small spread in compensation is facilitated by information sharing among the programs and the restraints on individual negotiation imposed by the NRMP.^[8]  Participation in the NRMP is near compulsory.  Completion of a residency program accredited by the Accreditation Council for Graduate Medical Education (ACGME) is required to become a licensed physician, and nearly all spots in ACGME accredited programs are filled through the NRMP.^[9]  The NRMP uses a computer algorithm to match applicants and programs based upon the rank order lists of preferred programs and preferred applicants.^[10]  Applicants are prohibited from agreeing on any employment terms prior to the match and from discussing with other applicants how they plan to rank programs.  Critically, both applicants and programs are contractually bound to adhere to whatever match the algorithm produces.  These restraints effectively bar applicants from engaging in negotiations over the terms of employment with the program with which they are matched.^[11]

The horizontal nature of these restraints raise obvious antitrust questions, and, in 2002, a class-action suit was brought against the AAMC, NRMP, the ACGME, and participating residency programs on behalf of all individuals who had been employed in accredited residency programs.^[12]  The plaintiffs in Jung v. Association of American Medical Colleges asserted that the defendants had violated Section 1 of the Sherman Act through horizontal agreements to impose anti-competitive restraints on medical residency placement and hiring through the NPRM; amounting to a de facto prohibition on the ability of residents to engage in individual negotiations.^[13]  The plaintiffs alleged that these practices, along with information sharing, had resulted in the fixing of wages at a level below the competitive equilibrium.^[14]  In a February 2004 order addressing the Defendant’s motion to dismiss, the Court allowed the suit to proceed against several of the defendants and gave nodding approval to the plaintiff’s theories regarding the alleged agreement and the nature of the antitrust violation.  Before the suit could proceed further, Congress sprang into action by exempting the NRMP from antitrust law in the Pension Funding Equity Act of 2004.^[15] The statutory exemption led to the subsequent dismissal of the suit by the district court and denials of the plaintiff’s attempts to appeal the decision.^[16]  There have been no subsequent antitrust challenges alleging horizontal price fixing by residency programs.  This is because it would be nearly impossible for plaintiffs to prove an agreement without using participation in the NRMP as evidence.^[17]  The exploitation of residents during the COVID-19 pandemic in conjunction with unionization may be the impetus needed to either get residency programs to voluntarily allow for meaningful negotiation or for Congress to reconsider the antitrust exemption of the NRMP.^[18]

^[1] See Department of Justice Antitrust Division and Federal Trade Commission to Hold Workshop on Promoting Competition in Labor Markets, Dep’t of Just. (Oct. 27, 2021) https://www.justice.gov/opa/pr/department-justice-antitrust-division-and-federal-trade-commission-hold-workshop-promoting; DOJ Criminally Prosecutes First No-Poach Agreement on Heels of First Criminal Wage Fixing Indictment, Cooley (Jan. 12, 2021) https://www.cooley.com/news/insight/2021/2021-01-12-doj-criminally-prosecutes-first-no-poach-agreement.

^[2] See Richard A. Bales & Katherine V.W. Stone, The Invisible Web at Work: Artificial Intelligence and Electronic Surveillance in the Workplace, 41 Berkeley J. Emp. & Lab. L. 1, 38–39 (2020); Suresh Naidu et. al., Antitrust Remedies for Labor Market Power, 132 Harv. L. Rev. 536, 599–600 (2018).

^[3]  Melissa Mayeux, A Match Made in Antitrust Heaven? A Liberalistic Exploration of the Medical Match’s Antitrust Exemption, 13 Wash U. Jur. Rev. 121, 143–44 (2020).

^[4] Mayeux, supra note 3, at 121.

^[5] Id. at 126.

^[6] Ass’n Am. Med. Colls., Survey of Resident/Fellow Stipends and Benefits Report (2021),  https://www.aamc.org/media/9606/download. While wages have remained stagnant the average debt of medical school graduates is now over $200,000.  Furthermore, the COVID-19 pandemic further highlighted the significant demands placed upon residents in terms of both the type of care they provide and the hours they work. Clifford M. Marks, Make Residency—and Health Care—More Equitable by Scrapping the Match, Stat (Mar. 18, 2021), https://www.statnews.com/2021/03/18/make-residency-more-equitable-scrap-the-match/.

^[7] Mayeux, supra note 3, at 129.

^[8] See George L. Priest, Timing “Disturbances” in Labor Market Contracting: Roth’s Findings and the Effects of Labor Market Monopsony, 28 J. Lab. Econ. 447, 450–51 (2010).

^[9] The Match: Explaining the Application Process and Your Residency Results, St. Geo. U. (Mar. 17, 2021), https://www.sgu.edu/blog/medical/explaining-the-match-for-residency/.

^[10] Alvin E. Roth, The Origins, History, and Design of the Resident Match, 289 JAMA 909, 911 (2003).

^[11] Kristin Madison, The Residency Match: Competitive Restraints in an Imperfect World, 42 Hous. L. Rev. 759, 775–76 (2005).

^[12] Jung v. Ass’n of Am. Med. Colls., 300 F. Supp. 2d 119, 125 (D.D.C. 2004).

^[13] Id. at 125–27.

^[14] Id. at 166–69.

^[15]  A provision of the act, entitled “Confirmation of Antitrust Status of Graduate Medical Resident Matching programs states that “It shall not be unlawful under the antitrust laws to sponsor, conduct, or participate in a graduate medical education residency matching program… Evidence of any of the conduct described in the preceding sentence shall not be admissible in federal court to support any claim or action alleging a violation of the antitrust laws.” 15 U.S.C. § 37b(b)(2).

^[16] Jung v. Ass’n of Am. Med. Colleges, 339 F. Supp. 2d 26 (D.D.C. 2004); Jung v. Ass’n of Am. Med. Colls.,184 F. App’x 9 (D.C. Cir. 2006), cert. denied, 127 S. Ct. 1041 (2007).

^[17] Mayeux, supra note 3, at 145.

^[18] See Marks, supra note 6 (arguing that due to the significant debt burden and the increase in exploitation of residents by hospitals during COVD-19, the NRMP should be disbanded or subject to challenge).