Does It Cost More to Train Residents or to Replace Them?

Does It Cost More to Train Residents or to Replace Them?: A Look at the Costs and Benefits of Operating Graduate Medical Education Programs

Barbara O. Wynn
Robert Smalley
Kristina M. Cordasco
Copyright Date: 2013
Published by: RAND Corporation
Pages: 93
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  • Book Info
    Does It Cost More to Train Residents or to Replace Them?
    Book Description:

    The policy issue underlying this study is whether Medicare support for graduate medical education should be restructured to differentiate between self-sustaining or less costly programs and those that are more costly to the sponsoring institution and its educational partners. The authors used literature, interviews, and administrative data to explore how the financial impact of operating residency training programs might differ by specialty.

    eISBN: 978-0-8330-8299-2
    Subjects: Health Sciences

Table of Contents

  1. Front Matter
    (pp. i-ii)
  2. Preface
    (pp. iii-iv)
  3. Abstract
    (pp. v-v)
  4. Table of Contents
    (pp. vi-vii)
  5. Figures
    (pp. viii-viii)
  6. Tables
    (pp. ix-ix)
  7. Summary
    (pp. x-xvi)
  8. Acknowledgments
    (pp. xvii-xvii)
  9. Abbreviations
    (pp. xviii-xix)
  10. 1. Introduction
    (pp. 1-7)

    Graduate medical education (GME) is clinical training provided to graduates from schools of medicine, osteopathy, dentistry, and podiatry. GME is provided in residency programs approved by nongovernmental accrediting organizations for the various disciplines and specialties. Residency programs are typically sponsored by a teaching hospital, a medical school, or an educational consortium. Clinical training occurs primarily in teaching hospitals, where residents provide patient care under the supervision of an attending physician and may instruct medical and allied health students or conduct clinical research as part of their training program.

    A number of factors influence the decisions that a sponsoring institution makes...

  11. 2. Direct GME Costs
    (pp. 8-17)

    Direct GME costs are the resources and infrastructure directly attributable to GME activities. These costs fall into three basic categories: (1) resident salaries and fringe benefits, (2) physician compensation for GME-related activities, and (3) other administrative support and infrastructure costs directly attributable to GME activities at the program and institutional level. Table A.1 in Appendix A provides a summary of total GME costs per resident that we derived from Medicare cost report data for 2008. The median GME cost per full-time equivalent (FTE) resident across teaching hospitals was $134,803. The table includes only costs that were incurred by the teaching...

  12. 3. Indirect Effects of Operating Residency Training Programs
    (pp. 18-33)

    Because most GME occurs in joint production with patient care in clinical settings, an assessment of GME costs should consider the impacts of residency training on patient care costs and revenues. These financial impacts can be on hospitals, attending physicians, and community-based physicians. Some effects, such as the indirect effect of residency training on hospital inpatient costs, are established in the literature as increasing patient care costs. However, other indirect effects could be either a cost or benefit. For example, residents providing services under the supervision of an attending physician may increase the attending physician’s productivity by providing complementary services...

  13. 4. GME Direct Benefits
    (pp. 34-43)

    In this section, we discuss the major sources of funds that relate directly to GME activities: Medicare and Medicaid GME-related revenues and HRSA grant programs.

    Medicare is the largest explicit source of funding for GME. Medicare’s contribution is allocated to hospitals through two formula-driven payments related to inpatient hospital care and number of residents: direct graduate medical education (DGME) and indirect medical education (IME). Medicare’s DGME payments are intended to cover Medicare’s share of the direct costs of residency training and apply to both acute care and specialty hospitals (children’s, cancer, inpatient psychiatric, inpatient rehabilitation, and long-term care). Medicare’s IME...

  14. 5. Summary of Findings and Discussion
    (pp. 44-49)

    Determining how different types of GME programs affect the financial performance of sponsoring institutions and their educational partners is a complex undertaking. Costs are borne by multiple teaching hospitals and community providers and by medical schools that receive support for those costs via fund transfers from hospitals and faculty practice plans. Most funds supporting GME activities—patient revenues—are not restricted to being used to support GME and support patient care and other provider missions as well. Greater consistency in hospital cost reporting for such costs as malpractice insurance and contract attending physician compensation would increase comparability across teaching institutions,...

  15. Appendix A. 2008 Direct GME Costs, Payments, and Sources of Funding
    (pp. 50-55)
  16. Appendix B. Faculty-to-Resident Ratios and Time Spent in GME-Related Activities
    (pp. 56-60)
  17. Appendix C. Analyses of California OSHPD Data
    (pp. 61-64)
  18. Appendix D. Medicaid 2009 GME Payments
    (pp. 65-66)
  19. References
    (pp. 67-74)