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Graduate Medical Education Management

Now that everyone in government is aggressively looking for cost savings, graduate medical education is again in the crosshairs. Just Google “Medicare and GME funding, ” and you will see a number of educated (and uneducated) pundits opining on the pros and cons of the current system of financing.

Medicare has recognized the costs of training physicians and the higher patient care costs of teaching hospitals since its creation. When Medicare switched to a Prospective Payment System, a complex set of formulas for payment were created; payment formulas have been adjusted downward for the past 25 years. The current Medicare funding methodology is well delineated in available on the AAMC website.

Approximately $3 billion a year is spent by Medicare to defray its share of the direct cost of training physicians. We have approximately 110, 000 residents and fellows currently in training, at least 10, 000 of whom are not supported by federal dollars. This represents approximately $25, 000 per year per trainee, which pays about one-third of first-year salary and benefits.

Medicare also allocates $6.5 billion to defray the higher patient care costs incurred by teaching hospitals because of more acutely ill patients and the services they require. These “indirect” costs of GME are inaccurately labeled as “education” payments but represent approximately 15 percent of Medicare reimbursement for patient care in teaching hospitals. You could add in the Medicaid GME support, which is state-specific and has been eliminated in many states given the current budget crisis, which would amount to about $100, 000 per year when compared to the number of trainees. Total costs of training are about $13 billion a year; total indirect costs of specialized care are about another $20 billion.

Lessons From Military Training Costs

These residents do not, overall, generate revenue; the educational and clinical environment necessary for training creates both inefficiencies and efficiencies in hospital operations, depending on the resident’s experience and skill level. Thus it is not unreasonable that the indirect support for the training environment is almost twice the direct support for salaries and benefits. If you research what it takes to train a soldier in the United States, you see that the fielding costs are far higher than the direct salary costs. This information is difficult to find.

For simplicity’s sake, assume that you can train a basic infantry soldier in one year at a minimum of $40, 000. Add the eight support staffers who provide the back office infrastructure so that soldier can be on the front lines and include the equipping, and fielding of each solider, US-issue Army recruit will cost over $250k. “Add in healthcare benefits, life-insurance and disability insurance, wear-and-tear of equipment, ammunition, moral and transportation costs and .”

A also found that calculating the real costs is incredibly complex and would require retrieving information from over a dozen US agencies.

Needed: More Doctors in America  — New York Times
The A.M.A. has fought diligently over the years to mitigate physician shortages on a number of fronts, including efforts to expand funding for graduate medical education and to advocate for more residency slots to train physicians in needed specialties ..

Opinion: Right On, IOM -- Reform Needed in GME  — MedPage Today
.. slamming U.S. medical educators for failing to meet minimal training standards for new physicians, which recommended a major overhaul of government funding for graduate medical education. In addition, NEJM published Perspectives pieces on the topic.

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