From The Lewin Group, Fairfax, Va. Mr Mechanic is now with the Massachusetts Hospital Association, Burlington.
Context.— As the managed care environment demands lower prices and a greater focus
on primary care, the high cost of teaching hospitals may adversely affect
their ability to carry out academic missions.
Objective.— To develop a national estimate of total inpatient hospital costs related
to graduate medical education (GME).
Design.— Using Medicare cost report data for fiscal year 1993, we developed a
series of regression models to analyze the relationship between inpatient
hospital costs per case and explanatory variables, such as case mix, wage
levels, local market characteristics, and teaching intensity (the ratio of
interns and residents to beds).
Setting and Participants.— A total of 4764 nonfederal, general acute care hospitals, including
1014 teaching hospitals.
Major Outcome Measures.— Actual direct GME hospital costs and estimated indirect GME-related
hospital costs based on the statistical relationship between teaching intensity
and inpatient costs per case.
Results.— In 1993, academic medical center (AMC) costs per case were 82.9% higher
than those for urban nonteaching hospitals (actual cost per case, $9901 vs
$5412, respectively). Non-AMC teaching hospital costs per case were 22.5%
higher than those for nonteaching hospitals (actual cost per differences in
case, $6630 vs $5412, respectively). After adjustment for case mix, wage levels,
and direct GME costs, AMCs were 44% more expensive and other teaching hospitals
were 14% more costly than nonteaching hospitals. The majority of this difference
is explained by teaching intensity. Total estimated US direct and indirect
GME-related costs were between $18.1 billion and $22.8 billion in 1997. These
estimates include some indirect costs, not directly educational in nature,
related to clinical research activities and specialized service capacity.
Conclusions.— The cost of teaching hospitals relative to their nonteaching counterparts
justifies concern about the potential financial impact of competitive markets
on academic missions. The 1997 GME-related cost estimates provide a starting
point as public funding mechanisms for academic missions are debated. The
efficiency of residency programs, their consistency with national health workforce
needs, financial benefits provided to teaching hospitals, and ability of AMCs
to maintain higher payment rates are also important considerations in determining
future levels of public financial support.
Mechanic R, Coleman K, Dobson A. Teaching Hospital CostsImplications for Academic Missions in a Competitive Market. JAMA. 1998;280(11):1015-1019. doi:10.1001/jama.280.11.1015