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August 26, 2020

Moving the Financing of Graduate Medical Education Into the 21st Century

Author Affiliations
  • 1Department of Medicine, Massachusetts General Hospital, Boston
  • 2Department of Emergency Medicine, Hospital of the University of Pennsylvania, Philadelphia
  • 3Leonard David Institute of Health Economics, Philadelphia, Pennsylvania
  • 4Harvard Kennedy School, Cambridge, Massachusetts
  • 5Harvard Business School, Cambridge, Massachusetts
JAMA. 2020;324(11):1035-1036. doi:10.1001/jama.2020.15480

In 2019, the Hahnemann Medical Center, a safety net hospital in Philadelphia, declared bankruptcy and a consortium of hospitals submitted a winning bid of $55 million for 550 government-funded residency slots. The auction challenges the narrative of teaching hospitals that training residents is a money-losing proposition and provides an opportunity to rethink the role of public financing of graduate medical education (GME) and its nearly 4-decades-old funding formulas.

Since 1983, GME has been financed by 2 funding streams: direct GME and indirect graduate medical education (IME) payments. Direct GME payments are based on the hospitals’ cost structure in 1984, the number of full-time equivalent residents in 1996, and Medicare’s share of total inpatient days at that hospital during the current period. IME payments increase Medicare payments to teaching hospitals and are intended to cover additional costs hospitals may incur as a result of training physicians, such as additional diagnostic tests or procedures ordered by residents. IME payments depend on a ratio of the number of residents to hospital beds as a proxy for a hospital’s teaching intensity. Between 2000 and 2015, average GME payments per resident increased nearly 20%, from a mean of $117 323 to $138 938, driven mainly by increases in IME reimbursements, which represent nearly three-fourths of total Medicare GME payments.1,2 In 2015, federal and state support for GME reached $16.3 billion (nearly $18 billion in 2020 dollars), representing $14.5 billion from the federal government and $1.8 billion from state Medicaid agencies.2

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    1 Comment for this article
    Contrast with NPs and PAs
    Lesley Shure, MD, DPM |
    Over the course of time covered in the article, I saw the rise of NPs and PAs in teaching hospitals and their clinics. With lesser degrees, training, skills, and responsibility, I understood they were paid more in income and benefits, including vacation time, and that they worked fewer hours with required lunch breaks and the like. I understood that they benefitted the hospital's bottom line, though not as much as the cheaper labor of residents. When resident work hours were limited, in the late 1990s, it was understood that we were to claim observance of this regulation on paper or risk the cancellation of our program and suddenly being cut out of our career, otherwise. With student loans on our backs, we worked the hours and kept our silence. Some teaching hospitals had some NPs and PAs before that, but the numbers increased as the rule made it harder to hide 100-120 and even 140-hour workweeks -- without overtime pay, comp time, or any other benefit.
    CONFLICT OF INTEREST: DPM residency, MD residency