FINANCIAL BARRIERS TO COMMUNITY-BASED TRAINING
There are several financial barriers to expanding community-based training. Ambulatory training tends to be less efficient and more faculty-intensive than inpatient training. In the inpatient setting, faculty can teach students at different educational levels during patient rounds. In the ambulatory setting, patients are available generally only for a short period of time. Space constraints and the focus on clinical productivity limit opportunities for teaching multiple students at the same time. In addition, physician revenues for ambulatory services tend to be lower than revenues for services furnished in the inpatient setting. Thus, patient care revenues generated when residents are involved in ambulatory care are generally less than when the care is in inpatient settings. Further, there is a distinction between revenues generated by a hospital-based clinic, which include Medicare (and in many States Medicaid) GME payments, and revenues generated by community clinics. The latter do not receive Medicare payments directly (unless they qualify under the BBA provision) and, in the case of community health centers, have few privately insured patients and high uncompensated costs.
Some studies have tried to measure the effect of teaching on the ambulatory site's productivity and net revenues. These studies are directed at the question of whether there are GME costs in ambulatory settings that are not recovered through patient care revenues. The findings suggest net costs are site-dependent and reflect factors such as the amount of time spent on teaching relative to patient care, patient flow and the efficiency of the practice, payer mix, the physicians' incomes and residents' salaries. The studies support a widespread belief that residency programs "break even." First year residents generate productivity losses. Second year residents generally have no effect on productivity. Net increases in productivity and revenues by the third year of residency training in ambulatory sites offset the first-year losses.
Another potential barrier is the impact resident rotations to community-based settings have on the primary training site and its teaching faculty. Many residents have significant teaching responsibilities for medical students that may make community-based rotations more difficult. It is possible this issue may diminish as medical students increasingly receive training in community settings. Residents also provide coverage for teaching physicians and contribute to the services billed by teaching physicians. Resident replacement costs can be a significant factor in decisions to rotate residents to non-hospital settings. The cost of replacing residents will depend on the relative cost of the staff that are replacing them, their productivity, and their ability to generate revenue.
SITE VISIT FINDINGS
As part of this study, site visits or telephone interviews were conducted with individuals involved with selected residency programs with community-based training sites. The interviews included both programs with long-standing community-based training sites and relatively new programs that are developing collaborative arrangements with managed care organizations or community providers in medically underserved areas. The interviews focused on the funding sources and arrangements used to support ambulatory training. The findings reflect the circumstances of the programs where the interviews were conducted. However, similar themes emerged from the interviews with different sites that are also consistent with other information on GME financing issues.
Key findings from the site visits are that financing arrangements for community-based training vary, reflect local circumstances, and frequently involve other interrelationships as well. An individual program may have arrangements for teaching with hospital-based clinics, hospital-operated and hospital-affiliated physician practices, community health centers, and individual clinician-physicians in private practice. The financing arrangements differ for each site depending on a number of factors, including payer mix and the intensity of the teaching effort. The financing issues for hospital-based clinics are quite different than those for community clinics and physician practices. The variety of arrangements suggests that decisions on how GME funds should be allocated among the various participants in a given program are best made at the local level. A single national policy that allocates funds between hospital and community-based sites using a pre-determined formula does not acknowledge the myriad of existing arrangements for community-based training that could be disrupted.
Most teaching in community-based sites occurs through volunteer faculty. During the interviews, some concern was expressed that clinician-educators in the community are becoming less willing to teach without compensation. Commonly cited reasons are competitive pressures for clinical productivity and the Medicare teaching physician rules. Specific policies may be needed to assure community physicians receive appropriate compensation for their teaching activities.
ALTERNATIVE MODELS FOR GME FINANCING REFORM
The changing health care environment and the uncertainties of continued reliance on Medicare, Medicaid and private pay revenues to fund GME have led COGME and others to conclude significant changes are needed in the way GME is financed. In addition to COGME, advocates of an all-payer fund include the Pew Health Professions Commission, the Commonwealth Fund's Taskforce on Academic Health Centers, and the 1997 Consensus Statement on the Physician Workforce by associations representing physicians and teaching institutions. Two bills were introduced in the 106th Congress that would provide all-payer funding for GME. Underlying the all-payer proposals is an assumption that GME is a public good that merits broad support. An alternative assumption made by the Medicare Payment Advisory Commission is that GME results in enhanced patient care that should be recognized in health care service-related payments to teaching hospitals.
POLICY CONSIDERATIONS FOR GME FUNDING
GME funding policies should meet the following objectives:
- Provide a stable funding mechanism that is responsive to the community yet consistent with the national workforce objectives;
- Enable health care institutions to compete on price and quality by subsidizing higher costs attributable to educational activities and uncompensated care without supporting inefficiencies;
- Create adequate support and appropriate incentives for developing community-based educational programs;
- Encourage effective and efficient educational models that promote improved ways to meet health care needs;
- Foster mechanisms that will stabilize the total number of physicians while improving the specialty and geographic distribution of the future physician workforce; and,
- Hold recipients of Federal and State funds accountable for producing needed public goods.
Educating physicians in the environment in which they will eventually practice requires expansion of residency training in community settings for most specialties. The BBA eliminated some disincentives for a hospital to rotate residents to non-hospital settings by paying IME for the resident's time in the non-hospital setting. However, the BBA limits on FTE resident counts do not benefit those hospitals that were already training residents in community-based settings. A modification in the law to count the residents who were in non-hospital settings in the 1996 base year would remedy this problem. The remaining disincentives to rotate residents to community-based settings are more difficult to resolve:
- As the recipient of the funds, the hospital is in the stronger bargaining position regarding who should bear the direct costs of training in the ambulatory setting.
- Hospital service demands compete with educational needs to rotate residents to community-based settings.
- The hospital's patient care needs and financial interests rather than physician workforce needs may determine the numbers and specialty mix of residents and residency programs.
- Accountability is difficult to establish because the program sponsor, rather than the hospital has the ultimate responsibility for the conduct of the educational program. In hospital-sponsored programs, this problem arises with respect to resident rotations to other hospitals.
Fundamental issues to consider in evaluating alternative models for distributing all-payer GME funds are:
- Who should receive payments directly from the fund;
- How the funds should be allocated among the receiving entities; and,
- How to establish accountability for the funds.
There are four basic models that potentially could be used to distribute GME funds. The differences between three models are based on which entities would receive payments directly from the fund: health care providers, educational institutions, or GME planning bodies. The fourth model would link payment to specific performance measures. The models are not mutually exclusive and a combination is needed to achieve the policy objectives for the GME fund.
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