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Probing the Costs of Medical Education: Are We Getting Our Money's Worth?


While the nation has been preoccupied with delivering better, cheaper health care, medical training programs producing tomorrow’s health leaders, have largely escaped public scrutiny.

That changed this summer with release of the provocative Institute of Medicine (IOM) report on graduate medical education. Federal financing of graduate medical education in the United States amounts to nearly $14 billion with little accounting for how residency programs spend the money, the authors found.

“The IOM didn’t question our ability to produce technically-adept physicians,” says Brad Poss, M.D., Associate Dean for Graduate Medical Education at University of Utah’s School of Medicine. “It questioned whether we’re preparing our residents and fellows to thrive in a field that is rapidly changing, whether we’re teaching them to work as teams and cater to an increasingly diverse population, and whether we’re producing enough primary care providers to meet the nation’s needs. The overarching question being: Are we getting our money’s worth?”

It’s a valid question – one that can’t be explored without knowing the costs, he says.

Very few health systems have a true handle on their costs. They can’t say with any specificity (down to the supplies used or time spent in the OR) what it costs to, for example, perform a knee replacement – much less what it costs to simultaneously teach a resident to do it.

University of Utah Health Care is one of a handful of health centers with a data system capable of tracking the cost and quality of care for every patient. Provider teams use the tool to devise ways to streamline and improve care.

Now those same data are being used to analyze the University’s residency programs.

“It’s a mammoth undertaking. Next we’ll tackle world peace,” jokes Poss, who is documenting his findings with the aid of Harvard Business School emeritus professor, Robert S. Kaplan, M.S., Ph.D. and University of Utah Health Sciences’ Sr. Vice President Vivian Lee, M.D., Ph.D., M.D.

The IOM report calls for keeping the current level of graduate medical education funding as is, while indexing it to inflation and slowly moving to a performance-based method for distributing the money.

“The authors know that if you really want to change the way physicians practice, you have to look at the whole continuum, from medical school to residencies and beyond. Academic medical centers are in the best position to do this,” Poss says.

There’s not a teaching hospital in the country that isn’t preoccupied with how to improve training. At University of Utah Health Care, interprofessional education simulations are used to teach providers to work as teams. Medical students with a passion for primary care are identified in their first year of school and given early exposure to the field. There exists a fund to repay school loans for students who choose primary care or who agree to work in rural, underserved parts of the state. A new dual MBA/M.D. degree is producing a corps of leaders who understand the business of health care and how to improve it.

These innovations come at some expense and justifying that expense requires measuring their outcomes and costs.

It’s a complicated undertaking because residents are trainees and employees. Doubtless, there are times when they cost the system and slow down our provision of medical care, and times when having an extra set of hands and eyes creates efficiencies and enables us to treat more patients, says Poss.

Graduate medical education is predominantly subsidized through Medicare, and there’s wide variation in how much each training hospital receives. The current distribution of funds disproportionately benefits larger, older facilities on the East coast, because these amounts were set two decades ago.

Due to a funding cap, fewer than half of the University of Utah’s 740 residents are funded through Medicare. Our residency program receives about $7 million annually in Direct Medical Education payments from Medicare, which covers about a third of the costs. The difference is supported with clinical revenue, some of it generated by residents.

“But how much? That’s what we’re trying to gauge. Do residents pay for themselves, and then some? What about the quality of care they deliver? What’s the value equation for GME?” says Poss.

The answers are likely to be different for pediatrics than for surgery or radiology, he says. “We intend to examine several fields, defining all residents’ activities, every point at which they touch patient care. Then we’ll compare their patient costs and outcomes to those of fully licensed staff working solo.”

It could be that academic medical centers subsidize trainees up front, but they end up enhancing the value of care we provide, especially senior residents and fellows. “We’ll know better when we see the data,” Poss says.

By: Kirsten Stewart

Kirsten Stewart is a senior writer for University of Utah Health Sciences