GME – Part II

Bradley Flansbaum

Posted 10/16/11 on The Hospitalist Leader

My last post discussed the dollars allocated to GME funding, and the constituents involved in defending it.  The American Association of Medical Colleges (AAMC), AHA, and academic medical centers all are proponents of continued support.  Members of congress representing districts with training hospitals also endorse sustained flows of tax dollars into to these facilities for obvious reasons.

Below is a frequently distributed graph illustrating the actual and theoretical demands for future physician labor:

Given this shortfall in staff then, why would the government cut funding?

We work in hospitals and it is natural to safeguard services that are essential by our standards.  However, front line physicians have not mastered the actuarial sciences, and our assumptions regarding what is “vital” differs.  My objective however, is not to promote the projections of others—right or wrong, but alert you to alternate views so you may formulate a reasoned stance.

The following are not articles of faith, but sound assertions.  They are factors affecting trainee funding, often overlooked by clinicians, and rightfully, deserve attention when considering how we allocate those streams:

1. Hospitals receive IME dollars.  They swoosh in a collective pot, similar to a combined checking account in many households.  This pot finances facility operations, and CFO’s allocate these dollars to multiple service lines based on (their) perceived need.  Presumably, since trainees engage in all clinical matters related to these investments, the spending is justifiable.  Often, clinicians—focused on care and less on margins, and administrators—focused on margins and less on care, cannot agree on apportionments.  There is no coherent strategy, and money goes where returns are largest.

A menu of deliverables then, which provides the public with welfare enhancing care, does not come to fruition.  Hospitals use dollars inefficiently and likely focus on unessential service lines.  This status quo will not persist past the decade.

2. Like CHF or MI care, some hospitals outperform others.  This applies equally to training programs.  If training program “A” emphasizes high touch, low-tech care with satisfactory outcomes, and hospital “B” accentuates the reverse, do we reward them equally?  Affirmative, and so commonplace it is, we hardly wince.

However, some institutions do not groom trainees under the precepts of value-based care, no less grasp its significance.  Receipt of GME funding will no longer be certain, and its allotment will concentrate more on educational outcomes contingent on these tenets, and less on institutional cachet and political meddling.  Progressive in intent, make no mistake, these are challenging transformations, and will take years to hone.  Under scrutiny, program evaluation will likely undergo the same advancement (? regression) as clinical measures—that is, gamesmanship and playing to metrics.

3. Hospitals protect their training ranks.  As explained, the government provides (guaranteed) revenue for all accredited programs.  However, without a reasoned strategy rationalizing a primary care and specialty practice mix, CMS emphasizes some disciplines unnecessarily, to the detriment of others.  The consequence is the uncomfortable trimming of resident tracks.  Current workforce approaches are penny wise, dollar poor, and until CMS establishes an efficient service mix benchmark, blindly protecting positions is irresponsible. Expect a global cap on specialty training, financed with discretionary dollars in a more regulated environment.  Private spending will be a component of funding.

4. Although heretical to utter, it is possible aggregate workforce projections are incorrect, independent of specialty practice mix.  Consider the following:

a. There is good evidence that clinical outcomes are NOT solely linked to physician supply.

b. Health care regions throughout the U.S. are quite adaptable regarding physician allocations, with FTE factor variations of 2-3.  Shortage areas due exist however.

c. Substitutability of labor: are NP’s and PA’s value enhancing when practices utilize them appropriately?

d. With more attention to spending, utilization will decrease.  We cannot afford 100K plus new doctors without making great national sacrifice.  This is the easiest factor to understand.  We do not have the money, and testing and treatment volume will diminish.

As you see from the graphs below, OECD (a) populations vary greatly in their quotient of physicians per 1,000 population.  Also, consider the United States does not outclass other countries in most categories of performance.  Additionally, the number of physicians has increased since the introduction of Medicare (b), and not inadvertently, so has unlimited fee for service payment and specialization.  We produce far greater numbers of specialists (and fewer generalists) than most nations.

Table a: OECD Docs per 1000
Table b: Physician Growth

In summary, what is the proper physician ratio, and when is supply adequate?  It is an equilibrium between cost and quality.  Policy experts have viewpoints, but given our political climate, many will not see daylight.

There are many variables and data gaps.  Assumptions regarding the number of trainees necessary to produce a rational system, and in what disciplines, is a black box.  Commonsense dictates that overlying a dysfunctional, inefficient health system, is a dysfunctional, inefficient educational payment system.  Even with a cursory glance, that much is obvious.

Hospitals will get less and compete more.  Private payers and commercial insurance providers, among others, will need to step up—either through regulated or altruistic pressure.

At first blush, the consequences seem grim.  However, long-term, the adjustments will render training enhancements simultaneous with a more rationalized mix of physicians.  In the fuutre, a positive–for the public, and John Q. taxpayer.  It is harrowing for us.

MedPAC is correct in demanding more hospital transparency–correct accounting for IME spending is long in coming.   Workforce projections, unfortunately delayed with the stall of the National Health Care Workforce Commission—are short in coming and vitally necessary to guide spending policy.  With trainee spots currently capped (since 1997), increases in the number of US medical graduates, and international graduates pining for visas, we require guidance.  Given training lags, every year delayed generates an additional years’ worth of misallocated resources.

We are spending inefficiently in the GME arena.  To untangle that conundrum however, requires the tackling of greater quandaries organized medicine persistently ignores. The necessary systemic changes suggested above equals less doctors, less specialists, and radical change.  That fight is looming, and like other organized interests in healthcare, we fantasize another sector within healthcare will take the hit.  Do not hold your breath.

No words needed:

UPDATE: This out in Crain’s business today (10-17-11).  GNYHA is a powerful hospital association in NY.  Very powerful:

Hospitals: Save IME

Continuing its efforts to lobby the federal deficit reduction supercommittee, GNYHA is focusing on potential cuts to Medicare indirect medical education payments to hospitals. The trade group says slashing IME would force teaching hospitals to cut services, lay off employees and train fewer doctors. In a 13-page analysis, GNYHA lays out the importance of IME payments, a document that it is asking members to use to lobby the Obama administration, the New York delegation and members of the supercommittee. Some of the talking points: Medicare significantly underpays teaching hospitals for the direct costs of GME—such as salaries and fringe benefits for residents and supervising physicians, classroom space, and supplies—because of statutory caps put into effect when policymakers argued there were too many doctors, not too few. “These policies were specifically designed to discourage physician training and are highly inappropriate given the realities of the 21st century,” said GNYHA. Medicare’s share of direct GME costs is $5.4 billion, but it covers only $3.1 billion.

About Brian Klepper

Brian Klepper is a health care analyst and the Chief Development Officer of WeCare TLC onsite clinics.
This entry was posted in Analytics, Innovation, Market Dynamics, Medical Management, Physicians, Policy/Law/Regulation, Quality and tagged , , , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s