Editor’s note: The American College of Surgeons (ACS) Board of Governors has conducted an annual survey of its members for more than 20 years. The purpose of the survey is to provide a means of communicating the Governors’ concerns to the ACS leadership. The 2015 ACS Governors Survey, which was conducted in August 2015, had a 76.2 percent (208/273) response rate.
The following article focuses on funding for graduate medical education (GME) and is the last in a series of three feature articles highlighting key issues addressed in the Governors Survey. The previous articles were published in the April and May issues of the Bulletin and centered on the electronic health record and the Affordable Care Act, respectively.
The 2015 Governors Survey provided data on the Governors’ age range, surgical practice setting, and the type or size of the hospitals where they work. Through a deeper analysis, answers to survey questions were linked to these different demographic categories. Most ACS Governors are 51–65 years old (see Figure 1), and most (52 percent) are in full-time academic practice (see Figure 2). Of the remaining survey respondents, 28 percent are in private practice; 16 percent are full-time, hospital-employed physicians; and 4 percent work for a government agency. The survey also highlighted the fact that ACS Governors work in varying types and sizes of hospitals—most of the Governors (62 percent) work in academic, quaternary, or tertiary facilities; of the remaining Governors, most are at large hospitals, rather than small hospitals (see Figure 3).
Figure 1. Age range of ACS Governors
Figure 2. Practice setting
Figure 3. Type or size of hospital
Given these practice types and institutional affiliations, it is easy to understand why GME funding is a topic of considerable interest to members of the ACS Board of Governors. But ultimately, GME affects all of us, as it is used to train the surgeons who will be providing care to surgical patients in the years to come.
GME funding: How the system works
The U.S. physician workforce has always been considered a “public good.” A goal of the GME system is to train the proper number and type of physicians who can meet the health care needs of our nation. In training future physicians, however, teaching hospitals incur costs beyond those associated with providing patient care. To address this situation, the Social Security Amendments of 1965 established the Medicare and Medicaid programs, including provisions that mandate federal funding for GME. Due to the public policy-based nature of these monetary provisions, any changes in public financing of GME requires a change in legislation. The most significant piece of legislation affecting GME was the Balanced Budget Act (BBA) of 1997, which capped the number of residency training positions that Medicare would fund at approximately 100,000.1
Current public financing for GME is approximately $15 billion per year. This money comes from multiple sources, with Medicare contributing 62.5 percent ($9.7 billion), Medicaid contributing 25.2 percent ($3.9 billion), the U.S. Department of Veterans Affairs contributing 9.3 percent ($1.437 billion), and the U.S. Health Resources & Services Administration contributing 3.0 percent ($464 million).2
Medicare currently makes payments to teaching hospitals through direct graduate medical education (DGME) payments and indirect medical education (IME) payments. DGME payments, which comprise 29 percent ($2.7 billion) of Medicare’s contribution to GME, are paid out on a per resident basis to cover costs, such as residents’ stipends and benefits, and compensation to teaching faculty.3
IME payments comprise 71 percent ($6.7 billion) of Medicare’s contribution to GME and cover additional patient care costs due to the unique teaching hospital mission of education and research.3 The current system rewards teaching hospitals based on the number of residents they train and the percentage of publicly funded patients whom they treat.
Can the GME system produce enough physicians?
GME is a complex issue that affects the gamut of health care challenges. At present, many health policy experts are concerned with whether the GME system can continue to produce enough physicians to meet the evolving health care needs of U.S. patients. A study by the Association of American Medical Colleges projects a deficit of 46,100 to 90,400 physicians by 2025 due to an aging population requiring more care, physician retirements, and the Affordable Care Act potentially introducing 32 million more patients into the health care system.4 To counteract this projected deficit of physicians, the number of domestic medical school graduates has increased recently. However, this uptick in medical school graduates has added to the complexity of the GME conundrum.
The BBA of 1997 was enacted in an era when health policy experts were projecting an oversupply of physicians. Passing legislation to change the BBA’s cap on residency positions has proven difficult. Because of the increased number of domestic medical school graduates and the capped number of residency positions available, it has become more difficult for medical students to be accepted into the residency programs of their choice. When Governors were asked whether the current level of GME funding should change, 80 percent responded that GME funding should be increased, 19 percent responded that GME funding should remain at the same level, and 1 percent responded that GME funding should be decreased (see Figure 4). Responses to this question did not vary by age of the Governor. And—although one might anticipate that Governors who work in academic facilities or larger hospitals might be more likely to support an increase in GME funding—the answers did not vary based on practice setting (academic versus employed physician versus private practice) or type or size of the hospital where the Governor works.
Figure 4. Level of GME funding
Alternative sources of GME funding
For the GME system to be able to produce more physicians to meet U.S. workforce needs, some policymakers and members of the surgical education community have suggested that alternative sources of funding should be developed. New financing mechanisms are necessary for several reasons. First, existing legislation limits the amount of funding that Medicare can contribute to GME. Second, Medicaid contributions to GME are not required under federal law; as a result, some states that are experiencing budgetary issues are choosing to stop making Medicaid payments to GME programs.
The ACS Governors were asked to select options for alternative sources for additional GME funding (see Table 1). Their responses did not vary by age or practice setting, although Governors in smaller hospitals were more likely to favor the option of “regional sponsorship for a resident’s commitment to practice in the region for a period of time” in comparison with Governors in larger hospitals or academic institutions.
Table 1. Alternative sources for additional GME funding
|Medical insurance companies||
|Regional sponsorship for a resident’s commitment to practice in the region for a period of time||
|Large hospital systems||
|Military support for a resident’s commitment to serve as a physician in the military for a period of time||
|Finances from the general fund of the teaching hospital that sponsors the residency program||
Some states are beginning to develop alternative sources of supplemental GME funding. Although existing teaching hospitals have not received additional funds to support new residency positions since the BBA was enacted, residency programs at new teaching hospitals may receive additional DGME and IME funding if certain Medicare requirements are met.
Georgia, for example, has actively sought to increase the number of new residency positions available in the state by helping new teaching hospitals to develop training programs and by contributing to the start-up costs of these programs. These expenditures can be significant. Start-up costs are estimated to be $3.88 million for one hospital with five new residency programs. In 2012, the Georgia State Legislature proposed legislation to fund the start-up costs for new teaching hospitals, with the hospital required to match the funding on a 1:1 basis starting in fiscal year (FY) 2013. As of May 2015, 11 new teaching hospitals have been developed to establish 415 new residency positions in the state.5
Meeting U.S. physician workforce needs
The amount of financial support that the federal government provides for physician training exceeds the total for any other profession. Concerns have been raised that, despite the billions of dollars of public funds that have been invested in GME since 1965, the current GME system may be ineffective in meeting U.S. physician workforce needs. An Institute of Medicine (now the Health and Medicine Division of the National Academies of Science, Engineering, and Medicine) report from July 2014 indicates, “There is a striking absence of transparency and accountability in the GME financing system for producing the types of physicians that the nation needs.”2
The Medicare Payment Advisory Commission (MedPAC) is an independent, nonpartisan agency that advises Congress on overall Medicare spending. A February 2015 MedPAC report on GME stated that only 46 percent of Medicare IME payments were empirically justified.6 In another example of the federal government questioning the value of spending for GME funding, President Obama’s FY 2016 budget called for reducing the IME adjustment by 10 percent.7
If GME funding were to be cut, it would be important to ensure that the specialty mix of physicians produced by the GME system would be compatible with the nation’s health care needs. Governors were asked whether they felt the ACS should function in an advisory capacity to determine which surgical specialties or subspecialties are most needed, so that if GME funding is decreased, decisions could be made to preserve residency positions in those disciplines. Of the respondents surveyed, 79 percent either agreed or strongly agreed that the ACS should play this role. Only 10 percent of the respondents either disagreed or strongly disagreed that the ACS should act in this capacity, and 11 percent were neutral on this issue (see Figure 5). Answers to this question did not vary based on age, type of surgical practice setting, or type or size of hospital.
Figure 5. Preservation of residency programs based on need of surgical specialty
Another goal of GME should be to produce a physician workforce that meets the health care needs of all areas or regions of the U.S. Some residency programs are more likely than others to produce physicians who practice in areas of greater need. The data show that many physicians will ultimately practice in an area near where they completed their residency training. In a report from the Association of American Medical Colleges, 52.9 percent of individuals who completed residency training in an Accreditation Council for Graduate Medical Education program from 2005 through 2014 were shown to be practicing in the state where they completed their residency training.8
If GME funding were to decrease nationwide, one could argue that residency programs that produce physicians who more frequently practice in areas of need should be preserved. Governors were asked whether they felt that the ACS should function in an advisory role to determine which areas or regions need surgeons more than others, so that if GME funding is decreased, it would be possible to preserve residency positions in areas of greater need (see Figure 6). Of the respondents surveyed, 63 percent said they agreed or strongly agreed that the ACS should function in an advisory role, 21 percent were neutral on the issue, and 16 percent either disagreed or strongly disagreed that the ACS should function in an advisory role. Answers were invariable based on age, practice setting, or type or size of hospital.
Figure 6. Preservation of residency programs based on need
Importance as a legislative issue
Any significant changes in the current GME funding system will require changes in legislation. Governors were asked how high on its list of priorities the ACS Division of Advocacy and Health Policy should place GME. Of the respondents, 45 percent listed GME as an extremely high priority, 40 percent as a high priority, and 13 percent as a moderate priority. Only 2 percent of the respondents indicated that GME was a low priority, and none responded that it was a very low priority (see Figure 7).
Figure 7. Legislative priority level for GME funding
Answers to the question of how the ACS should prioritize GME funding were similar regardless of the age of the respondent. When answers were examined based on the type of surgical practice setting, a higher percentage of academic surgeons answered “extremely high priority” in comparison with surgeons in other practice settings. A higher percentage of Governors in private practice answered “high priority” when compared with those in other practice settings. Based on type or size of hospital, a higher percentage of ACS Governors in academic facilities or larger hospitals answered “extremely high priority,” and a higher percentage of surgeons in smaller hospitals answered “high priority.”
ACS Governors clearly have significant concerns about GME. Of the survey respondents, 80 percent said that GME funding should be increased. This sentiment was expressed regardless of the type of practice, be it academic, hospital-based, or private practice.
Governors also suggested that the College and other stakeholders explore alternative funding options for GME funding, specifically insurers, for sources of additional funding. It was clear that respondents felt that simply having teaching hospitals supplement GME funding from their general fund was not a good option as an alternative source of GME funding.
Furthermore, the Governors indicated that the ACS should play an advisory role, first in determining which surgical specialties are most needed so that residency positions in those disciplines can be preserved, and second, to help determine which parts of the U.S. have the greatest need for access to surgical care so that residency positions can be sustained in these areas.
Survey results suggest that ACS Governors would encourage the ACS Division of Advocacy and Health Policy to keep GME funding at the forefront of its legislative agenda. Only 2 percent of the respondents indicated that this issue is a low priority.
The ACS leadership can use the information provided by the 2015 Governors Survey to make GME a program that produces surgeons who are prepared to provide for the health care needs of our nation.
- Balanced Budget Act/Section 4621. Available at: www.gpo.gov/fdsys/pkg/PLAW-105publ33/html/PLAW-105publ33.htm. Accessed April 13, 2016.
- Institute of Medicine. Graduate Medical Education that meets the nation’s health needs. July 2014. Available at: www.nationalacademies.org/hmd/~/media/Files/Report%20Files/2014/GME/GME-RB.pdf. Accessed April 13, 2016.
- Mihalich-Levin L, Cohen A. Demystifying what Medicare GME payments cover and how they’re calculated. Acad Med. 2015;90(9):1286. Available at: http://journals.lww.com/academicmedicine/Fulltext/2015/09000/Demystifying_What_Medicare_GME_Payments_Cover_and.33.aspx. Accessed April 13, 2016.
- Association of American Medical Colleges. The complexities of physician supply and demand: Projections from 2013 to 2025. March 2015. Available at: www.aamc.org/download/426242/data/ihsreportdownload.pdf?cm_mmc=AAMC-_-ScientificAffairs-_-PDF-_-ihsreport. Accessed April 13, 2016.
- Nuss MA, Robinson B, Buckley RF. A statewide strategy for expanding graduate medical education by establishing new teaching hospitals and residency programs. Acad Med. 2015;90(9):1264-1268. Available at: http://journals.lww.com/academicmedicine/Fulltext/2015/09000/A_Statewide_Strategy_for_Expanding_Graduate.27.aspx. Accessed April 13, 2016.
- Miller M. Graduate medical education payments. MedPAC. February 2015. Available at: www.nhpf.org/uploads/Handouts/Miller-slides_02-20-15.pdf. Accessed April 13, 2016.
- American Hospital Association Factsheet. Graduate medical education. September 2015. Available at: www.aha.org/content/13/fs-gme.pdf. Accessed April 13, 2016.
- Association of American Medical Colleges. Table C6. Physician retention in state of residency training, by state. 2015. Available at: www.aamc.org/data/448496/c6table.html. Accessed April 13, 2016.