Patching together medical education

Academe, Nov/Dec 1999 by Flower, Ruth

THE LIFE OF THE MEDical intern and resident has served up movie and television fare for decades, from Dr. Kildare and Dr. Casey of the 1960s to the clowning Dr. Patch Adams of the 1990s. Always there's the white-coated gaggle of medical trainees making "rounds" with the demanding and humorless master of the trade. Always the overtired and underpaid resident tries to save the patient.

But the complex finances behind these gripping dramas don't script quite so well in Hollywood. Teaching hospitals in the United States provide 44 percent of all indigent care, and they train 75 percent of all residents in this country, according to the Association of American Medical Colleges. The vast majority of clinical research is also performed at teaching hospitals. The survival of these entities is clearly in everyone's interest. Yet the financial support of teaching hospitals is a patchwork affair, loose in some places, worn through in others.

Some support comes through patient care. Through Medicare, Medicaid, private insurance, or other programs, most patients furnish some payment for their own care. In addition, hospitals receive some subsidies for the care of lowincome patients, and physicians who coordinate their practices through hospital facilities contribute toward common hospital expenses.

But teaching hospitals incur special costs-some related to training, some related to patient care-that raise their rates above the average amount that insurance plans or (lately) Medicare and Medicaid expect to pay. Teaching hospitals are major medical resources for their regions. They attract and care for patients with complex medical needs, they maintain highly specialized facilities (such as those for transplants and trauma care), and they offer a level and quality of care that are not likely to be found in area hospitals, particularly for elderly and indigent patients. In addition, they incur special training costs, which include the (modest at best) salaries of the resident physicians, faculty salaries for those who instruct and supervise the residents, and the administrative costs of training.

Ideally, all parts of the health-care industry would contribute proportionately to these special costs, because all sectors benefit. Since the inception of Medicare, the federal government has committed to carrying its share of these extra costs. Through three sets of formulas, the federal government directs additional funds to the ledgers of teaching hospitals. These are Direct Graduate Medical Education (DGME) adjustments, Indirect Medical Education (IME) adjustments, and disproportionate-share subsidies for hospitals serving a high proportion of low-income patients. At one time, these subsidies covered more than half of the cost of graduate medical education; now, owing to a series of interlocking budget cuts, the programs meet only about 20 percent of the total cost.

Belt-tightening in the Medicare program between 1986 and 1997 essentially "froze" the formulas governing DGME adjustments at 1984 staff levels.

The IME adjustment, which addresses the higher cost of patient care in teaching hospitals, has also been on a downward slide since 1986. The Balanced Budget Act of 1997 included a plan to further reduce the adjustment by 29 percent between 1998 and 2001. Sen, Daniel Patrick Moynihan (DN.Y.) and Rep. Charles Rangel (DN.Y.) have introduced legislation (S. 1023 and H.R. 1785) to stop this latest slide before it hits bottom.

The long-term solution is to put the support of medical education on firmer ground. Sen. Moynihan and Rep. Benjamin Cardin (D-Md.) have introduced similar bills (S. 210 and H.R. 1785), which would require all parts of the health-care marketplace to contribute to medical education and clinical research. Each of these bills would create a trust fund that would receive money in the form of a 1.5 percent tax (Moynihan) or a 1 percent fee (Cardin) from private-sector insurance plans and health maintenance organizations, plus formula allocations from Medicare and Medicaid. The trust funds would be disbursed, on a formula basis, to medical schools, teaching hospitals, and academic health centers to support medical education, clinical research, and critical patient care.

What can you do? Urge your own representative and senators to support measures that will preserve funding for graduate medical education through Medicare, and to expand the funding program to Medicaid and to private insurance plans.

Ruth Flower is director of AAUP government relations.