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A. Alex Jahangir, MD,


Published 8/1/2016
Maureen Leahy

Flawed GME Funding System Requires Changes

NOLC symposium calls for physician leadership

Graduate Medical Education (GME) is vital to the success of the healthcare system. Unfortunately, the current system of GME funding is greatly flawed. If we don't address the problem now, we risk a serious shortage of physicians, particularly specialists, in the future," said of Vanderbilt Orthopaedics in Nashville.

Dr. Jahangir made his comments during an educational symposium on GME, moderated by Lisa K. Cannada, MD, and held during the 2016 National Orthopaedic Leadership Conference.

System shortcomings
In 1965, passage of the Medicare bill created federal funding for GME. Although originally intended as a temporary solution, Medicare remains the largest single funding source of GME. Medicaid and private payers also support GME, but to a much lesser degree. Yet, despite all the money being spent on GME, the system is defective, according to Dr. Jahangir.

Medicare's direct and indirect GME payments to teaching hospitals are tied to the number of Medicare patients treated by a hospital. In 1997, as part of the balanced budget amendment, Medicare-funded residency slots in hospitals were capped at 1996 levels. "This cap—which is still in place today—froze the number of Medicare-sponsored residencies without any regard to future changes in population or workforce needs. In addition, there is no incentive for institutions to change their numbers to adjust to meet these future workforce needs. Frankly, this is a big problem in places like Nashville where we have seen our population double in the last 20 years," said Dr. Jahangir.

Another shortcoming of the current GME system, Dr. Jahangir said, is funding disparity based on geographic location. "For example, the federal government pays teaching hospitals in Louisiana approximately $64,000 per resident per year for training, while hospitals in other states such as Connecticut receive $155,000 per resident per year."

Dr. Jahangir also pointed out the federal government's lack of oversight in planning for the approximately $15 billion it pays for GME. "This lack of oversight—and lack of data to assess whether we are getting value for the training that is delivered—leads to insufficient accountability to ensure that programs will train not only competent physicians, but enough physicians to meet the needs of each community," he said.

Restructuring GME funding
Calls for substantial reform of GME funding are nothing new, Dr. Jahangir noted, particularly amid current efforts to curb federal spending. He outlined one reform agenda, proposed by John O'Shea, MD, with the public policy research institute The Heritage Foundation, which includes the following recommended changes:

  • Consolidate government funding for GME.
    "Combining direct and indirect Medicare payments, as well as other sources of federal funding, would allow for more transparency of the total federal GME spending, and hopefully lead to more accountability," explained Dr. Jahangir.
  • Let states manage the public funding of GME.
    "States have a stronger incentive to ensure that the medical training programs in their states align with both current and future healthcare workforce requirements in ways that accommodate different geographic and demographic needs," said Dr. Jahangir. 
  • Allow GME funding to follow the trainee.
    "Under the current system, hospitals make decisions on which training programs to sponsor according to their own needs. In addition, when funds go directly to the hospital, there is no incentive to train physicians in outpatient clinical settings where most health care is delivered," said Dr. Jahangir. "If the funding followed the trainees, states could allocate funding for specific training programs based on workforce needs, understanding that most residents will likely remain in the state in which they trained."

Dr. Jahangir added that institutions such as children's hospitals or safety net hospitals with a limited elderly population are negatively affected by a system that pays for residents based on the number of Medicare patients treated.

To truly implement changes in health care requires leadership, specifically leadership by physicians, Dr. Jahangir concluded. "This is our role—we must be great leaders and decision makers; we must think about the next generation," he said. "Saving GME is an issue that will affect all of our lives for decades to come."

Additional presenters during Symposium V, "Who Pays for Graduate Medical Education in a Changing Environment?" were Larry Marsh, MD, of the University of Iowa Hospitals and Clinics, and Leonard J. Marquez, director of Government Relations, Association of American Medical Colleges.

For more information on GME funding, see "Election Topic: GME Funding,"AAOS Now, April 2016 and "Will We Soon Be A Few Orthopaedists Short?"AAOS Now, July 2016.

Maureen Leahy is assistant managing editor of AAOS Now. She can be reached at leahy@aaos.org


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