Effects of reducing GME Funding at Teaching Hospitals

Congressional Budget Office: Reduce Federal Payments for Graduate Medical Education at Teaching Hospitals


In order to reduce the US budget deficit, the Joint Committee on Deficit Reduction proposes several options for federal spending reduction, including Consolidate and Reduce Federal Payments for Graduate Medical Education (GME) at Teaching Hospitals

This option aims to reduce Medicare costs by 6.7 billion dollars by the end of 2021 and is expected to reach 31.9 billion dollars by 2026.

The implications of what it means to reduce federal payments for Graduate Medical Education will have detrimental effects on hospital facilities; is anticipated that cuts will affect doctors that are in training, intensive medical services and sophisticated equipment that hospitals provide. It is also anticipated that cutting payments for Post-Graduate Medical Education to teaching hospitals will have an impact on patient care because it only increases the number in physician shortage, a fact that is already a concern for the medical field. Another aspect that can create an issue is the limitation on the number of hours that a resident is permitted to be on duty, deficiency in the number of specialists whose role is of critical importance, and also fearing that those cuts can be an obstacle for our next generation of doctors to be the most educated and up-to-date.


To address the potential negative effects, hospitals could respond to a cut in federal payments for GME by intensifying efforts to stimulate other sources of revenue such as investment income, philanthropic donations, renegotiate rates with private insurers, etc.

Many teaching hospitals already receive higher payments from private insurers than they do from public funded federal programs for performing the same procedures, consequently hospitals with a sufficient market presence or some other form of negotiating leverage may respond to reduction in federal GME funding by boosting the implicit amount that the private insurers pay for medical education.

Another suggestion that hospitals could consider is by waiving certain resident training programs and replacing that labor component with full-time physicians, physician assistants or even nurse practitioners. Also, teaching hospitals can respond to federal payment cuts by keeping the same number of residents while decreasing some of their salaries.

Just as important, a major contribution that could help hospitals would be the input from outside organizations that are specialized in managing and using GME funds to help the hospitals maximize the use of these funds received under the new cap imposed by the federal government.



References

Brian Rye. (February 2012). Assessing the Impact of Potential Cuts in Medicare Doctor-Training Subsidies. Bloomberg Government. Retrieved from: https://www.monroecollege.edu/uploadedFiles/_Site_Assets/PDF/ryestudy.pdf

Congressional Budget Office. Options for Reducing the Deficit: 2017 to 2026. Retrieved from: https://www.cbo.gov/sites/default/files/114th-congress-2015-2016/reports/52142-budgetoptions2.pdf

Nasca, T. J., Miller, R. S., & Holt, K. D. (2011). The Potential Impact of Reduction in Federal GME Funding in the United States: A Study of the Estimates of Designated Institutional Officials. Journal of Graduate Medical Education, 3(4), 585–590. http://doi.org/10.4300/JGME-03-04-33

Thomas Sullivan. (May 2018). Federal Budget Cuts and Teaching Hospitals. Retrieved from: https://www.policymed.com/2011/08/federal-budget-cuts-and-teaching-hospitals.html