Innovative funding opens new residency slots

Despite a lack of fresh federal dollars, some hospitals are adding residency positions.

By Myrle Croasdale — Posted Jan. 30, 2006

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While some are lobbying for Congress to increase the amount it spends on graduate medical education, a handful of teaching institutions have found their own sources of money in recent years to expand the number of residency slots their programs offer.

Although Medicare funding for residents remains frozen at 1996 levels, data recently examined by the Assn. of American Medical Colleges' Center for Workforce Studies show that the total number of residency slots has inched up 4% between 1998 and 2004.

To pay for this growth, academic medical centers are cobbling together funds from state governments, hospitals' bottom lines and Medicaid. The American Academy of Dermatology even tapped corporate sources to help pay for new dermatology residencies that will start later this year. (See correction)

The efforts come as consensus is growing that a national physician shortage lies ahead. Some experts say adding slots is important, even though the government isn't pitching in more money, because it's the only way to increase the physician supply and ensure there are enough doctors to meet the public's medical care needs.

Work force experts are just beginning to examine the growth closely. For example, they are looking at what specialties are growing and where, geographically, residencies are being added.

Some, though, worry that money-making specialities such as orthopedic surgery will see the biggest growth, while fields such as family medicine will be left behind.

"It's fair to say that the lucrative professions will grow, while the needed but less lucrative fields won't thrive. But they won't disappear, either," said economist Thomas Getzen, PhD, executive director of the International Health Economics Assn.

But it's not only money that is driving the expansion. Demand also was a factor.

Diane M. Hartmann, MD, associate dean for graduate medical education at the University of Rochester School of Medicine in New York, said national shortages in cardiology and gastroenterology, along with academically strong departments in these disciplines, helped drive expansions at her school.

Anesthesiology added slots as the hospital built more operating rooms. Radiology expanded after new techniques and procedures increased demand. New neurological subspecialties also sparked fellowships.

Over the past six years, Rochester has added 50 resident positions above its Medicare payment cap, bringing its total residents to 550. Revenue from the university's clinical practices has primarily paid for the additional slots, Dr. Hartmann said.

"The [federal] cap was created as a control on the amount of spending on graduate medical education," Dr. Hartmann said, "but times have changed, and the medical needs of the American population have changed."

Hospitals tapped for money

In Austin, Texas, Tom Blackwell, MD, assistant dean of graduate medical education for the University of Texas Medical Branch, said the Galveston-based school is expanding its residencies primarily with dollars from a regional nonprofit hospital system, Seton Healthcare Network.

Population growth caused UTMB to expand the residency programs in Austin, Dr. Blackwell said. He expects to add 30 to 40 positions above the university's cap, bringing the total number of residents in the school's Austin programs to 215. At $55,000 per resident, salaries alone will cost more than $2 million a year.

A Seton work force analysis showed a need for more doctors in almost every medical discipline, Dr. Blackwell said. Consequently, the school will expand in several areas, including adding 20 residents in a new ob-gyn program. The school also will expand in specialties that students want to study.

"We're not expanding family practice, but we are expanding internal medicine, because the [internal medicine] subspecialties are very popular," Dr. Blackwell said.

Working together

Further west, Utah has taken a different approach. Instead of individual institutions figuring out how to tackle the demand for more doctors, a quasi-governmental body is leading expansion efforts.

Gar Elison, executive director of the Utah Medical Education Council, said the Legislature created the group in 1997, responding to fears that an impending $40 million cut in Medicare reimbursements would cripple residency training. Charged with finding solutions, the council stabilized funding and found enough revenue to add 64 new resident slots to the state's existing 700 positions.

Competing Utah teaching institutions are pitching in a total of $3 million over five years into a general pool that passes through the council. The state Legislature also has committed $300,000 annually for the next decade.

The council expects to build up residencies in child and adolescent psychiatry, general pediatrics, pediatric neurology, internal medicine, anesthesiology and ophthalmology.

One of the ways the council helped motivate hospitals to contribute money to the pool was by helping them apply for Medicaid graduate medical education payments. Collectively, the hospitals once received just a few million in Medicaid dollars annually. Now they're seeing $26 million a year, Elison said.

How much further the expansion will go is unclear. Ed Salsberg, director of AAMC's Center for Workforce Studies, said it appears hospitals could expand 2% to 3% beyond their caps.

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Expanding residency slots

The number of medical residents training in the United States has seen small but significant growth since the Balanced Budget Act of 1997 froze the number of medical residents eligible for funding at 1996 levels. Between 1998 and 2004, residencies grew 4%, as institutions have dug into their own pockets to pay for new slots.

1996 98,076
1997 98,143
1998 97,383
1999 97.989
2000 96,806
2001 96,410
2002 98,258
2003 99,964
2004 101,291

Sources: Journal of the American Medical Association, September medical education issues, 1997 through 2005

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The print version of this story contained incorrect information. A March vote by the American Academy of Dermatology will not have a direct impact on an existing pilot program to expand resident training. AAD will vote on whether to adopt a bylaw that would require the AAD to "not support or fund any initiative intended to influence the size of the dermatology work force without approval by a two-thirds vote" of eligible members. American Medical News regrets the error.

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