I’ve been sitting on a couple of items about residency funding and physician workforce for a few months.  On Saturday, there came this piece in the New York Times, compliments of Uwe Reinhardt, whom many of us would posit is the premiere health economist of our time.  His proposal?  The burden of paying for residency training should not necessarily be funded through tax dollars.

My response?  Yes.  And no.

For those not familiar with the funding of graduate medical education, this great primer on the “how” of Medicare funding for residency positions will give you the backstory far better than I can.  She also nicely highlights the fact that in 1997 residency positions were capped by the federal government so that growth wouldn’t continue in a haphazard fashion.  In the last decade, the number of U.S. medical students has increased at a rapid rate…with virtually no expansion in residency positions.  Within the next 2 years, we are likely to have more medical school graduates than residency positions in the U.S. on an annual basis.  Simple translation?  Young Americans will have huge amounts of debt and not be able to practice because you can’t practice without a residency.

The historical argument behind the Graduate Medical Education (GME) subsidies has been that there are inefficiencies associated with training new physicians, and that teaching hospitals by definition lose money through the activities of education.  Teaching hospitals also serve as a “safety net” in healthcare, with many of them caring for patients who otherwise would not receive care.  They serve as sites for innovation and research in a way that non-teaching hospitals simply can’t, as well as specialized care; my own bias becomes apparent if I confess here that 96% of burn patients in 2007 received care at teaching hospitals.  The relevance of innovation, research, and specialty services to GME funding lies in the fact that patients with private insurance benefit from these things every bit as much as the other patients, yet the private insurers do not contribute to the financing of residency education.  That is the basis for my agreement that the burden of paying for resident education should not fall entirely on the taxpayers’ shoulders.

However, we simply can’t withdraw federal subsidies from the picture either.  This pathway would likely spell collapse for the academic medical centers (AMCs), which would be catastrophic for the reasons I have alluded to above as the unique benefits of teaching hospitals.  I also dispute the following statement from Dr. Reinhardt:

“Although teaching hospitals do incur added costs to train physicians in residency programs, they are already reimbursed for those costs by the residents themselves, which obviates the need for government funding.”

The logical fallacy here is that residents do not pay the teaching hospitals- it’s not clear to me what money they would use to do so between their limited salary and their often exorbitant student loan debt.  If anything, residents are a good deal for the AMCs because they provide high-quality labor relatively inexpensively and (unlike NPs and PAs) really can’t opt out of nights and weekends.  I’m not saying that AMCs are making money off of residents, simply that residents help the AMC to make ends meet.

Do I have the answer to this problem?  No, I don’t, other than acknowledging that we need more physicians and that we fund GME in an irrational, inefficient, and inequitable manner.  It makes me feel a bit better to realize that brilliant minds don’t seem to have a good answer to the dilemma either, but a solution must be found- and soon.