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GME Funding Cuts Will Worsen Physician Shortage, Hurt America's Health

July 7, 2011

As discussions continue about the debt ceiling and deficit reduction, there's a great deal of focus on how reduced spending will ensure a robust and productive future for our nation. But when you think about it, our nation's future strength will similarly require continued investments in programs of demonstrated value to society. Medicare's support for physician training (graduate medical education or GME) is one such program. Medicare support for GME isn't wasteful. It's an investment that benefits all Americans today and long into the future.

In a recent New York Times article, Robert Pear reported that the administration is seriously considering a proposal to "Reduce Medicare payments to teaching hospitals for the costs of training doctors, caring for sicker patients and providing specialized services like trauma care and organ transplants."

That reduction would mean two things would happen. First, the nation would train fewer doctors and other health professionals at a time when the number and health care needs of baby boomers are rapidly increasing and millions more Americans will be gaining access to health insurance. Second, it would mean fewer critical health care services—such as trauma care—would be available in communities across the country.

What Does Medicare Have to Do with Teaching Hospitals?

Teaching hospitals train about 110,000 residents each year, at a direct cost of approximately $13 billion a year. Medicare supports about $3 billion of that total through direct graduate medical education payments (DGME), and it hasn't increased that support since 1997. Clearly, Medicare's investment in physician training is important... and the return on that investment will benefit many generations of beneficiaries, as well as their children, grandchildren, and great-grandchildren. Medicare also provides teaching hospitals with what's called "indirect medical education" (IME) payments. Despite the "education" label, IME support is actually a patient care payment made to teaching hospitals because they treat a more complex patient population and provide costly and life-saving services often unavailable elsewhere in the community. Medicare recognizes that basic reimbursement rates cannot support around-the-clock access to these unique services. Both the House and Senate, in report language in 1983, reiterated the intent of the IME payments:

This adjustment is provided in light of doubts...about the ability of the DRG case classification system to account fully for factors such as severity of illness of patients requiring the specialized services and treatment programs provided by teaching institutions and the additional costs associated with the teaching of residents.

Like DGME payments, IME support also has been frozen since 1997.

These services are often ones that patients and communities turn to when they need care the most. While they might not expect to develop a rare but treatable cancer, or be in a multi-vehicle car accident, or suffer major burns while working as a volunteer firefighter to save a neighbor's house, people know that, if they do, a teaching hospital will be there to help them. Without Medicare's support—without this critical federal investment in teaching hospitals—we will see diminished support for these vital resources, and we will see Americans' access to life-saving care restricted.

What Does Medicare's Support Mean to the Average Person?

It means that within two hours of the tornadoes that devastated Joplin, Missouri, a teaching hospital miles away had a trauma team on the road to set up a mobile hospital. This unit included trauma doctors and nurses, surgical specialists, EMTs, equipment, supplies, and drugs. They were onsite and operational less than six hours after the tornado struck. These services are often un- or under-compensated and would be impossible to provide without public support.

It means that there is one place—a teaching hospital... and the only facility within 300 miles—that provides immediate access to the expertise and technology needed to re-attach and restore the use of a severed limb, 24 hours a day, seven days a week, 365 days a year.

Our health system may need improvement, but the fact is, America has the world's best doctors and nurses because we have the best teaching hospitals. In a July 5 letter to President Obama , AAMC President Darrell G. Kirch, M.D., wrote, "Any funding cuts that jeopardize our ability to provide America with an adequate supply of physicians, nurses, and other health care providers, as well as limit critical services, are a serious step in the wrong direction. Cutting the deficit is important, but cutting physician training at a time when our nation faces a critical shortage of doctors would threaten the health of all Americans."

Similarly, the head of the American Council of Graduate Medical Education, the organization that accredits residency training programs, is expressing concerns about possible cuts to GME funding, along with a growing number of other groups.

And beginning today, AAMC has launched a print ad campaign called "Careful What You Cut ," to raise awareness of the implications of any cuts to GME funding.

One more thing. While this is first and foremost about patient access and the health of the nation, there is the equally important fact that GME funding also supports jobs. According to a 2011 economic impact study conducted for the AAMC by the firm Tripp Umbach, cuts to GME support would cost more than 70,000 jobs.

I don't know about you, but to me, it's short-sided to cut support for doctor training at a time when our nation faces a growing shortage of physicians. Similarly, cutting support for critical medical services is just plain bad medicine. And cutting more than 70,000 jobs in the name of deficit reduction at a time when we are trying to jump start the economy makes no sense at all.

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About the Author

Atul Grover, MD, PhD AAMC Executive Vice President

Atul Grover, MD, PhD
AAMC Executive Vice President

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For More Information

Peters Willson
Sr. Specialist, Policy and Constituency Issues
Telephone: 202-862-6029