An Institute of Medicine committee issued its long-awaited study on Graduate Medical Education (GME) funding on July 29, 2014. The committee, headed by two former Centers on Medicare & Medicaid Services administrators, Gail Wilensky and Don Berwick, worked for nearly two years to produce "Graduate Medical Education that Meets the Nation's Health Needs."
The study recommends five fundamental changes in the way Medicare and Medicaid fund GME. If adopted, the recommendations would have a heavy impact on academic medical centers and teaching hospitals, where nearly all GME training now occurs. Taken together, the changes would move a significant portion of GME funding away from the inpatient hospital setting and into community clinics and ambulatory settings.
The changes would also rewrite the funding formula to make it less dependent on Medicare inpatient volume. That would mean a loss for high Medicare volume hospitals but a gain for many other hospitals. Free-standing pediatric hospitals are examples of the latter because they would no longer suffer, as they now do, merely because of low-to-nonexistent Medicare volume.
Other recommendations call for funding formulas that address the shortage of physicians in underserved rural areas and underrepresentation of minorities in the physician population.
The good news for teaching hospitals and academic medical centers is that the study recommends that Medicare remain the major funding source for GME. That wasn't a foregone conclusion because Medicare is, after all, a program designed primarily for the elderly. Another piece of good news is the recommendation that the current funding level be maintained.
Nevertheless, organizations representing the institutions that would lose funding were quick to question and even condemn the study. The day the study came out, the Association of American Medical Colleges issued a statement saying the recommendations would amount to a "wholesale dismantling of our nation's GME system." The American Hospital Association joined in, alleging that the study ignores the contributions teaching hospitals have made to address the country's changing health care needs. The American Medical Association took a similar view, noting that the study failed to address the urgent need for 45,000 more primary care doctors and 46,000 more specialists by 2020.
In contrast, the American Academy of Family Physicians announced that it "welcomed" the recommendations. That's not surprising, because the study reflects a view that current GME training is too inpatient and specialty oriented and needs to be focused more on primary care and ambulatory settings.