Academic Medical Centers: Clinical Care, Research and Teaching (or Maybe Not?)—Graduate Medical Education and the Future

by BakerHostetler

In the world of healthcare policy and law, we usually discuss issues impacting providers, but don’t often report about the training and infrastructure behind what allows our healthcare system to treat patients in our facilities. Many warnings have come and gone about how we are not training enough physicians for primary care, and the ACA and other programs have sensitized us to the need for more family practice, pediatricians and internists as healthcare delivery reform proceeds. Well, if we weren’t paying enough attention, last week’s Institute of Medicine (IOM) report,” Graduate Medical Education That Meets the Nation’s Health Needs” should be a wake-up call to all academic medical centers, hospitals and medical schools around the nation because the IOM calls for major change in response to today’s shifting healthcare environment, and essentially proposes dismantling its current funding system.

Training interns and residents, post-medical school training (called “graduate medical education” or “GME”), is required before doctors can be licensed to practice medicine. Congress recognized the importance of these programs and investing in this aspect of our healthcare system at the inception of the Medicare program in 1965 and developed a means to include funding for this program as part of the Medicare law. Since that time, the Medicare and Medicaid programs fund GME residency training programs and help to support teaching hospitals in which those programs are housed. The IOM study identified that the vast majority of GME funding—about $15 billion in 2012—comes from the Medicare program, and thus, the Medicare program can be leveraged to redesign the GME system to reward desired outcomes and improve program performance.

If we didn’t have enough going on in the world of the health reform, this IOM study proposes to restructure the program completely as to funding, oversight and programmatic review.

To that end, the IOM called for more accountability for the funds and an end to the current manner in which funds are paid. The report made five recommendations:

  1. Maintain aggregate GME support (which is the total of indirect medical education (IME) and direct GME expenditures for a base year, trended forward annually for inflation) while taking steps to modernize payment methods based upon performance, ensure program oversight and accountability and incentivize innovation in the content and financing of GME. The report called for phasing out the current GME payment system over a ten-year period.
  2. Build a new GME policy and financing infrastructure, including the creation of a GME Policy Council to ensure the development and oversight of a strategic plan for GME training, ensure sufficient geographic distribution and specialty configuration of the physician workforce and create and manage funding and data collection under the guidance of the new policy council.
  3. Create a new Medicaid GME fund with two components: (1) an operational fund to distribute ongoing support for residency training positions that are currently approved and funded; and (2) a transformation fund to finance initiatives to develop and innovate GME programs, determine and validate performance measures and pilot alternative methods and award new Medicare-funded GME training programs in priority disciplines and geographic areas.
  4. Modernize the GME payment methodology by replacing the current system and consolidating the current IME and GME payment into one combined payment to sponsoring programs, based upon a national per resident amount (with an adjustment for geographic area). The per resident amount would equal the total value of the operational fund divided by the current number of full-time equivalent
    Medicare-funded training slots. This recommendation also would redirect the funding stream directly to the sponsoring organizations and implement performance-based payments using information from the transformation pilots.
  5. Medicaid GME would remain within the state’s discretion but would be subject to the same level of transparency and accountability as in the Medicare GME program.

One of the major components of the lengthy report involves the recognition that, at the time the GME funding program was developed, a majority of the training of residents and interns occurred within the academic hospital itself and not in the community, while currently the healthcare system encourages patients to be treated outside the hospital, in community-based settings with physician extenders and other allied health personnel. Current funding formulas discourage training at these outlying clinics or community-based settings.

The IOM report drew almost immediate criticism from the American Academy of Medical Colleges and the American Hospital Association, which voiced significant concern with a wholesale dismantling of the current training and funding system for physicians in this country. They identified that, while more physicians are needed in primary care, there still are areas of subspecialty care, such as in pediatric neurology, where we do not train enough physicians and the training must occur in a hospital inpatient setting.

Many critics identified the significant changes occurring in healthcare today and that this report, which recommends substantial change in the funding and structure of GME, calls for the weakening of a foundational aspect of the healthcare infrastructure. While change and innovation must occur, critics found the recommendations irresponsible given the magnitude of the changes to which hospitals, medical schools and physicians are adapting.

The IOM report contains significant detail regarding the current funding of the Medicare GME program and the proposed recommendations that surely will be of interest to a Congress that remains focused on cost cutting in government programs and ways to ensure that Medicare funding is cost effective. Healthcare executives in academic settings should keep a watchful eye on these policy developments and funding discussions, as they work to sustain and attempt to grow our nation’s physician workforce.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© BakerHostetler | Attorney Advertising

Written by:


BakerHostetler on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.