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2. Costs and Revenues for Primary Care Residencies in Ambulatory Settings
Pages 35-50

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From page 35...
... Attempts to separate and apportion the revenues and costs to different functions have met with little success, and many questions are unanswered. Analysis of the costs and revenues of ambulatory based residencies is further complicated by three circumstances: lack of data on revenues that would allow disaggregation by specialty and site; lack of precise definition of the costs involved in the transition of residents to ambulatory care sites; and the great variety of ambulatory sites for which there is a wide range of costs and revenues.
From page 36...
... Direct costs are composed of resident stipends, teaching physician salaries, fringe benefits, and allocated hospital overhead. Indirect costs are the increase in patient costs incurred because the hospital is engaged in teaching.
From page 37...
... . Two surveys of family practice residency programs found that patient revenues accounted for about 31 percent of program costs.
From page 38...
... To summarize what is known about the costs of ambulator care training: important variables are patient flow, the amount of faculty input and faculty salaries, the efficiency of the clinic management, and the portion of residents salaries allocated to the ambulatory site. The influence of these variables makes it hard to draw firm conclusion across sites, but there are findings that indicate that net costs are incurred by training first-year residents in primary care clinics; for second- and third-year residents this is generally not the case.
From page 39...
... indicates, the relative importance of sources of funding for medical schools has changed substantially since the 1970s. Most significant have been the growth of patient revenues (largely derived from the teaching/patient care activities of GME that flow into medical practice plans)
From page 40...
... Table 2.1 Trends in U.S. Medical School Revenues Selected Years 1971 - 1987 1970-1971 1975-1976 1986-1987 Revenue Source Percent Percent Percent Federal research 25.6 24.3 19.9 Other federal 18.8 11.7 3.8 State & local 18.9 23.8 18.5 government Tuition and fees 3.7 4.6 5.3 Medical service 12.2 18.0 37.6 Other income 20.9 17.6 14.8 Total*
From page 41...
... r) i.~t.rihlll.ion Sollrr,~ of Filing Plihlin Private State and local government 29.7 Professional fee income 19.4 Recover of indirect costs 5.0 Tuition and fees 3.2 Endowment 0.2 Gifts 0.2 Income from college services 1.7 General university funds 2.4 Reimbursement from hospitals 7.S Research and teaching training 1.5 Sponsored programs*
From page 42...
... Grants for family practice residency programs became available in fiscal year 1972 under the Comprehensive Health Manpower Training Act of 1971, (P.~.
From page 43...
... The council recommended of ways of increasing the supply of primary care physicians that included requiring that a portion of all residencies should be in primary care, that capitation payments currently made to family practice residency programs should be expanded to general internal medicine and pediatrics, and that Medicaid payments for primary care services be increased to a point where it is financially feasible for physicians to provide for the primary care needs of Medicaid eligible patients (New York State Council on Graduate Medical Education, 19881.
From page 44...
... Patient Care Support Although patient care activities are integral to medical education financing and play an increasingly important role as a source of support, outpatient and primary care education operate at a disadvantage. Third-party reimbursement pays a higher proportion of costs and charges for inpatient than for outpatient care.
From page 45...
... Thus the primary care residencies will receive full payment, while some subspecialty training, and training beyond five years, will receive reduced payment. Also assisting primary care and a move to training in outpatient settings, the Omnibus Budget Reconciliation Act of 1986 extended the Medicare direct education payment from hospital outpatient departments to non-hospital settings if the resident is involved in patient care activities and there is a written agreement that the hospital bears substantially all the training costs in the outside setting (Federal Register, 1988)
From page 46...
... The commission drew back from recommending the larger cut because of concerns about the impact on the financial health of teaching hospitals (Prospective Payment Assessment Commission, 19891. The final budget request of the Reagan administration recommended reducing the indirect medical education payment to 4.5 percent.
From page 47...
... Similarly, Medicaid reimbursement of $70-80 per visit is critical in allowing the SUNY-Buffalo Family Practice Program to support residents at family practice centers and numerous other facul~-staffed ambulatory sites (WalkingLon, 19891. However, such generosity is not the rule for most Medicaid programs, therefore residency programs that use sites such as community health centers that are heavily dependent on Medicaid payments suffer a shortfall of patient care revenues that can undermine the ability to support residencies, particularly when Medicaid payments are well below average practice costs.
From page 48...
... In outpatient settings the resident's salary and supervisory salaries of faculty as well as other teaching costs must be earned from patient income or the relatively small amounts available from grants. While it has been shown that residents in their later years can earn enough to cover the additional costs that teaching sites incur, lacking the explicit or implicit education payments that providers of inpatient care receive, the level of patient care revenues becomes critically important.
From page 49...
... Albany, New York: New York State Council on Graduate Medical Education. Peinado, Sandra C
From page 50...
... 1986. Impact of Federal Support on Family Practice Residency Training.


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