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Why on earth would medicare have anything to do with residency spots to start with? Why wouldn't the hospitals use this as an apprenticeship program and pay the

by eppp 3y ago

Why on earth would medicare have anything to do with residency spots to start with? Why wouldn't the hospitals use this as an apprenticeship program and pay the residents and charge appropriately for their services?

ethbr1 3y ago
Because hospitals generally don't have the funding (in the case of rural or urban trauma barely balancing the books) or inclination (in the case if wealthy suburb, managed facilities trying to maximize profit by running minimal staff) to do this. Ergo, like education in general, it's funded from the federal government.
- s1artibartfast 3y ago
  If hospitals don't have the revenue, they should charge the cost of services to balance their books. I think government involvement in the residency program is problematic distortion, causing hospitals to chase a scarce resource instead of working to expand the supply pipeline.
  - ethbr1 3y ago
    Among other laws, there's the EMTALA that prevents charging the cost of services. https://en.m.wikipedia.org/wiki/Emergency_Medical_Treatment_and_Active_Labor_Act https://en.m.wikipedia.org/wiki/Emergency_Medical_Treatment_...
  - nradov 3y ago
    This is not a free market and you won't accomplish anything by telling hospitals what they "should" do. Prices are largely fixed by Medicare/Medicaid reimbursement rates. Whenever prices are fixed, shortages are pretty much inevitable. Relying on Medicare to pay for residency programs isn't an ideal situation. But the reality is that there are no other major players in the system with both the money and incentive to cover those costs. That won't change without a complete restructuring of the entire system, and achieving the political consensus to do that will be extremely difficult. If you have a few million dollars to spare then feel free to donate it to your local teaching hospital. They'll be happy to take your money to expand their residency program. There is an opportunity for philanthropists to do some real good in reducing the physician shortage.
    - s1artibartfast 3y ago
      I dont think I agree. Medicare/medicaid rates change constantly. The cost of retaining physicians is part of cost of providing healthcare, so there is no reason to carve it out. Hospitals have a natural incentive to have doctors on staff. The only reason they dont have incentive today is because there is someone else taking on the cost. I would argue that it is easier and more realistic to simply include it in the price than expect congress accurately predict future demand, and continually pass legislation to that effect. We dont need a congressional act to subsidize hospital janitors- Somehow hospitals figure out how to include them in their operational expenses because they need them. Furthermore, it wouldnt break the bank of most of these hospitals. Take one of the largest teaching hospitals in the world, Cleveland clinic, with 2000 residents. at typical resident grant of 100k, that is 200 million. The Cleavland clinic annual revenue is >13 Billion.
      - nradov 3y ago
        That is not a realistic or sensible proposal. Only a subset of hospitals do graduate medical education. If teaching hospitals raised their prices to cover the overhead of residency programs then that would put them at a competitive disadvantage relative to hospitals that don't train residents at all. In order to keep residency programs financially sustainable there has to be a separate revenue source. Cleveland Clinic is a non-profit. Their total revenue is irrelevant. If you'd like them to spend an extra $200M on their residency program then they would have to spend less on other stuff. Take a look at their financial statements and then you can tell them exactly where they ought to cut back in order to fund your proposal. Please be specific. https://my.clevelandclinic.org/about/overview/financial-information https://my.clevelandclinic.org/about/overview/financial-info...
        s1artibartfast 3y ago
        Of course their revenue is relevant? IF they can stack 2 billion per year onto their endowment every year, they could spend 200 million on residents. That is my specific proposal. If they refuse to raise prices, then they should grow the endowment by 200 million less per year and provide the same services. It is bad enough that a non-profit charges 20% more than the cost of their services. They would be fine if they were only making 18% more than their costs. It is basicity the same as if Harvard college claimed it cant afford to train teachers aids while charging students more than enough to cover expenses and sitting on a 50 billion endowment that grows ever larger each year.
- TuringNYC 3y ago
  You just need to look at an EoB statement to realize the sheer volume of revenues earned by Residents (thought not retained by residents). They are huge profit centers for the medical system with millions in earned revenue annually. Medicare does not need to pay for residents, they are massively net positive revenue. The AMA boards create artificial scarcity and "medicare" is the boogeyman word.
  - ethbr1 3y ago
    But if those residents were paid by hospitals, they wouldn't be huge profit centers. Or, to put it another way, if hospitals have difficulty balancing the books with free resident labor, adding additional paid residents wouldn't necessarily fix the financial problem in most hospitals.
    - TuringNYC 3y ago
      >> But if those residents were paid by hospitals, they wouldn't be huge profit centers. Paying residents is not the blocker here, Residents are already paid by hospitals. They are paid a fraction of revenues, which is normal for any profitable business. https://www.ziprecruiter.com/Salaries/First-Year-Medical-Resident-Salary-in-New-York-City,NY https://www.ziprecruiter.com/Salaries/First-Year-Medical-Res...
- SkyPuncher 3y ago
  Hospitals absolutely have the funding. Residents make a shit load of money for the hospitals they work for. Some hospitals allow residents to moonlight (e.g. practice in off hours) and pay $300+/hour.
ceejayoz 3y ago
Medicare pays for the residency spots. https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/direct-graduate-medical-education-dgme https://www.cms.gov/medicare/payment/prospective-payment-sys... https://crsreports.congress.gov/product/pdf/IF/IF10960 https://crsreports.congress.gov/product/pdf/IF/IF10960
nradov 3y ago
There are a lot of bizarre path dependence issues and misaligned financial incentives in the US healthcare system. Most teaching hospitals are non-profits, often run by university systems or governments. Those hospitals get much of their revenue from Medicare/Medicaid. Reimbursement rates are fixed and hospitals have no ability to raise prices to cover increased training expenses. So, the only solution has been to get separate GME funding from Medicare. There are other GME funding sources such as private charitable foundations but still the majority of the money comes from Medicare.
HDThoreaun 3y ago
Residencies lose money, so they're reliant on federal subsidies.
- ska 3y ago
  > Residencies lose money, Do they though? Or is that mostly creative accounting. I've heard claims in both directions but like anything in medical billing in the US, it's all pretty murky.

by eppp 3y ago

ethbr1 3y ago

Because hospitals generally don't have the funding (in the case of rural or urban trauma barely balancing the books) or inclination (in the case if wealthy suburb, managed facilities trying to maximize profit by running minimal staff) to do this. Ergo, like education in general, it's funded from the federal government.

s1artibartfast 3y ago
If hospitals don't have the revenue, they should charge the cost of services to balance their books. I think government involvement in the residency program is problematic distortion, causing hospitals to chase a scarce resource instead of working to expand the supply pipeline.
- ethbr1 3y ago
  Among other laws, there's the EMTALA that prevents charging the cost of services. https://en.m.wikipedia.org/wiki/Emergency_Medical_Treatment_and_Active_Labor_Act https://en.m.wikipedia.org/wiki/Emergency_Medical_Treatment_...
- nradov 3y ago
  This is not a free market and you won't accomplish anything by telling hospitals what they "should" do. Prices are largely fixed by Medicare/Medicaid reimbursement rates. Whenever prices are fixed, shortages are pretty much inevitable. Relying on Medicare to pay for residency programs isn't an ideal situation. But the reality is that there are no other major players in the system with both the money and incentive to cover those costs. That won't change without a complete restructuring of the entire system, and achieving the political consensus to do that will be extremely difficult. If you have a few million dollars to spare then feel free to donate it to your local teaching hospital. They'll be happy to take your money to expand their residency program. There is an opportunity for philanthropists to do some real good in reducing the physician shortage.
  - s1artibartfast 3y ago
    I dont think I agree. Medicare/medicaid rates change constantly. The cost of retaining physicians is part of cost of providing healthcare, so there is no reason to carve it out. Hospitals have a natural incentive to have doctors on staff. The only reason they dont have incentive today is because there is someone else taking on the cost. I would argue that it is easier and more realistic to simply include it in the price than expect congress accurately predict future demand, and continually pass legislation to that effect. We dont need a congressional act to subsidize hospital janitors- Somehow hospitals figure out how to include them in their operational expenses because they need them. Furthermore, it wouldnt break the bank of most of these hospitals. Take one of the largest teaching hospitals in the world, Cleveland clinic, with 2000 residents. at typical resident grant of 100k, that is 200 million. The Cleavland clinic annual revenue is >13 Billion.
    - nradov 3y ago
      That is not a realistic or sensible proposal. Only a subset of hospitals do graduate medical education. If teaching hospitals raised their prices to cover the overhead of residency programs then that would put them at a competitive disadvantage relative to hospitals that don't train residents at all. In order to keep residency programs financially sustainable there has to be a separate revenue source. Cleveland Clinic is a non-profit. Their total revenue is irrelevant. If you'd like them to spend an extra $200M on their residency program then they would have to spend less on other stuff. Take a look at their financial statements and then you can tell them exactly where they ought to cut back in order to fund your proposal. Please be specific. https://my.clevelandclinic.org/about/overview/financial-information https://my.clevelandclinic.org/about/overview/financial-info...
      - s1artibartfast 3y ago
        Of course their revenue is relevant? IF they can stack 2 billion per year onto their endowment every year, they could spend 200 million on residents. That is my specific proposal. If they refuse to raise prices, then they should grow the endowment by 200 million less per year and provide the same services. It is bad enough that a non-profit charges 20% more than the cost of their services. They would be fine if they were only making 18% more than their costs. It is basicity the same as if Harvard college claimed it cant afford to train teachers aids while charging students more than enough to cover expenses and sitting on a 50 billion endowment that grows ever larger each year.
TuringNYC 3y ago
You just need to look at an EoB statement to realize the sheer volume of revenues earned by Residents (thought not retained by residents). They are huge profit centers for the medical system with millions in earned revenue annually. Medicare does not need to pay for residents, they are massively net positive revenue. The AMA boards create artificial scarcity and "medicare" is the boogeyman word.
- ethbr1 3y ago
  But if those residents were paid by hospitals, they wouldn't be huge profit centers. Or, to put it another way, if hospitals have difficulty balancing the books with free resident labor, adding additional paid residents wouldn't necessarily fix the financial problem in most hospitals.
  - TuringNYC 3y ago
    >> But if those residents were paid by hospitals, they wouldn't be huge profit centers. Paying residents is not the blocker here, Residents are already paid by hospitals. They are paid a fraction of revenues, which is normal for any profitable business. https://www.ziprecruiter.com/Salaries/First-Year-Medical-Resident-Salary-in-New-York-City,NY https://www.ziprecruiter.com/Salaries/First-Year-Medical-Res...
SkyPuncher 3y ago
Hospitals absolutely have the funding. Residents make a shit load of money for the hospitals they work for. Some hospitals allow residents to moonlight (e.g. practice in off hours) and pay $300+/hour.

ceejayoz 3y ago

Medicare pays for the residency spots. https://www.cms.gov/medicare/payment/prospective-payment-systems/acute-inpatient-pps/direct-graduate-medical-education-dgme https://www.cms.gov/medicare/payment/prospective-payment-sys... https://crsreports.congress.gov/product/pdf/IF/IF10960 https://crsreports.congress.gov/product/pdf/IF/IF10960

nradov 3y ago

There are a lot of bizarre path dependence issues and misaligned financial incentives in the US healthcare system. Most teaching hospitals are non-profits, often run by university systems or governments. Those hospitals get much of their revenue from Medicare/Medicaid. Reimbursement rates are fixed and hospitals have no ability to raise prices to cover increased training expenses. So, the only solution has been to get separate GME funding from Medicare. There are other GME funding sources such as private charitable foundations but still the majority of the money comes from Medicare.

HDThoreaun 3y ago

Residencies lose money, so they're reliant on federal subsidies.

ska 3y ago
> Residencies lose money, Do they though? Or is that mostly creative accounting. I've heard claims in both directions but like anything in medical billing in the US, it's all pretty murky.