Importance

• Current debate on:

Estimating the Marginal Cost of – whether to expand physician workforce
Financing Physician Training in the US – how to finance it (even more important)

• Scant literature on:

– how much needed to train one more physician through a
Martey S. Dodoo, PhD, program
Senior Economist
The Robert Graham Center • Cost estimates should allow:
(Policy studies in Family Medicine and Primary Care ) – Training programs maintain financial viability
Washington, DC. – Advocate for necessary financial support

Presented at the: Annual 2007 Academy Health Research Meeting • Credible cost estimates:
Mon., June 4, 2007 11 AM
– critical to obtaining funding for training program expansion
Orlando, FL
1 The Robert Graham Center 2
Policy Studies in Family Medicine and
Primary Care

Background Data Sources

Burden of financing falls on four groups (not mutually exclusive): • Medical School Funding
– Students – Total Cost Dollars:
– Institutions • From AAMC Annual Financial Tables (LCME part 1A)
– Taxpayers (local, city, regional, State, Fed) • From AACOM - annual statistical reports
– Society – Total Enrollment Numbers:
• From AAMC Data Warehouse
Our Objectives: • From AACOM annual statistical reports
• Provide a simple but credible framework
• Estimate marginal cost to taxpayers of physician training • GME – Residency program funding
Æ financial support advocacy – Total Cost Dollars :
• From Medicare Cost Reports
Based on: • From Nat. Conf. of State Legislature - Henderson’s surveys (’01-’02
• Average Variable Cost that is & ‘04-’05)
Proportional to output = Marginal cost – Total Resident Numbers:
• From Annual reports and other data reports of ACGME

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Policy Studies in Family Medicine and Policy Studies in Family Medicine and
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Methods Methods
Illustrate with Medical School (MD) costs: For example: – for all MD schools FY 2005:
Total taxpayer dollar costs
= medical school revenue from taxpayers Revenue items: $million (current $)
Hospitals/Medical School Programs $8,090
Government Appropriations (2 items) $4,053
• Selected revenue items proportional to student output
Tuition and Fees (exclude?) $2,107
(critical to the method):
Indirect Federal Grants (2 items) $4,698
1. Hospitals/Med School programs
Subtotal (in $ millions) $18,948
2. Government Appropriations (2 items)
Student Enrollment 68,008
3. Tuition and Fees (may exclude if so choose)
Cost per student $278,614
4. Administrative/Indirect costs (2 items)
(As % total revenue: Public MS=35% ; Private MS=25%)
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 Methods Results
Medical Schools(FY2001-FY2005) Cost per student (in constant 2000 $s)
For example: for all DO schools – for FY 2005:
MD Schools DO schools
Revenue items: $million (current $) Public Private Using total Using estimated
Program costs (2 items) $378.0 School School enrollment Yr 1&2 #s
Government Appropriations (3 items) $356.6 2000-01 $215,010 $216,665 $66,994 $126,580
Tuition and Fees (exclude?) $150.6
2001-02 $230,713 $233,112 $71,033 $137,138
Grants and Contracts (3 items) $68.6
2002-03 $240,124 $253,389 $73,969 $140,936
Subtotal (in $ millions) $851.7
Total Student Enrollment 11,857 2003-04 $253,078 $269,608 $68,635 $125,201

1st & 2nd Year Enrollment (est.) 6,500 2004-05 $268,195 $277,580 n/a n/a
Cost per student (using all enrollment) $80,442 Average $241,424 $250,071 $70,158 $132,464
Cost per student (using 1st & 2nd year #s) $146,738
Notes: Numbers were inflation adjusted using the Higher Education Price Index (HEPI)

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Policy Studies in Family Medicine and Policy Studies in Family Medicine and
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Methods Results
For all GME residency programs for example – for FY 2005 (current $): GME residency costs from FY 2001 to FY 2005 (in constant 2000 $s):
GME Cost items: $million Per resident costs and payments
Total medical resident positions 101,810 Medicaid GME Medicare GME
GME costs payments payments*
Pediatrics resident positions 7,876
Medicare IME payments ($m) $4,053 2000-01 $81,867 $23,369 $77,480
Medicare DME payments ($m) $1,951 2001-02 $88,573 $25,751 $81,396
Medicare GME Payment per resident * $63,917 2002-03 $91,962 $27,568 $79,758
Medicaid GME payments ($m) $3,180 2003-04 $92,426 $28,488 $83,840
Medicaid GME Payment per resident $31,235 $65,844 $30,154 $61,705
2004-05
GME costs ($m) (as reported) $6,944
Average $84,134 $27,066 $76,836
GME Cost per resident (as reported) $68,205 Notes: * Excludes pediatrics residents/students.
Notes: * Excludes pediatrics students/residents Numbers were inflation adjusted using the Higher Education Price Index (HEPI)
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Policy Studies in Family Medicine and Policy Studies in Family Medicine and
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Results Alternative methods

• Similar tables summarizing GME • Regression technique:
residency costs from FY2001 to FY2005 – Relation between total costs and enrollment
(in constant 2000 $s): – Need to control for intervening variables
– Used to estimate marginal costs
– By each of 50 States and DC – Interpretation difficulties
– By size of teaching hospital (in 5 size groups • Incremental cost method:
using # of beds) – Directly estimates marginal cost attributed to changes
– By type of hospital control in enrollment at single institution or its sub-unit
– By rural or urban location – Complicated by joint production, separating other
factors etc.
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Limitations of our method: Summary
Medical School estimates: Marginal cost of Physician Training per student per year
(constant 2000 $)
• Identifying variable costs and proportional
variable costs in financial records may be
Type of training Cost/student/year
judgmental.
Public MD School $241,424
GME estimates: Private MD School $250,071
• The State and Medicaid GME payments are DO School (4 years) $70,158
estimates and extrapolations of those estimates DO School (mostly year 1 & 2) $132,464
from NCSL surveys GME Medicaid funding $27,066
• Data for different geographic regions - may not GME Medicare funding $76,836
be reported consistently Notes: * Excludes pediatrics residents/students.
Numbers were inflation adjusted using the Higher Education Price Index (HEPI)
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Thanks

mdodoo@aafp.org

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Policy Studies in Family Medicine and
Primary Care