Wealthy hospitals should be last in line for new residential slots

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The $ 1.9 trillion American rescue plan that President Biden enacted in March includes funding to create 1,000 additional residency spaces for newly created doctors in hospitals across the country. This provision is one of many provisions in the bill aimed at helping health systems provide essential care to their patients and communities.

Although this important rise in importance is long overdue, an inequitable distribution of these residences goes against its objective. To expand the delivery of needed health services in the most equitable manner, a significant percentage of new residences in core areas – including internal medicine, family medicine, pediatrics, obstetrics and gynecology, surgery general, diagnostic radiology, psychiatry and emergency medicine – should first be established in hospitals in rural, underserved and tribal areas. The remaining residences would then have to go to wealthy hospitals.

The increase in the number of residences, which were capped by the Balanced Budget Act of 1997 and have not budged for nearly 25 years, could not have been better. The combination of a growing and aging population, better access to insurance coverage, and the retirements of older physicians were poised to result in a dangerous loss of between 37,800 and 124,000 American doctors by 2034.

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The new medical residency slots funded by the US bailout will help avert this crisis – if their assignment is based on where in the country new doctors are needed most. Sadly, the unfair allocation of billions of dollars in funding from the CARES Act last year shows that the distribution of federal aid to hospitals often favors large, wealthy and well-connected institutions at the expense of smaller ones that primarily treat populations. low income.

According to a 2020 study By the Kaiser Family Foundation, hospitals that primarily serve financially secure patients have gotten twice as many reliefs from the CARES Act as hospitals that serve more needy patients on Medicare, Medicaid, or without any coverage. The guidelines that determined the allocation of funds for the CARES Act were designed by the Department of Health and Human Services with input from influential lobby groups that represent leading hospitals. HHS funding formulas have largely benefited institutions that were large, successful, and located in major metropolitan markets, like the Cleveland Clinic, New York Presbyterian Hospital, and HCA Healthcare, to name a few.

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To give some idea of ​​the fiscal comfort of these wealthy hospitals, most have billions of dollars in cash reserves, receive millions more from affluent donors, manage their own venture capital funds, and work with private equity firms. to generate billions of additional investment profits. Did they need eight- or nine-digit infusions from the CARES Act emergency support to keep the lights on? No – and they certainly didn’t need the money as much as the vulnerable hospitals, which largely cater to underprivileged populations, and only have enough funds to cover a few weeks of running costs.

While financially healthy enough, successful hospitals will undoubtedly use their vast leverage and influence to claim as many new residences as possible. Why this aggressive approach? The amount of long-term profit that each residence location offers is too large to give up.

Up to half of a resident’s salary is covered by the federal government as direct payment for medical education. The federal government also offers hospitals an indirect payment for medical education, which provides additional compensation of up to 12% to 15% of the amounts billed for the medical services of their residents. Add to this the total associated fees that hospitals charge patients on top of their residents’ professional services (room, meals, supplies, lab work, tests, procedures, etc.) and it becomes clear just how new residences are. of the American bailout plan are valuable. will be in all hospitals now and in the future.

For wealthy hospitals, the benefit of having a crop of new residents as a bonus is even more substantial: Most patients in these hospitals are privately insured, which means their bills are worth the hospital. almost double what they would be if they were paid for by Medicare or Medicaid.

Without a framework in place to ensure that the new residents of the US bailout are assigned to the hospitals where they will do the most good, we could see a repeat of the funding bias of last year’s CARES Act that favored patients. powerful health care organizations versus smaller and less fortunate ones. .

To achieve a more equitable arrangement, two benchmarking methods can be used: Hospitals can be prioritized using a physician-patient ratio (hospitals with the highest average number of physician-directed patients would be top of the list). Another approach is to use an insurance / private / public assistance ratio (hospitals in which more patient bills are paid with Medicare and Medicaid than with private insurance would top the list).

Financial incentives could also be built into the designation of new residency niches that would support young physicians who wish to start their careers in low-income, underserved, and tribal areas, with tax-free grants being given to offset their large faculty debt. of Medicine. . In addition, they could receive stipends to help them pay their expenses for relocation, utilities and housing.

The American Rescue Plan aims to improve the long-term health of disadvantaged groups by improving accessibility to medical care, investing in community health, and addressing social contributors to health. Giving the lion’s share of the plan’s new medical residency slots to wealthy hospitals will override that goal. Prioritizing the establishment of essential service residences in low-income urban areas, medically underserved rural areas and tribal areas across the country will make this possible.

David Lenihan is the CEO of Ponce Health Sciences University and Tiber Health, a St. Louis-based medical education company.

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