A New Formula for Teaching Health Center Graduate Medical Education Payments Based on a Comprehensive Cost Evaluation.

Abstract

Purpose: A cost evaluation of the Teaching Health Center Graduate Medical Education (THCGME) program was conducted to measure direct medical education (DME) and indirect medical education (IME) costs, assess the effect of teaching health center (THC) characteristics on residency training costs, and develop a method and formula for per-resident amount (PRA) payments in baseline and future years for the THCGME program.

Method: A costing instrument was developed by George Washington University researchers to collect academic year 2018 to 2019 cost data from 50 of 55 THCs to determine DME expenses. The investigators conducted 3 rounds of review on submitted instruments and provided technical assistance to THCs as needed. Health center-based THC sites were compared with health centers without training programs to investigate IME expenses using the Uniform Data System, interviews, and data from 4 health centers with training and nontraining sites.

Results: After adjustment for inflation, the THCGME program PRA for academic year 2024 to 2025 was estimated at $227,164 based on median per-resident total expenses ($328,507) and revenues ($101,343). Resident and faculty compensation represented more than half of PRA expenses, with the remaining being other educational costs and operational or administrative expenses. Patient services represented 97% of revenues. Investigations into IME costs did not yield identifiable estimates.

Conclusions: The cost evaluation revealed that the PRA currently used in the THCGME program underfunds actual net training costs. The investigators offer 3 THCGME program recommendations: (1) use a payment formula to annually adjust the PRA for inflation, understanding that such a payment policy requires legislative (appropriations) and executive branch (implementation) action; (2) use a PRA that remains a single, fixed payment without adjustment for THC characteristics; and (3) provide no additional funding for IME, given limited supporting data to justify assigning additional costs to THC-based training, given its ambulatory context.