December 1998 Bulletin

14 hospitals exit HCFA residency reduction plan

Administrators find program too restrictive

More than a dozen New York state hospitals have bailed out a much-ballyhooed federal demonstration program designed to reduce the number of residents being trained. It was viewed as one way to reduce the work force of specialists in the coming years.

Hospital officials say the program is too restrictive and shifts the focus from creating the best possible educational experience to hitting residency reduction targets. Some administrators had second thoughts about the economics of participating. Thirty-five of the original 42 hospitals remain in the program.

The Health Care Financing Administration (HCFA) project provides the hospitals some $400 million in declining levels of Medicare payments over five years to reduce the number of training positions by 20 to 25 percent or 2,000 slots. During the same period, the hospitals would increase the proportion of primary care residents by 20 percent. HCFA expected to save $300 million because the agency would have given the hospitals $700 million in graduate medical education payments to train the 2,000 residents.

Harold Dick, MD, whose hospital, Columbia Presbyterian Medical Center, is one of the institutions that pulled out of the program, said "as soon as the finance officers saw the cost to have the work done by PAs and nurse practitioners they said it would cost more [to be in the program]."

Reducing residents also reduces the manpower providing care in the hospitals. Hospitals would have to hire physician assistants and nurse practitioners to perform the tasks of the residents.

In November, six hospitals of the Graduate Medical Education Consortium of Rochester (New York) and Beth Israel Medical Center in New York City dropped out of the HCFA demonstration project. Seven other teaching hospitals dropped out earlier.

"It's not surprising that some hospitals have dropped out of the program, said Patricia J. Wang, senior vice president, health finance and managed care, of the Greater New York State Hospital Association. "It is a demonstration project," she stressed. "Reducing the number of residents 20 or 25 percent is a lot. It's a deep cut and at a fast pace."

The hospitals have given a variety of reasons for bailing out. Some had internal service requirements and found they did not have flexibility; others believed that their educational programs were too constrained.

Some hospitals that want to reduce the number of residents may be finding they can do it with less restraints than the HCFA project, Wang said. The new budget act has a "three-year rolling average" provision for the calculation of HCFA reimbursements for GME.

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