In a move most hospitals don’t take all at once because of financial costs, DMC decided to make plans to hire the additional residents to address urgent primary care needs of the patients it serves in Detroit and Commerce Township, said Patricia Wilkerson-Uddyback, M.D., DMC’s vice president of graduate medical education and community affairs.
But unlike other major hospitals in Southeast Michigan that self-fund dozens of medical residents and fellows, all 79 residents are expected to be funded by the Centers for Medicare and Medicaid Services because the seven-hospital system has room under its federal resident reimbursement cap number, Wilkerson-Uddyback said.
“We are expanding most of the programs and taking existing programs and combining them,” said Wilkerson-Uddyback, adding that the number of residents hired and the programs may change over the next year based on demand. “Some (residency) programs were not full and (under) the caps, and we had an opportunity to fill them.”
The overwhelming majority of DMC’s new residents — some of whom will be accepted in this year’s residency match in March — will be accepted into DMC’s internal medicine program and other primary care programs that include internal medicine-pediatrics and critical care, Wilkerson-Uddyback said. A small number will go into neurology programs. Most will go to DMC’s Harper University Hospital, Sinai-Grace and Huron Valley, she said.
“We have a huge gap for primary care. It has been building for some time and became a focus for some years,” said Wilkerson-Uddyback. She said DMC took a close look at patient needs based on specific ZIP codes it services to come up with the staffing decisions.
On Dec. 31, DMC also discontinued a one-year externship program it funded for 12 medical school graduates that was aligned with its cardiology program. Elimination of the program, which was designed to give unmatched students experience in cardiology training, will allow DMC to hire more internal medicine residents, she said.
DMC officials confirmed that the elimination of the cardiology externship program saved DMC about $600,000 annually that will be used to expand care to primary care patients. The externship program was started by a half-dozen cardiologists, some of whom who have left DMC, said two sources who asked for anonymity.
Tom Gentile, a residency program consultant and former hospital GME executive in Southeast Michigan, said some hospital residency programs receive more funding from Medicare, Medicaid and other payers for residents than the costs of their residency programs.
Gentile told Crain’s that on average hospitals receive about $140,000 per resident from Medicare and other funders to pay for resident training costs. Costs to train residents also vary, but internal medicine residents cost hospitals about $125,000 to $140,000 per resident while family medicine residents, because of more ambulatory care duties, may cost a hospital $140,000 to $150,000 per resident annually, he said.
Based on a previous analysis Gentile conducted on DMC several years ago, DMC received about $180,000 per resident from Medicare and other funders. Based on those averages, DMC is expected to receive about $14.2 million in revenue for the 79 residents and pay out about $11.8 million in salaries, benefits and other training costs. Residents generally are more expensive than attending physicians because they often order more tests and conduct extra procedures for training purposes.
“Some hospitals receive a positive cash flow for the residency programs,” said Gentile, adding that hospitals can also further reduce patient care expenses by hiring more residents instead of paying advanced-practice nurses for similar duties.
The average first-year resident salary is about $50,000 per year, although it can vary based on hospital, region and specialty. In comparison, a physician assistant or nurse practitioner salary ranges averages about $100,000 per year.
“It is a good strategy to hire residents instead of nurse practitioners and physician assistants,” he said. “Residents add great value to hospitals to provide care. You get more direct benefits to patients because residents are as much by the bedside” as patient care nurses.
Wilkerson-Uddyback said DMC will spend some additional money on the GME programs because it also has approved a 12 percent raise for its residents this year to bring salaries up to market averages. She said residents’ average salary had dipped below the market in previous years. The salary boost will increase first-year resident salaries above $50,000 per year, she said.
Under the Balanced Budget Amendment of 1997, Medicare capped the number of residents it pays for at teaching hospitals to hold down costs. Efforts are underway in Congress to lift the cap because of the need to train more physicians to address the large number of doctors who are expected to retire in the next decade, to care for an aging population and those requiring more primary care services.
Crain’s has previously reported that several large teaching hospitals in Southeast Michigan are above the Medicare cap. For example, the University of Michigan Health System, which has 1,269 residents and fellows in 106 programs, pays for 272 of those residents out of its own operations because it is above the Medicare GME reimbursement cap.
Beaumont Hospital in Royal Oak, Ascension St. John Hospital and Medical Center in Detroit and Henry Ford Health System in Detroit also pay for more than 200 residents out of their operations because they are over their Medicare resident cap.
Each year, Michigan’s 50 teaching hospitals are paid more than $1 billion annually in graduate medical education funds from federal, state and managed care funding sources for their residency programs.
Medicare is the main source of health care GME funding, accounting for about 85 percent of funding in Michigan. Medicaid and private payers account for the remaining 15 percent. Medicare funding comes in two pots. The first is in direct payments to cover residents’ salaries, benefits, medical malpractice premiums, administrative costs and stipends for supervising physicians. The rest consists of indirect payments to cover teaching hospitals’ higher costs to treat the sicker patients they typically have.
DMC has one of the largest physician training programs in Michigan, generating millions of dollars in payments, and it does so through close academic affiliations with Michigan State University’s College of Osteopathic Medicine and Wayne State University’s School of Medicine.
Over the past several decades, DMC has trained about 70 percent of the state’s trauma surgeons and 60 percent of its emergency physicians. DMC sponsors more than 100 residency and fellowship programs that include such specialties as emergency medicine, surgery, family practice, cardiology, neurosurgery, obstetrics and gynecology, neurology, internal medicine, pathology, pediatrics and radiology.
At teaching hospitals, graduate medical education traditionally has fulfilled two goals: training thousands of young doctors and providing lower-cost, front-line daily patient care as part of a medical team that also includes higher-paid practicing physicians and nurses.
Wilkerson-Uddyback said other reasons to add the residents is to address the expected physician shortage looming over Michigan and the nation and to give more medical students trained at Wayne State and other Michigan-based medical schools more local training opportunities.
Over the next decade, she said DMC also will have a large number of primary care physicians retiring. “We have looked at a lot of different ways of approaching it,” said Wilkerson-Uddyback, who is still a practicing emergency physician. “I am coming at this from the hospital side of things. We have got to do this.”
Last fall, Wilkerson-Uddyback said she presented DMC CEO Tony Tedeschi, M.D., and Tenet Healthcare Corp., the owners of DMC based in Dallas, with the resident hiring plan and they were totally supportive.
“When Tony put me in this position, he really made a commitment to do this. We presented a really good case to Tenet and they supported the funding. Our goal is to have one of the best GME programs in the country.”
In 2018, a study sponsored by the Association of American Medical Colleges found that the U.S. could face a shortage of between 42,600 and 121,300 physicians by 2030. AAMC warned the projected shortages could pose a real risk to patients because it takes up to 10 years to train a doctor.
“There is a tremendous need right here in the city of Detroit with a deficit of more than 400 physicians,” Tedeschi said in a statement. “And with these new slots for residents, we can continue to impact the underserved needs of our community while providing world class health care.”
An AAMC official told Crain’s that the proposed act could gradually work to reduce the physician shortage problem by adding about 15,000 Medicare-supported GME residency positions over a five-year period.
Over the last several years, the AAMC has been lobbying for a federal bill that would remove the Medicare-funded reimbursement cap on hospital graduate medical education residents.