Getting paid not to teach too costly for New York hospitals
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* Milan Korcok

Despite handsome government bonuses to cut residency programs and thereby stem physician oversupply, New York State hospitals are finding they can't do without the low-cost, high-volume services of their young doctors-in-training.

Two years after signing on to the federal program, similar to one that paid farmers not to grow crops, more than half of the 49 hospitals in the Medicare Graduate Medical Education Demonstration Project have dropped out. Their complaint: replacing residents earning US$50 000 and working 80-hour weeks, with fully qualified specialists earning US$150 000 and working only 40 hours, was a losing proposition - even with the federal government kicking in its subsidies.

As Kenneth Raske, president of the Greater New York Hospital Association (GNYHA) said in a published report: "It became clear how indispensable the residents are to providing high-quality care on a day-in, day-out basis." It was the GNYHA, backed up by the state's 2 powerful senators, that first thought up the plan (see CMAJ 1997;157:1263-4).

Federal Medicare pays hospitals up to US$100 000 per year for each resident trained, and after paying their salaries (about US$50 000), hospitals can pocket the rest. Under the demonstration project, Medicare continued to pay hospitals even for the residency slots that were cut, so long as they reduced the total number of slots by as much as 20% to 25%. The plan was expected to result in up to 400 fewer residency positions in New York in the first year alone.

Though devised initially for New York, which trains some 15% of the nation's doctors, the plan was to extend the program to other states if it was successful. One major teaching centre that signed on to the program found the first year's experience cost the hospital US$1.5 million. Administrators quickly backtracked and restored the 40 resident positions they had cut.

When they signed on, the hospitals anticipated some significant changes in the supply-demand equation. They expected patient populations to decline, thus reducing the need for residents, and they felt Medicare reimbursements to hospitals to train doctors would surely be cut given federal balanced-budget imperatives. That would have reduced their incentive to employ residents. Neither change happened. Medicare budget cuts were only slight, and although average lengths of stay have dropped, the number of admissions rose and so the demand for residents' labour intensified.-[copyright sign] Milan Korcok, Florida