Report at a Glance
Graduate Medical Education That Meets the Nation’s Health Needs
Since the creation of the Medicare and Medicaid programs in 1965,the public has provided tens of billions of dollars to fund graduate medical education (GME), the period of residency and fellowship that is provided to physicians after they receive a medical degree. Although the scale of government support for physician training far exceeds that for any other profession, there is a striking absence of transparency and accountability in the GME financing system for producing the types of physicians that the nation needs.
In 2012, the Josiah Macy Jr. Foundation asked the Institute of Medicine (IOM) to conduct an independent review of the governance and financing of the GME system. Eleven other private foundations provided additional support for the study (the ABIM [American Board of Internal Medicine] Foundation, Aetna Foundation, The California Endowment, California HealthCare Foundation, The Commonwealth Fund, East Bay Community Foundation, Jewish Healthcare Foundation, Kaiser Permanente Institute for Health Policy, Missouri Foundation for Health, Robert Wood Johnson Foundation, and UnitedHealth Group Foundation), as well as the Health Resources and Services Administration (HRSA) and Department of Veterans Affairs (VA). Eleven U.S. senators, from both sides of the aisle, encouraged the IOM to undertake the study.
The 21-member IOM committee concludes that there is an unquestionable imperative to assess and optimize the effectiveness of the public’s investment in GME. In its report, Graduate Medical Education That Meets the Nation’s Health Needs, the committee recommends significant changes to GME financing and governance to address current deficiencies and better shape the physician workforce for the future.
The Role of Medicare
The vast majority of public financing for GME (which totaled about $15 billion in 2012) comes from the Medicare program—an estimated $9.7 billion in 2012. Indeed, Medicare has provided a secure and stable funding source for residency training for almost 50 years. During that time, residency positions have expanded in number and in the breadth of specialties; residents’ working conditions have improved; substantially more women are in the training pool; the number of underrepresented minorities has increased (although greater representation is still needed); and residency training has evolved from an apprenticeship model emphasizing service to a curriculum-based educational experience tied to the achievement of defined competencies. However, the statutes and regulations governing GME financing date from 1965, a time when hospitals were the central, if not exclusive, site for physician training. Medicare GME payment rules continue to reflect that era despite dramatic changes in the health care system. Although hospital services remain essential, the burden of chronic disease, the need for greater emphasis on preventive care, and modern information technologies (as well as other influences) mean that health care increasingly takes place in community settings and relies on nonphysicians and integrated care models. Yet, the Medicare GME payment system discourages physician training outside the hospital, where most health care is delivered.
Although Medicare’s dominant role in GME funding could be viewed as an historical accident, the IOM committee finds that there is great potential to leverage Medicare’s investment in GME by redesigning the system to reward desired outcomes and program performance. Despite the system’s flaws, to withdraw Medicare funding altogether would risk serious unintended consequences. Instead, the committee calls for reforms to the way Medicare’s GME funds are allocated and increased oversight and accountability for the GME system as a whole. Although additional public GME funding comes from Medicaid, VA, HRSA, the Department of Defense, and state sources (see Figure), the committee’s recommendations focus on Medicare as the largest and most influential contributor—and therefore the contributor with the most potential to effect change.