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The Sequestration Era

VUSM’s Donald Brady, M.D., discusses its potential impact on graduate medical education

By Kathy Whitney
August 2013

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Efforts by the federal government to control the nation’s spiraling budget deficit, including sequestration that took effect on March 1, have created the potential for significant impact to Medicare’s long-standing support for graduate medical education (GME) and could limit the ability of the nation’s academic medical centers to care for patients and train the next generation of physicians, says Donald Brady, M.D., senior associate dean of Graduate Medical Education for Vanderbilt University School of Medicine (VUSM).

According to the Association of American Medical Colleges’ Center for Workforce Studies, there will be a shortage of 45,000 primary care physicians and 46,000 surgeons and medical specialists in the next decade, exacerbating concerns over the future of GME funding and the nation’s ability to train enough physicians to care for an aging population.

Donald Brady, M.D. Photo by Joe Howell.

Donald Brady, M.D. Photo by Joe Howell.

Recently, Brady and Christina West, assistant vice chancellor for Federal Relations in Vanderbilt University’s Office of Federal Relations, visited the offices of a majority of Tennessee’s congressional delegation in Washington, D.C., sharing a detailed GME cost analysis.

Here, Brady answers questions about some of the issues VUMC’s leadership are grappling with as the full impact of efforts to control the nation’s deficit begin to take shape.

How did you describe the value of GME to Tennessee’s congressional staffers?
GME is the time in which your doctor learns to become your doctor. Residents and fellows have to complete an accredited training program to become eligible to sit for the certification exam in their specialties. Hospitals, medical centers and even the lay public expect and, in most cases require, their doctors to be certified in their fields.

In addition, GME contributes significantly to VUSM and VUMC. GME provides us the opportunity to train the next generation of physicians who will succeed us. Residents are an integral component of our efforts to provide the highest quality care to our patients, both through service delivery and quality improvement; they are at the front line of patient care. They provide teaching and mentoring for our medical students. Vanderbilt is deeply committed to training the next generation of physicians, as noted by the fact that we are more than 200 positions over our Center for Medicare and Medicaid Services (CMS) cap (the limit on the number of federally-funded residency positions, an overage for which Vanderbilt receives no federal reimbursement).

How is Vanderbilt’s GME program currently funded?
We did a major cost analysis last year, looking at GME revenue and expenses during fiscal year 2011. Most people do not realize that Vanderbilt invests more than $115 million each year in direct, non-billable expenses for GME. And this figure doesn’t include factoring in the time required for faculty to provide clinical supervision. To help cover costs in 2011, Vanderbilt received $37.5 million in direct graduate medical education payments from CMS, support designed to help compensate academic medical centers for residency education costs, including $14.3 million in reimbursement from TennCare, Tennessee’s state-managed Medicaid program. In addition, we received $36.5 million in indirect payment, designed to partially compensate academic medical centers for higher patient care costs due to the presence of teaching programs, from Medicare and Medicare Advantage. Even with this support, Vanderbilt is making an unreimbursed investment of more than $40 million toward GME. So, GME is underfunded from the very start. Direct and indirect medical education reimbursement combined don’t cover the core, direct non-billable GME costs, even before factoring in cuts to GME funding through sequestration or other deficit-reduction measures.

What might GME funding look like if reductions are enacted?
We don’t know the specifics yet, but reductions are likely inevitable. It could be as small as the nation’s academic medical centers absorbing a 2 percent annual cut in Medicare currently afforded through sequestration. At the other extreme, there are proposals on the table to cut billions from GME on a national basis. Almost every time a new proposal is put forth to reduce federal expenses, GME is part of the legislation. We are in an environment where there is a constant threat GME funding will be reduced or taken away.

Any reductions to funding will mean that Vanderbilt’s unreimbursed dollar investment in GME will have to grow to maintain even our current efforts to train tomorrow’s physicians.

How will funding reductions impact Vanderbilt’s GME program?
This is unknown right now. However, the greater the reduction the more likely we will have to make hard decisions on whether to eliminate certain programs altogether or to keep the same number of programs but decrease their size. Do we eliminate some of the subspecialty fellowships where there may only be one or two fellows in it, like geriatrics or stroke? The ramifications for our state (and nation) could be huge. Tennessee’s population is aging, and we offer the only geriatric training program in the state. Stroke is the fourth leading cause of death in Tennessee, and the state has the fifth highest rate of stroke deaths in the U.S. We have one of only two stroke fellowships in the state and the only neuroradiology and vascular radiology fellowships in Tennessee. I could say the same for our pain medicine fellowship, the only one in the state, given the great need in Tennessee for specialists trained in the proper prescribing of narcotics and given that Tennessee is second in the nation in per capita prescription of opioids.

It’s just as painful to consider decreasing the size of our primary care disciplines. We train 43 percent of all the pediatricians and 33 percent of all the general surgeons in the state, and we have one of only two medicine-pediatric programs in Tennessee. Of course, we could choose to maintain GME at its current capacity even with reduced funding, but that would force the Medical Center to make cuts in other areas to make up for the lost revenue, which is a no more tenable situation than other choices.

What steps are we are taking to prepare for possible funding reductions to GME?
Christina West and I visited the staff in the majority of Tennessee’s congressional offices. It was an excellent interaction because they really wanted to know what was going on. They appreciated that we had detailed information to provide them and that we were looking at the cost and investment that was being made for GME. We had a good dialogue about why investing in the training of physicians is incredibly important and what the consequences might be of any reductions to the current funding structure. I also know that Vice Chancellor and Dean Jeff Balser has been stressing this same message in his discussions with legislators and other leaders in Washington and has been instrumental in coordinating leaders of other academic medical centers in conveying a similar message. This is one of the primary advocacy issues before Vanderbilt’s Office of Federal Relations as they interact with federal policymakers.

What is Vanderbilt’s outlook?
I think the first thing to stress is that Vanderbilt remains committed to GME. Residents and clinical fellows are integral to our tripartite mission of patient care, education and research. The hope is there will be no cuts at all, maybe even some consideration for loosening the current GME cap, as the nation is graduating more and more medical students to fill forecasted physician shortages across the board. Currently, however, the GME cap is a bottleneck due to the limited number of funded positions. Without improved funding sources, that bottleneck is likely to remain tight. The best of the worst-case scenarios would be that we limit any reductions as much as possible. In the meantime, our programs go on as usual. We realize we will probably be adjusting to a new era, but we have not cut the size of any of our residency programs. Once we make the decision we are going to train someone, we do everything in our power to make sure we are training them in the best possible way to make them the best doctor they can be. This is one of our core missions: to train the next generation of physicians and physician leaders, so we’re going to do everything we can to ensure our core mission is not compromised. 



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