November 2020

Trend Watch: Teaching Hospitals’ Impact in a Transforming Health Care Landscape

American Hospital Association’s TrendWatch

Faegre Drinker Consulting Principal Mike Adelberg and health care counsel Dave Ault authored a report for American Hospital Association’s TrendWatch, titled “TrendWatch: Teaching Hospitals’ Impact in a Transforming Health Care Landscape,” that outlines the key issues faced by teaching hospitals, essential institutions for building and maintaining a physician workforce that can meet the country’s health care needs today and into the future.

Teaching hospitals train the physician workforce, drive innovation in health care and provide cutting-edge care to a diverse patient base, including vulnerable populations. Federal funding through Medicare graduate medical education (GME) has been a significant element in building and maintaining teaching hospitals, yet GME funding remains threatened.

In the report, the authors explained key issues teaching hospitals are facing today and serves to advance the policy discussion around these institutions.

The authors noted that the Accreditation Council for Graduate Medical Education (ACGME) sets and monitors the professional educational standards for teaching hospitals and that in 2015 ACGME assembled the 2025 Task Force, which is charged with better understanding teaching hospitals and which aims to change the future of GME.

Teaching hospitals’ margins have been decreasing for years, which has only been exacerbated by the COVID-19 pandemic. The authors explained the different factors contributing to the financial pressures facing teaching hospitals, including Medicaid GME, Health Resource and Service Administration programs, the Department of Defense, the Department of Veterans Affairs, and self-funding from the hospital, philanthropy, and the physicians themselves. The authors also discussed how the federally imposed caps on residency slots established by the Balanced Budget Act of 1997 factors into the financial pressure teaching hospitals face.

The authors highlighted the importance of teaching hospitals as a driver of health care innovation because they are adapters of new and emerging technology, conduct academic research and participate in alternative payment methods. Many teaching hospitals also provide advanced, technologically intensive and experimental clinical services that are seldom available elsewhere and treat a disproportionate share of uninsured persons. Despite these key contributions by teaching hospitals, the authors shared that it’s reported “between 35% and 54% of U.S. physicians have symptoms of burnout as a result of an imbalance between the demands of a clinician’s job and the resources available to perform their duties effectively.”

The authors highlighted the ways in which Congress is addressing these issues facing teaching hospitals, such as the Resident Physician Shortage Reduction Act of 2019 being the most recent legislative effort to address physician shortage through GME. The authors noted that GME policies will continue to be the subject of legislative debate as policymakers look to balance reducing health care spending with strengthening the physician work force.

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