Featured image for article

“Trickle-Down Physician Supply Doesn’t Work.”

That’s what Dr. Erin Fraher, health workforce expert at University of North Carolina, had to say to lawmakers at a recent subcommittee meeting that examined how government funds are distributed to help teaching hospitals pay for physician residency programs.

The bulk of graduate medical education (GME) funds are paid for out of Medicare, the federal program that offers health benefits for seniors. It used to be the case that hospitals covered residency training themselves (and patients would make up for the cost with higher hospital bills), but federal dollars have been appropriated for these programs since post-WWII.

Farher and other health workforce experts pointed out that there’s a need to reform the way GME money is allocated, since it’s difficult to track exactly how this money is being spent, and that the current financing structure allows hospitals to use GME funds to open residency slots based on their own interests rather than catering to patient needs.

As a result, the current GME financing structure is a contributing factor to North Carolina’s physician maldistribution problem. Looking across North Carolina’s health care landscape, 14 percent of the state’s population live in primary care shortage areas. 25 percent of counties don’t have a general surgeon or an OB-GYN.

“Some hospitals are good at aligning funds with workforce needs, others are not,” she says.

Dr. Warren Newton, Vice Dean and Director of North Carolina’s Area Health Education Centers (AHEC),   describes the GME funding structure as ‘a maple syrup on a pancake model.’

“So the idea is that you take maple syrup and you put it on a pancake, and you hope it gets everywhere. That’s why and how we’ve been training our docs. The problem is, it ain’t necessarily so, they don’t get everywhere and that’s part of what Erin is talking about, it’s maldistribution.”

Calls to reform GME is nothing new. One way to go about it is for all GME funding streams to be placed into its own separate pool, while states would be able to have more control in managing these funds. For more information, see here.

Katherine Restrepo / Director Of Healthcare Policy

Katherine Restrepo is the Director of Healthcare policy at the John Locke Foundation. Before joining the John Locke Foundation, she interned at the Cato Institute under the di...