Financing and budgeting of community-based family medicine residency programs.

Abstract: Using an Internet-based survey for the fiscal year 2003 to 2004, 56 community-based family medicine residency programs participated in primary research of current financing and expenditures. A median of $194,125 was invested in training each resident annually. The bulk of funding stemmed from sponsoring institution support and clinical care revenues. The majority of programs did not receive Title VII funds, state, local, or philanthropic support. Clinical care activity continued a historical trend of increases. There were 1,076 patient visits per resident full-time equivalent, producing 39.5% of program financing. The percentage of visits provided to those with Medicaid was 35.9%. Expenses included a calculated malpractice rate of $17,097 per faculty full-time equivalent. This effort provides a database available for further expansion, a comparison to medical school-based residency programs, analyses for reflection on program characteristics, and future comparison of historical trends.

Key Words: budgets, family practice, financing, funding, malpractice, medical residency

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The financing and budgeting of family medicine residency training programs are sparsely analyzed elements of health care spending. (1-4) With declining student interest and closure of programs for financial reasons, creating a national comparative database of program financing could allow programs to benchmark their activities and provide directions for future activities. (1) Findings of a small national database on financing and budgeting of community-based residency programs are presented here.

Previous efforts were used as templates for study design with input from clinician-researchers familiar with program financing. (2,4) An internet-based survey of community-based residency programs in family medicine was conducted from November 2004 until March 2005. Participants answered a 36 question survey on program revenues, patient payer types, and expenses for the fiscal year July 2003 to June 2004. Each participating program received a private comparison of its financing and budgeting.

The number of participating programs for each of the 36 survey questions ranged from 10 to 52, Tables 1, 2, and 3 present the median figures for program revenues, payer mix, and expenditures.

The typical community-based family medicine residency program used income of $4,464,822 to train 23 resident physicians at a total cost of $194,125 per resident full-time equivalent (FTE). Staffing involved 8.0 faculty FTE, 3.3 administrative staff FTE, and 17.2 clinical staff FTE.

Most community-based family medicine training programs did not receive state, local, or philanthropic funding. The sponsoring institution provided 43.5% and clinical care provided 39.5% of revenue. One-half of participating programs received grant funding with a high of over $800,000. Of the programs that received grant funding, seven received Title VII funds designated for the development of primary care clinicians.

The median program provided 26,378 patient visits, or 1,076 patient visits per resident FTE. Payer mix was 6.6% self-pay, 35.9% Medicaid, 20.0% Medicare, and 30.4% private payer.

Expenditures included $1,387,500 for faculty salaries, expenses, and benefits for a median rate of $164,654 per faculty FTE. Expenditures for 20.5 administrative and clinical staff FTE were $825,927. Nonpersonnel operating expenditures were $904,500. Total malpractice expenditures were $126,000. Divided by faculty FTE, this produced a median calculated rate of $17,097. Median malpractice rates reported by programs were $10,839 per faculty member practicing obstetrics, $6,500 per faculty member not practicing obstetrics, and $2,088 per resident physician.

A large annual investment of $194,125 per resident physician is placed into community-based family medicine residency programs. Institutional support and clinical care income account for the bulk of program financing. A minority of community-based programs receives funding from grant, state, local, medical school, or philanthropic support. State, local, and philanthropic support has declined substantially from a mean of 35% in 1981-1982 to 13% in this study. (2)

Clinical care income as a portion of training program financing has risen from 20 to 40% over the past 30 years. (1) The annual number of patient visits per resident physician has risen from 701 to 1,076. Of these visits, 40% is provided to those with Medicaid or no insurance, compared with 13.5% for the typical family physician. (5) Events that affect federal graduate medical education funding or clinical income from care of patients with Medicaid will impact the financial viability of training programs.

This study provides figures for benchmarking financing and budgeting practices of community-based programs. Administrators can use comparisons to evaluate the financial health of their programs as well as in negotiations with institutions. Identifying and addressing outlying costs of malpractice insurance, compensation, or clinical care volume may allow the continued viability of programs. This database is available for further analysis including future evaluation of historical developments, identification of patterns associated with financial stability, and attractiveness to medical students.

An inclusive national assessment needs to be performed. This is a small step in addressing the larger need for a continuous encompassing financial database that programs could utilize annually for their benefit.

References

1. Pauwels J, Oliveira A, Stevens N. Benchmarking the costs of residency training in family practice. Fam Med 2003;35:330-336.

2. Ramsey CN, Durrett JP, Grant WD. A National Study of Financing of Family Practice Residency Training Programs. Oklahoma City, University of Oklahoma Press, 1984.

3. Colwill JM, Glenn JK. Patient care income and the financing of residency education in family medicine. J Fam Pract 1981;13:529-536.

4. Hueston WJ, Mainous AG III, Ye X. The financial status of departments of family medicine at US medical schools. Fam Med 2001;33:166-170.

5. FACTS About Family Practice. Available at: http://www.aafp.org/x530.xml. Accessed May 27, 2005.

The human mind treats a new idea the same way the body treats a strange
protein; it rejects it.
--P.B. Medawar

Robert Carlisle, MD, MPH 

From the Department of Family Medicine, West Virginia University Department of Family Medicine, Morgantown, WV.

Reprint requests to Robert Carlisle, MD, MPH, West Virginia University Department of Family Medicine, PO Box 9152, Morgantown, WV 26506. Email: [e-mail]

Accepted January 3, 2006.

RELATED ARTICLE: Key Points

* A large annual investment near $200,000 per resident is made to train future primary care providers at community-based family medical residency programs.

* Most funding originates from sponsoring institution support and clinical care revenue.

* Most community-based family medicine programs do not receive Title VII or state funding.

* Reliance on clinical care revenue continues to increase with care provided to a large population with Medicaid.

* A continuous comparative database may be helpful in guiding programs' financing and budgeting.

Table 1. Revenue sources of participating programs, fiscal year 2003 to
2004

                                  No. of     No. receiving
                                  responses  funds          Median

Total program income or revenue   51         51             $4,464,822
Sponsoring institution support    51         46             $2,012,650
Calculated institutional support                               $77,306
  per resident FTE
Clinical revenue                  50         45             $1,800,000
State support                     49         23                      0
Medical school or university      52         25                      0
  support
Local support                     43          5                      0
Grant revenue                     46         23                   $750
Title VII funds                   41          7                      0
Philanthropic sources             45         13                      0
Other income                      27          6                      0

                                                          Median
                                  Median      Median      percentage of
                                  where       percentage  budget where
                                  value > 0   of budget   value > 0

Total program income or revenue   $4,464,822  100%        100%
Sponsoring institution support    $2,360,249   43.5%       47.5%
Calculated institutional support     $91,945
  per resident FTE
Clinical revenue                  $1,865,600   39.5%       40.1%
State support                       $268,833    0           6.2%
Medical school or university         $83,451    0           2.8%
  support
Local support                        $53,400    0           1.1%
Grant revenue                       $120,000    0           1.1%
Title VII funds                     $182,000
Philanthropic sources                $21,000    0           1.1%
Other income                        $166,494    0           5.0%

FTE, full-time equivalent.

Table 2. Patient payer mix of visits for participating community-based
programs, fiscal year 2003 to 2004

                                                  Median

Total clinic visits                               26,378
Visits per resident FTE                             1076
Visits per sum of faculty FTE + resident FTE         810
Percentage of visits, self-pay                         6.6%
Percentage of visits with Medicaid                    35.9%
Percentage of visits with Medicare                    20.0%
Percentage of visits with 3rd party or HMO payer      30.4%

FTE, full-time equivalent; HMO, health maintenance organization.

Table 3. Expenditures of participating programs, fiscal year 2003 to
2004

                                               No. with
                                  No. of       expenditure
                                  respondents  > 0          Median

Total expenses                    35           35           $4,387,165
Calculated total budgetary                                    $194,125
  expense per resident FTE
Faculty expenses                  34           34           $1,387,500
Faculty FTE                       35           35                    8.0
Resident expenses, salary, and    34           32             $952,500
  benefits
Administrative staff expenses,    33           33             $134,348
  salary, and benefits
Administrative staff FTE          35           35                    3.3
Clinical staff salary, benefits,  32           32             $691,579
  and expenses
Clinical staff FTE                34           34                   17.2
Nonpersonnel operating expenses   34           33             $904,500
Total malpractice expense         35           29             $126,000
Calculated malpractice rate per                                $17,097
  faculty FTE
Reported malpractice rate per     26           19              $10,839
  faculty member practicing
  obstetrics
Reported malpractice rate per     25           18                $6500
  faculty member not practicing
  obstetrics
Reported malpractice rate for     27           17                $2088
  residents

FTE, full-time equivalent