John K. Iglehart

In America’s freewheeling economy, the nation’s supply of physicians has fluctuated widely over decades, driven by countless decisions of individuals, private organizations, and governments. In this complicated mix, the federal government has remained a strong supporter of graduate medical education (GME), the pathway through which medical students must pass to become licensed independent doctors. The government’s commitment is embedded in the Medicare program, which in 2010 contributed $9.5 billion to teaching hospitals in support of the training of some 100,000 residents, with few questions asked. In the future, though, the financing of GME, the capacity of the health care workforce, and the specialty mix of physicians are likely to come under greater scrutiny by Congress and the administration for several compelling reasons.

The next test of whether Medicare’s support of GME may be in jeopardy will occur in the deliberations of a bipartisan panel of 12 members of Congress, called the Joint Select Committee on Deficit Reduction, which has been charged with recommending ways to cut the federal deficit by at least $1.2 trillion over the next decade. If the panel reaches agreement by a deadline of November 23, Congress would consider the recommendations in an expedited up-or-down vote by Christmas. If Congress rejects the package, government spending will automatically be cut by $1.2 trillion over the next 10 years, split between domestic and defense programs. In earlier high-level negotiations that at the last hour enabled President Barack Obama to raise the government debt ceiling, policymakers had discussed ways to cut the federal deficit but could not reach agreement. Among the ways identified was reducing Medicare’s support of GME, a recommendation made last December by the National Commission on Fiscal Responsibility and Reform.¹

However, another factor that relates to Medicare and the training of the nation’s physician workforce also figures into the equation. Once President Obama signed the Affordable Care Act (ACA) into law, the government, in essence, took on a new obligation to ensure that the millions of people who gain coverage in 2014 will have access to adequate health care. This surge in demand raises the question: Who will care for these previously uninsured individuals if reductions in Medicare’s GME support should cut the capacity of programs to train new physicians?

In this report, I will briefly describe the recommendation of the national commission (appointed by President Obama to “reduce excess payments to hospitals for medical education”) that has served as the basis for budget-deficit discussions to cut these payments.¹ I will take stock of other workforce issues that apply to doctors, including current estimates of physician shortages and the absence of a consensus on how many physicians are enough, provisions in the ACA to expand the number of primary care practitioners, and implications of the payment cap Congress imposed on Medicare’s GME support 14 years ago. I will also cite the 16 new allopathic and osteopathic medical schools that either have opened or soon will open (with another dozen or so in earlier stages of development) and report opinions of health care leaders who assert that state laws restricting advanced practice nurses from rendering care up to their level of training should be reconsidered, particularly when physicians are in short supply.

RECOMMENDATION OF THE BOWLES–SIMPSON COMMISSION

Last December, the national commission cochaired by Erskine Bowles, chief of staff to President Clinton, and former Republican Senator Alan Simpson of Wyoming, issued its report calling for a reduction in the federal deficit of $4 trillion over the next decade.¹ The commission, which included 14 senior Democratic and Republican congressional leaders, voted 11 to 7 in favor of its recommendations but fell short of the 14 votes necessary to send them to the House and Senate for an up or down vote. One of its many recommendations called for bringing Medicare’s GME payments “in line with the costs of medical education by limiting hospitals’ direct GME payments to 120% of the national average salary paid to residents in 2010.” Furthermore, the commission said that the “add-on payments” (totaling about $6 billion a year) that Medicare makes to teaching hospitals for their indirect medical education expenses should be reduced; these payments are based on the number of residents the hospitals employ. For every 10 residents per 100 beds, a teaching hospital receives a 5.5% add-on adjustment to its Medicare payment rate for hospital care. By reducing it to 2.2%, which the Medicare Payment Advisory Commission had estimated would more accurately reflect indirect costs, the Bowles–Simpson commission said Medicare’s reduced GME support would cut federal expenditures by $6 billion by 2015 and by $60 billion by 2020.²

REPORTS OF PHYSICIAN SHORTAGES

With time running out on the date (August 2) Treasury Department officials warned that the government would run out of money to meet its financial obligations, 63 Democrats and 1 Republican (Rep. Patrick Meehan of Pennsylvania) wrote in a letter to House and Senate leaders that “rumors abound on possible [GME] cuts.”³ They emphasized that the GME cuts that were being discussed “would have a profoundly negative impact” on medical training programs at a time when the United States is “on the cusp of a crisis in access to both specialty and primary care physicians due to a growing physician workforce shortage.” This urgent plea contrasts with the little attention that government has paid in recent years to the capacity of the nation’s health care workforce, despite warning signs contained in an array of government and private-sector reports that physician shortages either already exist or soon will exist in particular geographic areas and in a growing number of specialties.

Virtually all these reports were issued before the enactment of the ACA, which is certain to accelerate demand for more health care. The Association of American Medical Colleges is projecting a physician shortage of 62,900 doctors, including 29,800 in primary care, by 2015. The association also estimates that the shortage will be more than twice that number (130,600) by 2025,4 as the population grows and ages, as doctors retire at a rate similar to that of new entries, and as lifestyle priorities crimp physician productivity and advances in medical innovation.

In addition to the association’s national forecast, 62 other reports that have been issued in the past decade by state governments, universities, medical societies, and private foundations have also identified physician shortages in underserved areas and in many specialties.⁵ There are skeptics who maintain that unless physicians are steered through incentives to practice in areas in which doctors are scarce, many will continue to settle in attractive locales where “supply is already highest.”^6,7 Moreover, Dr. David Goodman, a Dartmouth Medical School pediatrician and researcher, added in testimony before the Senate Finance Committee that an increased supply of physicians is not reliably associated with better health outcomes, quality of care, or satisfaction for patients. To avoid getting caught up in the debate over the precise dimensions of a physician shortage, a foundation report that was authored by academic medical leaders simply recommended a goal of “maintaining the current ratio of approximately 250 doctors for every 100,000 people.”⁸

CONGRESSIONAL FOCUS ON PRIMARY CARE SHORTAGES

During the ACA debate, Congress ignored estimates of physician shortages in various specialties and instead took incremental steps to address the dwindling interest among medical school graduates in primary care. The Association of American Medical Colleges estimated that between 2000 and 2009, the number of U.S. medical school graduates who are likely to become primary care doctors fell by 31%.⁹ One recent forecast estimated that by 2019, between 4307 and 6940 additional primary care doctors would be needed to care for newly insured patients¹⁰; a second report placed the number between 6400 and 7400.¹¹ In 2010, there were about 205,000 generalist physicians (general and family practice, general internal medicine, general pediatrics, and geriatrics) who were active in patient care (Dall T: personal communication). The ACA directs Medicare to pay a 10% bonus for 5 years (2011–2015) under the program’s fee schedule to all family physicians, internists, geriatricians, nurse practitioners, and physician assistants who provide 60% of their services in qualifying evaluation and management codes. A similar bonus was provided to general surgeons, but to earn it they must practice in a medically underserved area. The law also requires states to increase Medicaid payment rates to Medicare levels in 2013 and 2014 for providers who deliver certain primary care services. A primary care researcher, Dr. Robert Phillips, characterized the changes as appreciated but “a small reversal of fortunes compared to the much larger shift to other specialties” as a result of Medicare’s fee schedule.¹² The ACA and the economic stimulus program tripled the field strength of the National Health Service Corps, infusing it with $1.8 billion over the next 5 years. The corps provides scholarships and loans to practitioners in return for a minimum 2-year commitment to provide primary care in underserved communities.

Other provisions of the ACA created a National Health Care Workforce Commission, charging it with informing Congress on workforce trends, as well as a National Center for Health Workforce Analysis (which is housed in the Health Resources and Services Administration) and state health care workforce development grants to expand data collection and research. The Government Accountability Office appointed the commission’s 15 members and named as its chairman Peter Buerhaus, a professor of nursing at Vanderbilt University.¹³ Five of the 15 commissioners are physicians. Given the strong Republican opposition to the ACA, advocates of the new commission have been unable to secure an appropriation of $3 million to launch its operations. Thus far, the commission’s activity has been limited to one conference call.

IMPLICATIONS OF MEDICARE’S GME PAYMENT CAP

In 1997, six major medical organizations declared in a consensus statement that the United States was on the verge of a serious oversupply of physicians. As a consequence, they said, the number of entry-level GME positions should be more closely aligned with the number of graduates of U.S. medical schools, and “this realignment should be achieved primarily by limiting federal funding of GME positions.”¹⁴ Congress, with virtually no objection from legislators, placed a payment cap on how much support Medicare could provide to GME programs. With the payment cap still in place 14 years later, fast-forward to the reform debate, in which senior Democrats, pressed by academic medicine, proposed to lift the cap and expand the number of Medicare-funded GME positions by 15% (to 115,000). To the dismay of other medical organizations, the American Academy of Family Physicians opposed the amendment, asserting that additional GME posts should be filled by trainees who planned careers in primary care. Congress declined to increase Medicare’s support for GME, agreeing only to redistribute about 900 unused but authorized GME slots. The law stipulates that most of these positions should be used to train practitioners in primary care and general surgery.

Because of the cap on Medicare’s payments, the expanding number of U.S. medical school graduates, and the continuing influx of some 7000 international medical graduates in search of GME posts every year, before long there will be too few positions to train them all. Currently, about 25% of practicing physicians in the United States are graduates of international medical schools. The slow growth in GME positions — an annual rate of 0.9% over the past decade (Nasca T: personal communication) — contrasts with the increases in enrollment that have occurred in 100 of the 125 allopathic medical schools and a doubling of enrollments in osteopathic medical schools. By 2015, combined first-year enrollment in allopathic and osteopathic schools is projected to reach 26,403, an increase of 35% over 2002 numbers. Eight new allopathic schools and nine osteopathic schools or branch campuses have enrolled their first classes or soon will do so (for details, see Table 1 in the Supplementary Appendix, available with the full text of this article at NEJM.org).

In an interview, Dr. Thomas Nasca, CEO of the Accreditation Council for Graduate Medical Education, expressed concern over the narrowing gap between the number of entry-level GME posts and the growing number of medical school graduates. Nasca said, “We estimate that we will see domestic production of medical school graduates functionally surpass our current total number of GME postgraduate year-one pipeline positions [posts that lead to initial specialty certification] by 2015 or sooner, and this does not include some 10,000 non–U.S.-citizen international medical graduates and about 3700 U.S.-citizen international medical graduates who seek GME posts in U.S. teaching hospitals.” Figure 1 shows three scenarios that are based on assumptions regarding the availability of GME positions. The first scenario assumes an annual increase of 0.883% in the number of positions (the average annual growth rate from 2001 through 2010). The second scenario assumes that GME positions will hold constant at the 2010 level. The third scenario assumes an annual decrease of 1% in the number of GME positions in recognition of possible reductions in Medicare support. Nasca added, “In the absence of congressional action to lift the cap, or the unlikely prospect of securing other sources of GME support, we face the risk of graduating physicians in the United States who will be unable to obtain the training required to obtain a license to practice independently.”

Florida stands out as a state with four new medical schools but very little activity under way to increase its number of GME positions, despite ranking 43rd in the number of these posts per capita. In an interview, Dr. Michael Whitcomb, a former senior vice president of the Association of American Medical Colleges, said that a number of factors have prevented Florida from expanding its GME capacity — financing being only one. “Another is that of community hospitals with the resources to create GME programs, very few are interested in doing so, in part because their medical staffs prefer taking care of patients without the added responsibility of teaching,” he said. In New York State, a survey of nonteaching hospitals with at least 70 beds showed that 58.3% were reluctant to develop GME programs with or without new funding because of the challenges they present (Edelman N: personal communication).

PROSPECTS FOR REMOVING THE GME CAP

Given the current concern over the federal deficit, the likelihood that Congress will remove the cap on Medicare’s GME support is nil. Indeed, holding on to existing GME support may be the best outcome medical educators can hope to achieve. Even before the budget discussions began in earnest, the House voted 234 to 185 on May 25 to eliminate $230 million in funding authorized by the ACA to support GME training of primary care physicians at community health centers. These facilities, referred to as “teaching health centers,” represent the first major federal effort to shift GME training to community-based settings that emphasize primary care. The Senate has not acted on the House-passed bill.

The administration’s 2012 budget proposes to eliminate a program that provides an annual appropriation of $317 million to children’s hospitals for the support of pediatric GME training. Ignoring the administration’s budget request, the House Energy and Commerce Committee cast a bipartisan voice vote on July 28 to extend the pediatric GME program for 5 years. In its latest set of options on ways to cut spending or raise revenue, the Congressional Budget Office (CBO) said that substantial savings could be achieved by consolidating federal GME support into a grant program for teaching hospitals. Through such a consolidation, the CBO estimated that the government could derive savings of $25 billion between 2012 and 2016 and roughly $69 billion over a decade (2012–2021).¹⁵

Some states also have begun to cut the support they provide to GME programs through Medicaid. In 2005, a total of 47 states provided GME support of $3.78 billion through Medicaid. By 2009, only 41 states were providing $3.18 billion in such support, and 9 additional states reported they were considering ending their payments to teaching hospitals.¹⁶ More recently, Arizona’s legislature eliminated all of its Medicaid GME support, a step educators considered “particularly vexing” because they had a strong working relationship with the program’s administrators (Grossman M: personal communication). In addition, Florida and Washington State cut GME funding provided through their Medicaid managed-care programs, Michigan reduced its support for GME, and training support provided by Iowa, Missouri, and Rhode Island appeared to be in jeopardy.

Disclosure forms provided by the author are available with the full text of this article at NEJM.org.

This article (10.1056/NEJMhpr1107519) was published on September 7, 2011, at NEJM.org.

SOURCE INFORMATION

Mr. Iglehart is a national correspondent for the Journal.

REFERENCES

1 The moment of truth. Washington, DC: National Commission on Fiscal Responsibility and Reform, 2010.

2 Report to the Congress: reforming the delivering system. Washington, DC: Medicare Payment Advisory Commission, 2008.

3 Letter signed by 64 members of the House of Representatives to Senate Majority Leader Harry Reid, Senate Minority Leader Mitch McConnell, House Speaker John Boehner and House Minority Leader Nancy Pelosi. Washington, DC: U.S. Congress, July 13, 2011 (https://www.aamc.org/download/254190/data/lettertocongressionalleadership.pdf.)

4 Association of American Medical Colleges. Physician shortages to worsen without increases in residency training. (https://www.aamc.org/download/150584/data/physician_shortages_factsheet.pdf.)

5 Recent studies and reports on physician shortages in the U.S. Washington, DC: Association of American Medical Colleges Center for Workforce Studies, 2011.

6 Goodman DC. Linking workforce policy to health care reform: invited testimony, the United States Senate Finance Committee. Hanover, NH: Dartmouth Institute for Health Policy and Clinical Practice, 2009.

7 Goodman DC, Grumbach K. Does having more physicians lead to better health system performance? JAMA 2008;299:335-337

CrossRef | Web of Science | Medline

8 Ensuring an effective physician workforce for America: recommendations for an accountable graduate medical education system. Summary of the Josiah Macy Jr. Foundation–Association of Academic Health Centers conference on graduate medical education, Atlanta, October 2010. New York: Josiah Macy Jr. Foundation, 2010.

9 Erikson C. Interim Director’s presentation at the 7th annual Association of American Medical Colleges (AAMC) Physician Workforce Conference, National Harbor, MD, May 5–6, 2011. Washington, DC: AAMC, 2011.

10 Hofer AN, Abraham JM, Moscovice I. Expansion of coverage under the Patient Protection and Affordable Care Act and primary care utilization. Milbank Q 2011;89:69-89

CrossRef

11 Dall T. Current health workforce measurement, methods, and models. Presented at the AcademyHealth Annual Research Meeting, Seattle, June 12–14, 2011. Washington, DC: AcademyHealth, 2011.

12 Effects of proposed primary care incentive payments on average physician Medicare revenue and total Medicare allowed charges: a white paper. Washington, DC: Robert Graham Center, 2009.

13 GAO announces appointments to new national health care workforce commission. News release of the Government Accountability Office, Washington, DC, September 30, 2010.

14 Consensus statement on the physician workforce. Washington, DC: Association of American Medical Colleges, 1996.

15 Reducing the deficit: spending and revenue options. Washington, DC: Congressional Budget Office, March 2011.

16 Henderson TM. Medicaid direct and indirect graduate medical education payments: a 50 state survey 2010. Washington, DC: Association of American Medical Colleges, 2010.

17 Cooper RA, Getzen TE, McKee HJ, Laud P. Economic and demographic trends signal an impending physician shortage. Health Aff (Millwood) 2002;21:140-154

CrossRef | Web of Science | Medline

18 Sargen M, Hooker RS, Cooper RA. Gaps in the supply of physicians, advanced practice nurses, and physician assistants. J Am Coll Surg 2011;212:991-999

CrossRef

19 Institute of Medicine. The future of nursing: leading change, advancing health. Washington, DC: National Academies Press, 2011.

Permalink