1. The value equationfor family medicine training programs Judith Pauwels, MD University of Washington WWAMI Network

2. What is the value of your program? • Value = benefits/costs (i.e., Program Impact / Finances

3. Goals • Identify key financial concepts that define the costs of programs. • Describe the benefits that programs bring to their institutions and communities. • Discuss what the “values equation” looks like for your program.

4. How sponsors look at programs: • “The CFO would like a meeting with you, …today!” • Why aren’t your faculty more productive? • “We need to cut 10% out of your program by next week” • How do you compare with MGMA?” • “How are you going to break even?”

5. How programs look at themselves: • What revenues and expenses are expected for programs? • What is the average “cost per resident”? • What variations must be considered? • How productive can residency programs be and still be educational? • What are typical staffing models for residency clinics? • What impacts have duty hours, PCMH, EHRs and other trends had on programs?

6. Costs: Essential data • Revenues • Expenses • Productivity • Staffing models

7. Residency revenues • Patient care reimbursements • FMC • Inpatient, nursing home, other • Other service reimbursements • Federal funding (Medicare GME) • Medicaid GME • Other federal sources • State funding • Grants, foundation support, other sources

8. Residency revenues • Patient care reimbursements • FMC • Specialty clinics • Inpatient, nursing home, other • Dependent on resident and faculty activity and reimbursement model – increases when all third year positions and faculty positions filled • Other service reimbursements • Medical directorships • Other service contracts • Administrative roles

9. Residency revenues • Federal funding (Medicare GME) • Medicaid GME • Other federal sources • AHECs • HRSA / FQHC • Teaching Health Center grants • PTCE grants • Veterans Administration

10. Residency revenues • State funding • Other sources: • Community Support • Foundation • Individual – e.g. naming rights • Direct Grants • Research • Other • Institutional direct support

11. Factors affecting revenue • Payer mix of patients • Billing and collections efficiencies (deductions, write-offs, AR, etc.) • Volume of patients seen • Service contracts (managed care; enhanced reimbursements) • RVU production

12. Residency expenses • Salary, benefits, retirement • Variable operational expenses • Fixed operational expenses • “Indirect” expenses or “overhead”: other costs not directly on the budget sheets but contributing to the support of the program

13. Residency expenses • Salary, benefits, retirement (faculty, residents, other providers, and support FPC and program staff) • Faculty salaries, benefits and support • Resident salaries, benefits and support • Educational staff • FMC staff • Stipends for other teachers (specialists, preceptors, etc.)

14. Faculty Role Avg Prog FTE 00-10 Director/ Admin. 1.2 - 1.4 Family Medicine 5.2 - 7.2 Internal Medicine 0.4 - 0.6 Pharmacy 0.3 - 0.6 Behavior Medicine 1.0 - 0.9 Other 0.3 - 0.4 Total Core Faculty 8.4 - 11.1 Network data: Structure of core faculty FTE

15. Staffing considerations • Nursing per 10,000 visits • RN/Nurse ratio • Physician Assistant or Nurse Practitioner per program • Ancillary Staff (lab, X-ray, Referrals, MSW, Nutritionist, etc.) • Central Business Office functions are common, limiting FPC staffing to data entry

16. Staffing of FMC practices

17. Residency expenses • Variable operational expenses • Medical and non-medical supplies, pharmacy, transcription, etc. • IT expenses: hardware and software • Malpractice and other insurances

18. Residency expenses • Fixed operational expenses • Building/space, both clinic and administration • Maintenance • Equipment • Etc etc…

19. Residency expenses • “Indirect” expenses or “overhead”: other costs not directly on the budget sheets but contributing to the support of the program • Human resources • IT • Administration • Billing functions • Utilities • Highly variable among programs

20. Factors affecting expenses • Faculty number and structure • Staffing models of clinics • Allocations of institutional overhead • FPC and residency expenses

21. Productivity measures • Direct patient care activities • Indirect patient care activities (precepting, research, conferences, etc.)

22. Network data: Annual FPC productivity trends

23. Costs: revenues vs. expenses • Planning for a future in a complex and competitive environment: • Increase revenues • Patient care reimbursement • New federal funding sources • Grants • Philanthropy • Decrease expenses

24. What is the value of your program? • Value = benefits/costs (i.e., Program Impact / Finances

25. Program Impact • Direct patient care services provided • Inpatient Care • Outpatient Care • Community access • Specialty care: HIV, Hepatitis C, OB • Better health, lower costs

26. Program Impact • Underserved care • Community safety net • Specialty access: • HIV • Hepatitis • OB

27. Program Impact • Learning environment: • Quality of care in the institution • Enhancing the adoption of “new” knowledge • Regional CME • Research

28. Program Impact • New providers / graduates • Committed to the community and institution • Familiar with local environment • Reduced recruiting costs • Replacement provider costs

29. Program Impact • Direct “downstream” referrals • Catchment area

30. Program Impact • Other Benefits • Meeting state workforce needs • Community involvement • “Goodwill” in the community

31. What is the value of your program? • Value = benefits/costs (i.e., Program Impact / Finances

32. Presenting the “values equation” • Develop a “dashboard”: • Performance data • Financial summary • Trend information • Explain variations

33. Performance data: Patient volumes/mo New patient visits Productivity measures: pts/ hr RVU/ visit revenues/ visit Quality measures Financial summary: Patient care revenues Expenses FTE’s Flex expenses/ FTE Collections measures Trend information Explain variations Dashboard items

34. Presenting the “values equation” • Promote your program impact: • Patient services • Teaching/research achievements • Graduates • Community engagement

35. Summary • Understanding the financial pressures facing graduate medical education is crucial for program management. • Discussing revenues, expenses, productivity, and dashboards helps everyone work to address real needs for cost accountability. • Identifying and celebrating program impact helps everyone feel pride in the amazing work we are all doing on behalf of patients, and the future of our health care system.