NCPA - National Center for Policy Analysis

Doctor Training Subsidies Vary Widely

July 28, 1999

Medicare payments to teaching hospitals that train doctors are seven times higher for hospitals in New York than they are for Houston hospitals. Similar disparities are widespread across the nation, according to a study in the New England Journal of Medicine.

  • Researchers found that New York hospitals receive three to four times as much in subsidies per trainee as hospitals in Los Angeles or Cleveland.
  • New York's Beth Israel Medical Center gets an average Medicare payment of $57,010 a year for each year a resident trains, versus a payment of only $6,938 for each resident at Hermann Hospital in Houston.
  • Hospital executives in New York contend the payments are justified by high wage costs and the large number of Medicare patients they serve.

But hospital executives in California, Texas and Ohio counter that they, too, serve large numbers of elderly patients and turn out doctors just as good as those in New York.

Traditionally, hospitals in the Northeast bill Medicare for faculty time, while hospitals elsewhere cover that cost in other ways.

Federal aid to teaching hospitals costs taxpayers about $7 billion annually -- about 7 percent of the Medicare program's annual expenditures.

Source: Robert Pear, "Study Highlights Disparities in Aid to Train Doctors," New York Times, July 25, 1999; and John K. Iglehart , "Support for Academic Medical Centers -- Revisiting the 1997 Balanced Budget Act," New England Journal of Medicine, July 22, 1999.


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