Professional News
 DOI: 10.1176/appi.pn.2014.9a13
Mixed Reviews Follow IOM Report on Future of GME Financing
Psychiatric News
Volume 49 Number 17 page 1


The Institute of Medicine’s report on restructuring financing for graduate medical education elicits strong feedback from organized medicine.

Abstract Teaser

The funding process for graduate medical education (GME) is ripe for major changes, according to an Institute of Medicine (IOM) report issued in July.

“The current Medicare GME payment system should be phased out,” said the IOM committee, co-chaired by Donald Berwick, M.D., founder of the Institute for Healthcare Improvement and a candidate for governor of Massachusetts, and Gail Wilensky, Ph.D., an economist and senior fellow at Project HOPE, who headed the Medicare and Medicaid programs under the first Bush administration.

But what should be phased in and what that means for patients, residents, hospitals, and even entire medical specialties is not clear.

Some organizations, like the American Hospital Association and Association of American Medical Colleges raised strong objections immediately.

“[The] report . . . is the wrong prescription for training tomorrow’s physicians,” said the American Hospital Association’s senior vice president for public policy analysis and development, Linda Fishman.

APA President Paul Summergrad, M.D., was more circumspect. “Any changes should strengthen the nation’s pipeline of physicians, with a particular view toward addressing persistent problems in today’s system,” said Summergrad, the Arkin professor and chair of psychiatry at Tufts University School of Medicine and psychiatrist-in-chief at Tufts Medical Center, in a statement. “[But] proposed changes could diminish the number of psychiatrists and child psychiatrists, already in short supply, and of international medical graduate psychiatrists.”

The current GME funding system relies on $9.7 billion from the Medicare system out of a total of $15 billion in annual funding. The rest comes from Medicaid (another $3.9 billion), the Department of Veterans Affairs, and other sources.

The IOM panel addressed only the Medicare portion of this money and opted to keep that connection in the near future in the interest of “secure and predictable funding.”

The IOM also recommended maintaining GME funding at present levels. The suggested changes would be phased in over 10 years, basing GME payment methods on residency programs’ performance while ensuring program oversight and accountability. In addition, the IOM panel urged development of policies to ensure “the sufficiency, geographic distribution, and specialty configuration of the physician workforce” while producing physicians who are ready to “provide better individual care, better population health, and [at] lower cost.”

Even those who have some reservations about the report’s conclusions believe there is a need for a serious reexamination of the existing system.


“We are approaching a crisis in funding GME, and an overview is obligated at this time,” said Christopher Varley, M.D., president of the American Association of Directors of Psychiatric Residency Training and a professor of psychiatry and behavioral health at the University of Washington.

The report’s assumption that shortages of physicians will be overcome by new modes of collaborative practice with other professions concerns Varley. Those predicted shortages are “speculative,” he said.

The report also does not address the current rise in the number of new medical schools and the consequent increase in new graduates over the next few years, graduates who soon will need places to train, he pointed out.

“This may be an opportunity to address integrated care, but that will not substantially change access,” he said. “We need more, not fewer, psychiatrists and subspecialty psychiatrists.”


Many of the perceived problems arise because the current system was locked in decades ago, in a now-antiquated era of health care, the report’s authors said.

For instance, direct GME payments from Medicare are based on costs in 1984-1985, and Congress capped the number of Medicare-supported training slots at levels existing in 1996. (Hospitals can add more training slots, but they can’t be funded by Medicare.)

That freezes “the geographic distribution of Medicare-supported residencies without regard for future changes in local or regional health workforce priorities or the geography and demography of the U.S. population,” the report stated.

The present system may not be rationally designed, but it does make the United States the top choice for graduate medical education in the world, said Richard Summers, M.D., a clinical professor and co-director of residency training in the Department of Psychiatry at the Perelman School of Medicine at the University of Pennsylvania.

Were the IOM recommendations to be implemented, dollars for training would flow to whatever setting residents work in, not necessarily toward hospitals, said Summers, chair of APA’s Council on Medical Education and Lifelong Learning.


This would likely hurt academic medical centers, “the crown jewels of American medical research, clinical care, and teaching,” and the very places where many people want to receive health care or train, he said. “Some of the strongest institutions would be at a substantial economic disadvantage.”

Despite these concerns, Summers sees the IOM report as a good starting point for examining graduate medical education. “The report’s goals are desirable, especially in terms of a better distribution of physicians and a central role for integrated practice,” he said. “The massive changes in the health care landscape demand a closer examination of physician training.”

However, specific measures regarding psychiatry concerned Varley.

“Over the last 20 or 30 years, we’ve seen a decrease [in the medical community] in the stigma surrounding psychiatry,” he said. “But compared with procedure-based specialties, psychiatry, pediatrics, and family medicine are not high-income-generating fields, so there’s a potential that such residency programs will be downsized or eliminated.”

The IOM report also calls for structural changes for federal GME financing. A GME Policy Council would be created in the Office of the Secretary of Health and Human Services, as would a unit in the Centers for Medicare and Medicaid Services, to manage operations and oversee a special GME transformation fund to promote training innovations.

The report is clearly not the last word on the subject. “It serves as an important notice that the system needs attention,” said Varley. “This conversation needs to be moved forward.” ■

The report “Graduate Medical Education That Meets the Nation’s Health Needs” can be accessed here. APA’s statement on the IOM report can be accessed here.

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