Strategic Considerations Thomas C. Gentile, Jr., MSA Ron Stephen, FCOHE, FACHE 1

2 Strategic Considerations Part One: Review of Medicare GME Payments Part Two: How a hospital sees GME as a potential strategic option Part Three: The strategic considerations of implementing a GME program Thomas C. Gentile, Jr. MSA Chief Academic Officer/Vice President Academic Affairs (Retired) Adjunct Assistant Dean Wayne State University School of Medicine Part One: Medicare GME Payments Direct Graduate Medical Education Expense (DGME) and the Per Resident Amount (PRA) Indirect Medical Education Adjustment (IME) 2

Medicare GME Financing Thomas C. Gentile, Jr. MSA Chief Academic Officer/Vice President Academic Affairs (Retired) Adjunct Assistant Dean Wayne State University School of Medicine 3

Strategic Considerations Part One: Medicare GME Payments Direct Graduate Medical Education Expense (DGME) and the Per Resident Amount (PRA) Indirect Medical Education Adjustment (IME) 4

OGME as a Winning Strategy for Hospital CEO’s and Boards Ron Stephen, FCOHE, FACHE Hospital CEO (Retired) Teaching Faculty Wichita State University 5

Part Two: How Does OGME Fit Into Our Hospital’s Strategy Part Two: How Does OGME Fit Into Our Hospital’s Strategy? (How a CEO might look at it) 6

GME as a Strategic Option How a hospital determines its strategies Benefits of GME to a hospital, medical staff/physician and community SWOT analysis Measuring success: The Balanced Scorecard How GME helps improve the Balanced Scorecard 7

Speaking the Language Strategy- What the organization intends to do Strategic Management/ Strategic Planning- The concept and process of determining the best strategy and implementing it Strategic Plan- The document that outlines the selected strategies 8

What Keeps Hospital Administrators Awake at Night Competition for best-reimbursed patient services Increased cost of physician services ER Coverage, Hospitalists Emphasis on cost containment Quality oversight Increasingly tied to reimbursement (P4P) Shortage of skilled workers Shortage of physicians, especially primary care (Recruitment) 9

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Strategic Management/ Strategic Planning Emphasizes that both internal strengths and weaknesses and external opportunities and threats must be considered Basic Premise: Resources are limited, competition is intense, and timing must be planned Used in business for years Relatively new to healthcare organizations (25- 30 years) Many “old school” CEOs and Boards are still struggling with the concept 12

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A Hospital Determines Strategy Based on mission, vision, values and goals SWOT analysis Internal strengths Internal weaknesses External opportunities External threats 15

Does GME Fit with Your Mission, Vision and Values? Mission- Why does your hospital exist? Patient care and Physician Services? Education? Research? Vision- What is the mental image you want to portray when your hospital is accomplishing its mission? Values- What are the guiding principles that drive your hospital? Moral values? Improve the health of your community? Provide care to those in need? Be a resource for your physicians? 16

How would the potential benefits of GME mesh with your hospital’s strengths, weaknesses, opportunities and threats? (SWOT analysis) 17

Potential Benefits of GME to Your Hospital and Community Patient Care Benefits Medical Staff/Physician Benefits Bottom Line Benefits Community Benefits Synergistic Benefits 18

Patient Care Benefits Resident physicians in-house 24X7 Increased focus on quality of care Opportunity to expand specialty care Potential for clinical trials and medical research Better liaison with tertiary care referral physicians and facilities Patients’ perception of quality of care 19

Medical Staff Benefits Grow your own medical staff Become a magnet for quality medical staff Develop loyal cadre of resident graduates Increase relations with existing medical staff through involvement as teaching faculty Enhanced CME opportunity for all medical staff members Succession Planning Utilizing Resident Graduates 20

Bottom Line Benefits Medicare payment for GME expenses Presence of residents in-house may reduce expenses for medical staff coverage Reduce recruiting expenses Physician referral base may increase 21

Community Benefits Increased ability to serve unmet community healthcare needs Clinics for the chronically underserved/ medically indigent Will expand primary care physician base Hospital increases healthcare leadership stature in the community 22

Synergistic Benefits Image of hospital in the community = a teaching hospital, an educational leader Presence of residents 24X7 will increase the comfort level of nurses working in your hospital Increased intensity of care will help staff morale and make the hospital more attractive for skilled technicians 23

Developing a SWOT Analysis for GME for your Hospital Following are some considerations for starting a GME program OGME Development consultants can help you evaluate how these considerations fit into the analysis of Internal strength Internal weakness External opportunity External threat To promote the mission of the hospital 24

Criteria for Starting a GME Program Medical staff enthusiasm and willingness to support – Physician Champions CEO/Board enthusiasm and willingness to support Financial and administrative support to get started Community need for additional physicians Adequate patient load for residencies desired Adequate Medicare percentage for reasonable payment 25

Applying SWOT Use of the SWOT analysis helps administrative types see the “whole” picture Recognizing Medicare GME payments Most of the “criteria” can be allocated as a strength, weakness or threat Most of the benefits can be listed as opportunities 26

Threats and Weaknesses Threats are external- the hospital must evaluate their significance Weaknesses are internal- Is the hospital willing to fix them? 27

For the Hospital Considering GME, Help the Leadership Drill Down Consider each of the “criteria” and each of the benefits Allocate each as a strength, weakness, opportunity or threat This may take some time Any weaknesses are internal (by definition) - hospital and medical staff leadership should be able to correct the weaknesses 28

The Point When a hospital and medical staff do a thorough strategic analysis of adding a GME program, the benefits to the hospital and medical staff become clear The next question, what is the hospital’s cost to achieve these benefits, will be addressed as Part 3 of this briefing 29

A Final Consideration- The Effect of GME on the Balanced Scorecard 30

Balanced Scorecard Current trends are for organizations to evaluate their success on more than just the financial bottom line Four criteria are used to measure the implementation of their strategies Financial perspective Customer perspective Internal perspective Learning/growth perspective 31

Contribution of GME to the Financial Perspective Most hospitals do not lose money on their GME program Presence of residents in-house may reduce expenses for medical staff coverage Reduce recruiting expenses Potential for funding for research 32

Contribution of GME to the Customer Perspective Image of hospital in the community Patients’ perception of quality of care Presence of residents 24X7 will increase the comfort level of nurses working in your hospital Medical staff feel better about using a “teaching” hospital 33

Contribution of GME to the Internal Perspective Increased focus on quality of care Opportunity to expand specialty care Potential for clinical trials and medical research Better liaison with tertiary care referral physicians and facilities Recruitment of physicians to the community 34

Contribution of GME to the Learning/Growth Perspective Enhanced CME opportunity for all medical staff members Increased intensity of care will help staff morale and make the hospital more attractive for skilled technicians Nurses have much greater opportunity to learn and grow with more complex patients 35

On a Balanced Scorecard, Graduate Medical Education is a significant asset to the entire hospital 36

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