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

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

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

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

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

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

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

8. Residency revenues n 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 n Other service reimbursements n Medical directorships n Other service contracts n Administrative roles

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

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

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

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

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

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

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

16. Staffing of FMC practices

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

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

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

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

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

22. Network data: Annual FPC productivity trends

23. Costs : revenues vs. expenses n 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? n Value = benefit s/costs (i.e., Program Impact / Finances

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

26. Program Impact n Underserved care –Community safety net –Specialty access: < HIV < Hepatitis < OB

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

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

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

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

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

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

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

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

35. Summary n Understanding the financial pressures facing graduate medical education is crucial for program management. n Discussing revenues, expenses, productivity, and dashboards helps everyone work to address real needs for cost accountability. n 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.