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

2. 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

3. 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

4. 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

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

6. 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

7. 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

8. 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

9. 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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12. 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 ( years)
Many “old school” CEOs and Boards are still struggling with the concept 12

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

16. 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

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

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

19. 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

20. 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

21. 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

22. 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

23. 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

24. 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

25. 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

26. 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

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

28. 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

29. 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

30. A Final Consideration- The Effect of GME on the Balanced Scorecard30

31. 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

32. 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

33. 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

34. 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

35. 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

36. On a Balanced Scorecard, Graduate Medical Education is a significant asset to the entire hospital36

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