1. Financial Implications of Increasing Class Size Marc J Kahn, MD, MBA Tulane

2. How much does it cost to educate a medical student?

3. Henry’s Hotdogs

4. Parable Henry’s Hotdogs is a small business that sells hotdogs by the road. Henry borrowed money from the local bank to fund this business venture. During the first week, Henry spent $50 to sell 25 hotdogs. Over the next several weeks, Henry had the following expenses: WeekCostHotdogs sold 2$5732 3$4217 4$6439 5$8661

5. How to figure out costs: Y-intercept = fixed costs Slope= variable costs

6. Lets do the same for medical schools  MSPS Database from the AAMC gives 7 sources of revenue for each medical school  Assume only three streams part of medical education:  Total Tuition and Fees Total Government and Parent Support Total Revenue from Gifts and Endowment

7. Methods (cont.)  Categories of revenue not used:  Total Federal Research and Grants  Other Grants and Contracts  Hospital Transfers  Other Revenues

8. Revenue  Costs  Allocate 60% of revenue to cost (Ridley et al, Academic Med 2002)  Sensitivity analysis using 50% and 40%

9. Results

10. Sensitivity Analysis a As published in Ridley GT, Skockelak SE, Farrell PM. Mission aligned management and allocation: successfully implemented model of mission-based budgeting. Acad Med. 2002;77(2):124-9. b All 28 are Private Schools

11. Results

12. Conclusions  Based on our cost analysis, medical schools are not covering costs with tuition revenue  Our best point estimate of the cost required to educate a medical student in the US is $62,877  Increasing class sizes by 30% will cost an average of at least $5 million per school

13. Investigators  Danny A. Schieffler, PhD  Benjamin Azevedo, BA  Richard A. Culbertson, PhD  Marc J. Kahn, MD, MBA Tulane University School of Medicine and School of Public Health and Tropical Medicine