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Curriculum Center Browse Bibliography Build EPacket Pricing Structure Distribution Process Management Control in Nonprofit Organizations
University of Miami Department of Medicine
Young, David W.
Functional Area(s):
   Management Control Systems
   Health Policy
   Healthcare Management
Difficulty Level: Advanced
Pages: 18
Teaching Note: Available. 
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First Page and the Assignment Questions:
Recent cuts in federal funding have focused attention on the costs of GME [Graduate Medical Education] programs, leading many to believe that they’re money losers. I’m not convinced that’s true and in fact when you take into account the intangibles of a quality training program—faculty satisfaction, improved patient care, enhanced learning environment, not to mention the service the house staff themselves contribute—GME may turn out to be a real economic and non-economic “bargain”! I think we could and must do more to sell the benefits of GME. I think we need to figure out GME’s costs and benefits so we can do a better job of managing those areas we control and selling it to the department’s faculty, the institution, and the community at large.

Laurence Gardner, M.D., Chair of the Department of Medicine (DOM) at the University of Miami/Jackson Memorial Hospital, continued:

It would be very helpful to have a better sense of what GME costs us as a department (I suspect primarily in faculty and administrative costs) and as an institution. Each year the hospital and the medical school negotiate the Annual Operating Agreement where the hospital provides some funding to the medical school to cover teaching costs, but we never really get into the details of what GME costs us and how well we’re reimbursed. Instead, funding for GME is rolled into patient care, new faculty recruitment and program support. It’s not that we don’t support GME, we do, both as an institution and as a department. It’s just that many people don’t truly understand the resources associated with it or its benefits.

Dr. Gardner was concerned about the costs and benefits of GME for several reasons. First, he had implemented a form of mission-based management, of which GME was a part. Second, he wanted to be sure that his GME program was well managed and had the resources it needed to be successful, and was concerned that it did not. Third, for several years his department had used an incentive system that recognized teaching, clinical care and research, and he wondered if the system accurately reflected the time and other resources associated with GME.

Dr. Gardner had decided to work with his senior management team, and especially Mark Gelbard, M.D. (director of the DOM’s Residency Training Program) and Mark Murtach, M.D., (Chief of General Medicine and Vice Chair for Clinical Affairs), to more fully analyze the role of GME in his department. Dr. Gardner recognized that Jackson Memorial Hospital had been quite successful in securing additional funding to support its mission, including GME, and he wanted to be sure that this funding was distributed fairly and used effectively. He asked his team to work with the financial leaders at the medical school and the hospital and to address the following questions:

  1. What was the full cost of GME when all relevant items were included?
  2. What were GME’s benefits? . . .


  1. What does the medical residency cost the hospital and department? What benefits does each receive? Consider both financial and non-financial benefits.
  2. Do the cost estimates submitted to the State of Florida represent the cost of GME for the hospital? How accurate is the $94 million?
  3. Who should pay for the un-reimbursed costs? The hospital? The faculty practice plan? Residents? Medicare? Other funders?