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S. Hrg. 103-927

MEDICAL EDUCATION AND THE SUPPLY
OF HEALTH PROFESSIONALS

^Y 4. F 49: S. HRG. 103-927

nedical Education and the Supply of...

HEARING

BEFORE THE

COMMITTEE ON FINANCE
UNITED STATES SENATE

ONE HUNDRED THIRD CONGRESS

SECOND SESSION

MARCH 8, 1994

'^«*&|%|i--'-

Printed for the use of the Committee on Finance

U.S. GOVERNMENT PRINTING OFFICE
83-267— CC WASHINGTON : 1994

For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC 20402
ISBN 0-16-046649-0

S. Hrg. 103-927

MEDICAL EDUCATION AND THE SUPPLY
OF HEALTH PROFESSIONALS

/ 4. F 49: S. HRG. 103-927

ledical Education and the Supply of..

HEARING

BEFORE THE

COMMITTEE ON FINANCE
UNITED STATES SENATE

ONE HUNDRED THIRD CONGRESS

SECOND SESSION

MARCH 8, 1994

m H %

^C;i3

Printed for the use of the Committee on Finance

U.S. GOVERNMENT PRINTING OFFICE
83-267— CC WASHINGTON : 1994

For sale by the U.S. Government Printing Office
Superintendent of Documents. Congressional Sales Office. Washington, DC 20402
ISBN 0-16-046649-0

COMMITTEE ON FINANCE

DANIEL PATRICK MOYNIHAN, New York, Chairman

MAX BAUCUS, Montana

DAVID L. BOREN, Oklahoma

BILL BRADLEY, New Jersey

GEORGE J. MITCHELL, Maine

DAVID PRYOR, Arkansas

DONALD W. RIEGLE, Jr., Michigan

JOHN D. ROCKEFELLER IV, West Virginia

TOM DASCHLE, South Dakota

JOHN B. BREAUX, Louisiana

BOB PACKWOOD, Oregon
BOB DOLE, Kansas
WILLIAM V. ROTH, Jr., Delaware
JOHN C. DANFORTH, Missouri
JOHN H. CHAFEE, Rhode Island
DAVE DURENBERGER, Minnesota
CHARLES E. GRASSLEY, Iowa
ORRIN G. HATCH, Utah
MALCOLM WALLOP, Wyoming

KENT CONRAD, North Dakota

Lawrence O'Donnell, Jr., Staff Director
LiNDY L. Paull, Minority Staff Director and Chief Counsel

(II)

CONTENTS

OPENING STATEMENTS

Page
Moynihan, Hon. Daniel Patrick, a U.S. Senator from New York, chairman,

Committee on Finance 1

Packwood, Hon. Bob, a U.S. Senator from Oregon 2

COMMITTEE PRESS RELEASE
Finance Committee Sets Hearing on Medical Education 1

PUBLIC WITNESSES

Budetti, Peter P., M.D., J.D., director. Center for Health Policy Research,
the George Washington University, Washington, DC 3

Colwill, Jack M., M.D., professor and chairman. Department of Family and
Community Medicine, University of Missouri at Columbia School of Medi-
cine, Columbia, MO, on behalf of the Council on Graduate Medical Edu-
cation 6

Folkerts, Debra J., A.R.N.P., Family Nurse Practitioner, Manhattan; KS 9

Jensen, Clayton E., M.D., dean, the University of North Dakota School of
Medicine, Grand Forks, ND 12

ALPHABETICAL LISTING AND APPENDIX MATERIAL SUBMITTED

Budetti, Peter P., M.D., J.D.:

Testimony 3

Prepared statement 37

Responses to questions from Senator Dole 52

Responses to questions from Senator Grassley 53

Colwill, Jack M., M.D.:

Testimony 6

Prepared statement 55

Responses to questions from Senator Dole 68

Folkerts, Debra J., A.R.N.P.:

Testimony 9

Prepared statement 69

Hatch, Hon. Orrin G.:

Prepared statement 77

Jensen, Clayton E., M.D.:

Testimony 12

Prepared statement 77

Responses to questions from Senator Dole 87

Moynihan, Hon. Daniel Patrick:

Opening statement 1

Packwood, Hon. Bob:

Opening statement 2

Communications
American Academy of Family Physicians 88

(III)

MEDICAL EDUCATION AND THE SUPPLY OF
HEALTH PROFESSIONALS

TUESDAY, MARCH 8, 1994

U.S. Senate,
Committee on Finance,

Washington, DC.

The hearing was convened, pursuant to notice, at 10:00 a.m., in
room SD-215, Dirksen Senate Office Building, Hon. Daniel Patrick
Moynihan (chairman of the committee) presiding.

Also present: Senators Rockefeller, Daschle, Breaux, Conrad,
Packwood, Dole, Danforth, Chafee, Durenberger, and Grassley.

[The press release announcing the hearing follows:]

[Press Release No. H-14, March 4, 1994]

Finance Committee Sets Hearing on Medical Education

Washington, DC— Senator Daniel Patrick Moynihan (D-NY), Chairman of the
Senate Committee on Finance, announced today that the Committee will continue
its examination of health care issues with a hearing on medical education.

The hearing will begin at 10:00 AM. on Tuesday, March 8, 1994 in room SD-215
of the Dirksen Senate Office Building.

"The Committee will examine the factors that affect the number and type of phy-
sicians being trained today and how proposed health care reforms would influence
medical education and the overall supply of health care professionals," Senator Moy-
nihan said in announcing the hearing.

OPENING STATEMENT OF HON. DANIEL PATRICK MOYNIHAN,
A U.S. SENATOR FROM NEW YORK, CHAIRMAN, COMMITTEE
ON FINANCE

The Chairman. A very good morning to our distinguished panel
and our guests at this most important hearing to which we have
been looking forward for some time, on the subject of graduate
medical education and the supply of health professionals.

As we all know, the President's proposal has rather strong provi-
sions in this regard, not all of which have been welcome, not all
of which have been deplored, and some of which are not under-
stood.

I would like to take this happy occasion of a health care hearing
to welcome Mark back; and to prove whatever else is, we have
cured chicken pox. [Laughter.]

Do not underestimate those small advances in the culture.

Senator Packwood?

(1)

OPENING STATEMENT OF HON. BOB PACKWOOD, A U.S.
SENATOR FROM OREGON

Senator PACKWOOD. Mr. Chairman, as usual I find this also a
very interesting hearing. We are now going to try to guess, hope-
fiilly intelligently what kinds of doctors we need in the fiiture and
whether or not the Federal Government needs to direct us in that
direction or whether or not we look back at our past experience and
some of the choices we have made and perhaps exhibit a bit of cau-
tion as to whether or not we can guess correctly.

I guess a classic example of guessing incorrectly is the building
of hospitals. In the past, we were convinced we needed four or five
beds per 1,000 population; and now from the testimony we have
had, most of them are operating in areas of 2V2 beds per 1,000 pop-
ulation and are aiming toward one bed per 1,000 population. So we
over built without any malice. We thought we knew what we were
doing.

If we now say we are going to have a Federal program that de-
termines who many general practitioners we should have and how
many heart surgeons and how many brain surgeons and how many
internists, will we guess correctly or are we better off to leave that
to the marketplace knowing that as HMOs grow, and they have
been growing, that they are going to hire more general practition-
ers? They are paying more now. And will that in and of itself be
a sufficient inducement for people in medical school to change their
programs fi-om their present specialties to a general practitioner
specialty?

I do not know. I do know, however, that as with many things in-
volving medicine in the past, we have estimated wrong, we have
guessed wrong. So at least we ought to be a little wary in being
sure that we know what the answer is for how we should allocate
medical education to different specialties.

The Chairman. I very much agree. As our panel is gathered, we
are "primum non nocere" as is our standard here, and is a stEuid-
ard of seriousness we need if we want to do this well. We are not
raising questions because we are trying to obscure the subject or
make it more difficult, but rather to illuminate it.

It would help, I think, if any of you, as you move along, would
care to comment on what Senator Packwood just SEiid.

I would offer you a different view, sir, which is that when the
hospitals were built you needed 4 to 5 beds per 1,000 persons and
then medicine advanced in ways that one per 1,000 might be ap-
propriate now.

Senator PACKWOOD. It advanced in a way we could not foresee.

The Chairman. But you can foresee changes. Well, let us hear
from people who might know what they are talking about. [Laugh-
ter.]

And we do remember, we have to remember, as the chairman of
this committee, Hon. Russell Long, once said of the Hill-Burton
Hospital Construction Act, that that was the South's revenge for
the Civil War. [Laughter.]

So we take that into account, too, as well. Let us see. Dr.
Budetti, you are first and you are Director of the Center for Health
Policy Research right here at George Washington University. You

are not just a doctor. I take it the J.D. means you are a lawyer,
too.

Dr. BUDETTI. Yes, sir.

The Chairman. You are everyone's idea of a man. Anyone who
falls into your hands is in trouble, or perhaps not. I am joking.
Would you proceed, sir.

STATEMENT OF PETER P. BUDETTI, M.D., J.D., DIRECTOR, CEN-
TER FOR HEALTH POLICY RESEARCH, THE GEORGE WASH-
INGTON UNIVERSITY, WASHINGTON, DC

Dr. BuDETTi. Good morning, Mr. Chairman, and thank you for
inviting me here. Mr. Packwood, it is a pleasure to see you. I am
very much at home with both you, having gone to medical school
in New York and having been Chief Resident in Pediatrics at the
University of Oregon. So, so far, so good.

I do want to speak on the issues that you have mentioned so far.
I think it is clear that we are blessed with an abundance of physi-
cians in this country and a number of physicians that is increasing
very rapidly. I think the issue before us, as you have both quite
properly stated, is the extent to which that blessing is to some de-
gree a problem or even a curse, as some might put it, that we have
either too many physicians or too many physicians going into the
wrong fields.

The numbers certainly show where they are going. And the fact
that another Federal policy, which was to greatly increase the
numbers of doctors in this country just as we built a lot of hospital
beds, was also very successful. And we did, in fact, as we built hos-
pitals we also produced a lot of new doctors.

The Chairman. Was it not the Medicare Program that was asso-
ciated with increasing medical education?

Dr. BuDETTi. Yes. And I think that that is one of the key points
here. Senator, is that on the one hand we put a lot of money into
actually increasing the number of people coming out of medical
schools. But then through Medicare in particular we have put a
tremendous amount of Federal dollars into stimulating those peo-
ple to go into particular specialties.

I think that that is probably the key reason why it makes at
least some sense to say straightforwardly, this is not exactly a pure
marketplace. This is something that the Federal Government has
put a lot of bucks in for a lot of years, dollars that certainly rise
to the level that Senator Dirksen would have noticed, and they
have been very effective in putting forth an atmosphere in medical
education that has led physicians into specialties and subspecial-
ties.

Now is that a problem? I think that is the key question for us,
whether that is a problem or not. It certainly was not the result
of a deliberate Federal policy to do so. The Federal policy was to
put the money out there and the way that the money was spent
led to this distribution of physicians into high technology, hospital-
based intensive specialties rather than into primary care and we
have seen a fall off in the number of primary care doctors.

The Chairman. Are you saying, if I could just interject

Dr. BuDETTi. No, that is fine.

The Chairman. — the existence of the hospitals created the oppor-
tunity to specialize in certain ways that required a hospital and
was, in a sense, a hidden policy. It attracted specialties that would
not have developed in the absence of the hospitals themselves. So,
there was a secondary effect that perhaps was not anticipated?

Dr. BUDETTI. Much better stated than myself. Senator. That is
exactly what I was getting at, was that the presence of the hos-
pitals, the flow of the money for specialty training to hospitals
while primary care doctors by and large not only need to be trained
inside of hospitals but outside of hospitals as well.

But since the money could not go to those other places outside
of the hospitals and since the money was extremely useful to the
teaching hospitals in the sense that it let them build up the spe-
cialties that bring in the greatest amount of revenue for the teach-
ing hospitals, I think that we did see something of a marketplace,
but a marketplace stimulated very heavily by Federal dollars, but
to serve the parochial interests of the teaching hospitals and not
to serve national policies overtly anj^way.

I think that is the

The Chairman. I am going to make one more.

Dr. BUDETTI. Sure.

The Chairman. We are familiar with unanticipated con-
sequences. It was so stated by Robert K. Murtin, who published it
at Columbia in 1935, and it is addressed regularly here. But there
is something else also, is there not, that we have had a great age
of discovery in medicine. And the attraction of these specialties has
been in doing something not ever before done. Is that not so?

Dr. BUDETTI. Oh, I think that is very real. I think that the at-
traction of the specialties by and large has been on the one hand
quite legitimate and quite real as there have been major medical
advances that we are very proud of. I think we should all be very
proud of what we have done in this country with respect to the ad-
vancement of learning in medical science over the last 30 years or
so.

It is a major national triumph that we should be very proud of.
But that is just not the only factor that I think should have gone
into determining where medical students went on to practice and
what specialties they went on to practice. I think that the medical
students tended not to be exposed to people in primary care who
were in high status positions and who were looked upon as of equal
intellectual level as the people who were doing the sophisticated
biomedical research and high technology procedures.

So being a highly select group in the first place, and wanting to
emulate the best of the best, I think it is a natural attraction. That
was certainly my experience in medical school and I think it has
a lot of legitimate basis to it.

I think that what we have seen, though, is that there should be
other factors that should come into play as well, including the need
to just plain take care of people when you get out into practice and
what it takes to learn what you need to know in order to be a good
doctor to take care of people in the community.

Let me just make a couple of additional comments along these
lines. One of the questions is, if this is an issue that the Federal
Government has already put a lot of money into and has a big

stake in, what kind of measures should the Federal Government
take?

As you said at the beginning, Mr. Chairman, first of all, do no
harm. I think that is a very important point to keep in mind here.
This is an area where I think there has been a great deal of study
and analysis and preparation, trying to get ready for the point at
which we could make some sensible policies to on the one hand in-
crease the number of primary care trainees, of generalist trainees
in medicine and on the other heind not to cause major problems
that would undermine the progress that we have made in the more
sophisticated — I should not, I am catching myself sa3dng the same
point and the same stereotype — in the more technologically based
specialties.

So I think we are at a point now where, and we will be happy
to discuss some of this this morning, where there are a variety of
approaches, approaches that I think could achieve the aim of
redirecting the distribution of physicians into the different special-
ties without interfering too greatly into local decision making, into
the medical professional decision making, and into the kinds of
structures that are necessary to preserve our great progress in high
tech areas.

One final comment I would like to make, Mr. Chairman

The Chairman. May I just say, do not hesitate to be brief just
as you are doing, because you are the only panel we have this
morning, it would be interesting if we heard each of your views and
went back and heard them again; and then heard your views on
one another.

Dr. BuDETTl. I will make one more point and then I will be
happy to pass it along. The only other point I would hke to make
is, I think we need to focus on to clarify the difference between
service delivery and training.

I think that if we look at many of the inner city areas where peo-
ple are heavily dependent upon teaching hospitals for service deliv-
ery, those teaching hospitals play a very valuable role. But I have
always viewed that as at best a stop gap measure.

I think that the people in the inner cities, like everybody else,
deserve access to mainstream medical care. I think that that is
why considering these policies and these changes in policies in the
context of national health reform make so much sense. That at the
same time we could try to redistribute the training while providing
new ways to take care of people in the cities so that they are less
dependent on the teaching hospitals, except when they need the so-
phisticated services available at the teaching hospitals.

So I think that it is very important for us to have in mind that
service delivery solutions ought to go hand in hand as we try to re-
direct where the production lines of our medical industry are going.
Just producing residents so that they are there for 3 years to take
care of people in the inner city is not a long term solution to the
service delivery needs of people in those areas. I think we need to
keep that in mind.

Thank you, Mr. Chairman. I will be happy to respond to ques-
tions.

[The prepared statement of Dr. Budetti appears in the appendix.]

The Chairman. Thank you. Doctor. We will come back to this.

It may be noted, however, that probably three-quarters of the
great teaching hospitals in the United States, which are the finest
on earth, are located in what are called inner city slums. You
know, I, in my youth, found myself at Columbia Presbj^erian and
I do not feel deprived. And I never saw a bill.

Where is Senator Danforth? Senator Danforth, are you here?
[Laughter.]

Dr. COLWILL. I just received a note from the Senator.

The Chairman. You are nonetheless welcome, sir. [Laughter.]

I thought Jack was going to introduce you. He obviously has been
summoned to the Commerce Committee where all sorts of crises
are about.

Dr. Colwill is professor and chairman of the Department of Fam-
ily and Community Medicine at the University of Missouri and he
appears on behalf of the Council on Graduate Medical Education.
Perhaps you would tell us just a little bit about what that council
is and then go forward.

STATEMENT OF JACK M. COLWILL, M.D., PROFESSOR AND
CHAIRMAN, DEPARTMENT OF FAMILY AND COMMUNITY
MEDICINE, UNIVERSITY OF MISSOURI AT COLUMBIA
SCHOOL OF MEDICINE, COLUMBIA, MO, ON BEHALF OF THE
COUNCIL ON GRADUATE MEDICAL EDUCATION

Dr. COLWiLL. I appreciate the opportunity to be here today. The
Council on Graduate Medical Education was established by the
Congress a little over a decade ago. Its role was and has been to
make recommendations to the Secretary and to the Congress con-
cerning issues of the physician work force. It has become progres-
sively concerned about ftindamental issues in the physician work
force. That is why I am here today.

In a nutshell, we are concerned that this Nation has too few gen-
eralists, has a surplus of specialists and is moving toward a pro-
gressive physician surplus. These issues will impede our ability as
a nation to move into systems of managed care.

We are concerned that the surplus will stimulate provisions of
additional services that may not be fully necessary and con-
sequently contribute to escalating costs.

And finally

The Chairman. By surplus you mean an over supply?

Dr. Colwill. Over supply, yes, sir.

The Chairman. We are trying to work out a lexicon in the com-
mittee.

Dr. Colwill. And finally, as you know, shortages in the inner
city and rural health areas have continued to be a problem. The
fact that we have so few generalists is one of the major contribu-
tors.

I would suggest that you may want to review the figures in my
handout. The first figure shows

The Chairman. Would you give us the table number, sir?

Dr. Colwill. Figure 1 in my handout, which is the COGME
statement.

The Chairman. Good. Good.

Dr. Colwill. This figure demonstrates the increasing number of
physicians in our country over time. It also shows the increasing

ratio of physicians to population. Virtually everybody will say we
have at least an adequate supply of physicians today. Many say we
have an oversupply already. And yet we will continue to have an
increasing physician supply at least until 2020 when numbers pla-
teau. Further, between now and 2020, the physician to population
ratio will increase by roughly a quarter.

The Chairman. Let us see, just to get a hold on these things. The
demography is destiny in these things. That doctor in the year
2020 he or she was born 3 years ago?

Dr. COLWILL. I am sorry?

The Chairman. They were born 3 years ago, the doctors entering
the stream in the year 2020. So they are already alive.

Dr. COLWiLL. Right. Right.

The Chairman. In preschool and learning biology, elementary bi-
ology.

Dr. CoLWiLL. This projection is based upon what is happening
today. It actually may be an understatement, because the number
of physicians trained both in this country and abroad who are en-
tering residencies appears to be increasing.

The Chairman. One last — I am sorry. Will everybody interrupt.
Senator Durenberger, will you interrupt and stop underlining, if
you please, as you please?

Senator DuRENBERGER. Is this for lexicon purposes?

The Chairman. For database. If we are at, say, 240 per 100,000
population now, what is Canada?

Dr. COLWiLL. Canada is roughly at the same level.

The Chairman. Canada is roughly the same?

Dr. COLWiLL. Yes.

The Chairman. What is the U.K.

Dr. COLWiLL. Much lower.

The Chairman. Half? Three-quarters?

Dr. CoLWiLL. It is roughly 150, I believe, something in that ball
park.

The Chairman. It is 150 as against our 240. So it is almost half.
France?

Dr. COLWiLL. I cannot give you specific figures. It is roughly the
same or more.

The Chairman. So we have twice the amount?

Dr. COLWiLL. We are roughly in the middle of various nations in
terms of our physician to population ratio. There are some that are
much more than this. There are some that are significantly less.

Senator Packwood. What are some of the ones that are more?

Dr. CoLWiLL. I believe Germany, Italy, Portugal are in that cat-
egory.

The Chairman. I guess we had better find that out. All right?

Dr. COLWiLL. I am told that Israel may have the highest number.

The Chairman. You are dead right. The OECD average is 230
and so are we. The U.K. is down. Germany has twice the U.K. Yes.

Dr. CoLWILL. And when we get to the 300 figure, we will prob-
ably be at the top of where that list is right now.

The Chairman. Well, we are not off the chart at all.

Dr. CoLWiLL. No, we are not off the top. We are adding each year
to our residency programs 24,000 new trainees, new residents. Of

that group, about 17,500 received their M.D. from U.S medical
schools and roughly 6,500 are being trained in other countries.

The second Figure, demonstrates the declining percentage of gen-
eralists in our physician population. You can see that in the 1930s
virtually everybody was a general practitioner.

Today we are roughly at one-third generalists. Figure 3 shows
that only 26 percent of medical school graduates in 1989 entered
practice as generalists.

The Chairman. What is a "D.O."?

Dr. COLWILL. Doctor of Osteopathy. Osteopathic physicians are a
small proportion of the total physicians in this country.

We are now at the point where only about a quarter of medical
school graduates are going on to careers as generalists. It is these
figures that have led the COGME to be quite concerned about both
the total numbers and the generalist/specialist supply.

We are investing roughly $6 billion a year in graduate medical
education through Medicare. We are not in any way limiting the
total number of positions or in any way making suggestions about
their specialty distribution.

It is this issue that concerns COGME. COGME recommends that
that graduate medical education funding be utilized to limit the
total number of positions in graduate medical education and to
move toward a 50/50 mix of generalists and specialists.

The Chairman. So you are coming here as a Chairman of a
Board which we have created and you are saying you have a goal
for us, you have a recommendation.

Dr. CoLWiLL. Yes.

The Chairman. Tell us again. You have a 110 percent goal here.
You want fewer physicians than we are on our way to getting.

Dr. COLWiLL. If you moved to Figure 4

The Chairman. Yes, sir.

Dr. COLWiLL. — our goal is to try to contain the physician popu-
lation ratio at roughly today's levels.

The Chairman. Or limited to 110 percent.

Dr. CoLWiLL. If we limit it to 110 percent of the U.S. graduates,
you can see it will still rise somewhat beyond that level.

The Chairman. Yes. Now does everyone hear that? This is an
idea for having fewer physicians. This is the recommendation we
are getting, not formally but in your testimony, and this is where
you come out.

Dr. COLWILL. Yes, sir.

The Chairman. Do you find that the administration's bill is pret-
ty much in sync with that?

Dr. COLWiLL. I think the overall goals of the administration's bill
and ours are very much in sync. We have somewhat different rec-
ommendations for how to get there.

The Chairman. Right. And, of course, we have an advantage,
which not every country has, which is we often get superbly
trained physicians from other countries. I think of India, for exam-
ple. But you do not want us to get up to 300 per 100,000. You think
250, 260 is enough.

Dr. COLWiLL. I think one of the fundamental questions that you
have already posed is what is the appropriate physician number.
I do not think we know. I think that

The Chairman. Well, if you do not know, why do you have this
goal?

Dr. COLWILL. Well, let me take it on.

The Chairman. It is very refreshing.

Dr. COLWiLL. I think you will find a virtual consensus that the
current supply is at least adequate.

The Chairman. I see.

Dr. COLWiLL. Many will be saying that we are already in a sur-
plus.

The Chairman. And just perhaps to use a rough analogy, the 4
to 5 beds per 1,000 that may or may not have been required 20
years ago and we now say one will do, gets better.

Dr. CoLWiLL. Yes.

[The prepared statement of Dr. Col will appears in the appendix.]

The Chairman. Well, thank you very much. Doctor. We want to
move along.

As I said. Senator Dole and Senator Rockefeller, we have only
one panel this morning. Our witnesses are being fairly brief so we
can have a lot of exchange with them afterwards.

Now the next witness you may wish to introduce yourself, is
Debra Folkerts.

Senator Dole. We are just happy to have Debra here. She has
been helpful to us in the past and we appreciate very much your
coming.

The Chairman. Again, for lexicon purposes, an ARNP is an ac-
credited registered nurse practitioner.

Ms. Folkerts. Advanced Registered Nurse Practitioner, correct.

The Chairman. Good morning.

STATEMENT OF DEBRA J. FOLKERTS, A.R.N.P., FAMILY NURSE
PRACTITIONER, MANHATTAN, KS

Ms. Folkerts. Mr. Chairman and members of the committee, I
am Debra Folkerts, a family nurse practitioner from Manhattan,
KS. I am a member of the Kansas State Nurses Association and
the American Nurses Association.

Thank you for this opportunity to discuss graduate nurse edu-
cation and other health care reform issues within the jurisdiction
of this committee.

I am also testifying today on behalf of the American Association
of Colleges of Nursing, the American Association of Critical Care
Nurses, the American Organization of Nurse Executives, the Asso-
ciation of Operating Room Nurses, the Association of Spinal Cord
Injury Nurses, the Emergency Nurses Association and the National
Nurse Practitioner Coalition.

I am also here as a nurse practitioner who served for 3 years as
the only primary care provider in a very small town in rural Kan-
sas. I have always practiced in rural areas.

America's 2.2 million registered nurses deliver more essential
health care services in the United States today in a variety of set-
tings— hospitals, nursing homes, schools, home health agencies, the
work place, community health clinics, and private practice and in
managed care settings.

Nurses know firsthand of the inequities and problems with our
Nation's health care system. Because we are there 24 hours a day,

7 days a week, we know all too well how the system succeeds so
masterfully for some, yet continues to fail shamelessly for all too
many others.

Nursing commends Congress for its increased focus on nurse
education issues. It is clear that the U.S. health care system has
an increasingly urgent need for primary care providers. Funding
must be made available to strengthen existing advanced practice
nurse programs and to establish new programs to prepare those
primary care providers so urgently needed.

Nurses are well-positioned to fill many gaps in the availability of
primary health care services. Advanced practice nurses are trained
to provide from 80 to 90 percent of necessary primary care services
of the Nation.

We are pleased the President's health care reform proposal con-
tains a provision for funding for graduate nurse education. This
would provide a stable ongoing revenue source to expand the pro-
duction of advanced practice nurses, a vital resource for meeting
health care needs.

Advanced nurse education includes the preparation of nurse
practitioners, clinical nurse specialists, certified nurse midwives,
and certified registered nurse anesthetists. These advanced prac-
tice nurses are prepared as expert clinicians to deliver primary
care and other services vital to the Nation's health care needs.

The graduate nurse education program would help many grad-
uate nursing students who are currently attending school part-time
due to financial constraints to become full-time students.

The American Association and Colleges of Nursing found that
based on 1988 dollars it costs a graduate nursing student about
$36,837 without financial aid to receive a master's degree.

The costs of preparing the advanced practice nurses are currently
borne almost entirely by the schools of nursing and the students
themselves, each with very limited resources.

In order to quickly expand the number of these expert clinicians
there must be an increased Federal commitment to graduate nurse
education.

The Chairman. Could I just interject there to say that you men-
tioned the President's Health Security Act. You also mentioned
Senator Chafee's proposal as addressing these concerns of yours.

Ms. FOLKERTS. On the issue of graduate nurse education, correct.

Education programs alone, however, will not solve nursing's abil-
ity to provide full, primary and preventive health care services.
Certain artificial barriers prevent nurses fi-om providing these
services. The fastest way to expand the number of advanced prac-
tice nurses in this country would be to eliminate the barriers to
practice and reimbursement, which prevent these nurses fi-om
practicing to their fullest capabilities.

Nurses were pleased to have the opportunity to work with Sen-
ator Daschle and this committee to achieve the enactment of the
Rural Nursing Incentive Act, which enabled nurse practitioners
and clinical nurse specialists who practice in rural areas to receive
direct reimbursement under Medicare.

I know from personal experience the dramatic impact this law
had on the access to health care for people in a small town in Kan-
sas. Without this change in Medicare I, as a nurse practitioner,

could not have provided services to the 600 people of Glasgow, KS.
My patients came from Glasgow and the surrounding areas — 68
percent of them were Medicare beneficiaries.

Glasgow is located in Cloud County, KS, the third oldest county
per capita in the Nation. Thanks to the change in Medicare I saw
between 368 and 400 people per month, and I was their sole pri-
mary care provider. That law now needs to be expanded to cover
the services of all nurse practitioners and clinical nurse specialists,
regardless of geographic location and practice setting.

This expansion of coverage does not provide for reimbursement
of new services, but rather provides for reimbursement of existing
services in alternative cost effective settings by non-physician pro-
viders. By taking this action, these advanced practice nurses would
provide essential services to meet the health care needs of older
Americans who currently have no access to affordable health care.

Legislation to achieve this objective has been introduced by Sen-
ators Grassley and Conrad. We would urge you to ensure that this
important proposal is enacted as soon as possible.

The Medicaid Program also needs to directly reimburse for the
services of all advanced practice nurses so that they may be fully
utilized by Medicaid recipients. Senator Daschle has introduced a
bill to achieve that goal. This is a provision that must be adopted
to increase access immediately.

Just as nurses have demonstrated their ability to provide high
quality, cost effective and accessible health services, consumers
have shown their widespread acceptance of these services and their
willingness to continue receiving primary care services from nurses
in advanced practice.

A recent Gallup poll revealed that the vast majority of Ameri-
cans, 86 percent, are willing to receive everyday health care serv-
ices from an advanced practice nurse.

Mr. Chairman, we are pleased that a number of members of this
committee have introduced or co-sponsored bills that propose a va-
riety of different approaches to reform of the health care system.
This will ensure that this issue is comprehensively discussed and
that all options are thoroughly considered.

We look forward to working with all of you. We appreciate this
opportunity to share our views with you and look forward to con-
tinuing to work with you as comprehensive health care reform is
developed. I would be particularly happy to answer any questions
regarding rural practice. Thank you.

The Chairman. Thank you, Ms. Folkerts.

[The prepared statement of Ms. Folkerts appears in the appen-
dix.]

The Chairman. Could I just record here for the record that there
are three times as many nurses in the Nation as there are medical
doctors, a point to be kept in mind in terms of who is out there
and who is giving health care.

And now just to conclude our panel's opening statements, Dr.
Jensen, Dean of the University of North Dakota School of Medicine
at Grand Forks. Where is Senator Conrad? Well, you are on your
own. Doctor. You are very welcome, sir.

Senator Durenberger. Mr. Chairman, if I may, he really is not
alone.

The Chairman. You are neighbors practically, yes.

Senator DURENBERGER. As testimony to the fact that health care
really does not have State boundaries, there is no better example,
as I think I have shared with you before, than the way in which
the medical and health enterprise located in North Dakota has
serviced about a quarter of the State of Minnesota, looking at it
geographically.

The cooperation, the commitment, and I think the value system
that Dr. Jensen brings to his discussion of community based medi-
cal education is something that I think a lot of us share. Since I
have experienced it, and I have been there, and I have listened to
him, and I have learned from them, in Kent's absence, I will cer-
tainly endorse your wisdom in choosing Dr. Jensen to speak for a
lot of community based education.

The Chairman. Thank you very much. Senator Durenberger.

Dr. Jensen?

STATEMENT OF CLAYTON E. JENSEN, M.D., DEAN, THE UNI-
VERSITY OF NORTH DAKOTA SCHOOL OF MEDICINE, GRAND
FORKS, ND

Dr. Jensen. Thank you. Senator Moynihan, and certainly Sen-
ator Durenberger. As to the point I was on my own, I think the
comment was made a little bit earlier that is sort of reminiscent
of what family physicians are sometimes in the middle of the night
delivering a baby and things go to pot and you are basically there
holding the fort down by yourself.

So I appreciate Senator Durenberger's comments. He is abso-
lutely correct. Our residency training programs in North Dakota —
and we have four of them — are responsible for much of the man-
power and woman power, in other words health care needs in
northwest Minnesota. So we see him as a very, very staunch ally
and we thank him for that.

I am a family physician and practice as a family physician for
25 years in Valley City, ND. That has a tie, incidentally to Senator
Dole, who has a nephew that is in Valley City, North Dakota.

I left Valley City after 25 years and went to the University
of

Senator Grassley. Could you tell him who it is?

Dr. Jensen. Yes, I can. [Laughter.]

Senator DOLE. He is a Republican. [Laughter.]

Dr. Jensen. His name is Bill Jahn, to be exact. He is a phar-
macist actually in Valley City.

But I did leave the private practice of medicine and joined the
University of North Dakota. I am Chair of the Department of Fam-
ily Medicine and am currently the interim Dean.

The Chairman. And Senator Conrad has just this moment ar-
rived. We certainly want to welcome you.

Senator Conrad. Good morning. Welcome, Dr. Jensen. [Laugh-
ter.]

Dr. Jensen. Thank you.

I do want to make some comments. As a community based school
we make extensive use of community facilities. We do not

The Chairman. Can we just work on our lexicon? A community
based school, and how would you distinguish that? You are refer-
ring to the University of North Dakota School of Medicine.

Dr. Jensen. That is correct. And I am using North Dakota as a
model.

The Chairman. Is Cornell University of New York Hospital not
a community based school?

Dr. Jensen. No, not in the sense or in the definition that we
have.

The Chairman. That is what I want.

Dr. Jensen. That is correct.

We make use of community facilities throughout the State. In
other words, we have four campuses with our major cities — Bis-
marck, Fargo, Grand Forks and Minot — with our tertiary care fa-
cilities in those communities and with much of our teaching taking
place at those types of facilities and with community hospitals
throughout the State. We do not have a university teaching hos-
pital.

The Chairman. I see. Yes.

Dr. Jensen. I think that is important for everyone to under-
stand. My discussions are going to center around the community
based medical schools, of which North Dakota is one. There are ac-
tually a total of about 23 community based medical schools in this
country, who consider themselves to be community based.

As far as primary care physicians are concerned, you will find
that the percentages of primary care physicians come primarily
from community based medical schools. Of the 13 community based
schools, all but three, in other words 10 of those community based
schools, have the highest percentage of its graduates that go into
family practice, internal medicine or pediatrics.

So we have a vast amount of experience dealing with the special-
ties that are currently needed as we see it under health care re-
form and are needed, incidently by the country for the provision of
primary care.

Senator Packwood. Can I interrupt? Mr. Chairman, you said we
could.

Explain to me again what a community based medical school is.
Is that simply a non-teaching — I am not quite sure what it is.

Dr. Jensen. Okay. Community based means that it uses as its
resources facilities that are available within the communities. In
other words, we will use, for instance, as Senator Conrad knows,
the facilities of St. Luke's, and Dakota Hospital in Fargo, Fargo
being our largest city and those being the two largest hospitals.

We do that around the State. We do not

The Chairman. You do not build a university hospital across the
street.

Dr. Jensen. That is absolutely correct. And as a matter of fact,
at least in my opinion, that concept of a large university hospital
now has become somewhat of a dinosaur.

Senator Packwood. Do you have a university hospital?

Dr. Jensen. We do not.

Senator Packwood. Okay.

Dr. Jensen. We make absolute use of community based facilities,
community based hospitals that is, general hospitals in our major
communities and smaller communities throughout the State.

Senator Packwood. Let me pursue further so I am sure I under-
stand. So you do not have a teaching medical school?

Dr. Jensen. Yes, we have a teaching medical school, but its
teaching is done in community hospitals. So that the third and
fourth years take place in those settings, plus in small communities
throughout the State.

Senator Packwood. The first 2 years take place in the more aca-
demic setting?

Dr. Jensen. That is correct, up at Grand Forks, the first 2 years.
You will find the curriculum that we have and the facilities that
we use I think back in the appendices, which are about Appendix
Two and Appendix Three as I recall.

The Chairman. And you make up about 20 percent of medical
schools, is that what you said?

Dr. Jensen. Well, there are 23 medical schools in this country
that consider themselves to be community based.

The Chairman. And there are 128 medical schools altogether.

Dr. Jensen. That is correct.

One of the things that we do in order to reduce costs is that we
have about, for instance in my department alone, family medicine,
110 clinical faculty throughout the State that participate in our
teaching, who are not paid. They make that as a contribution to
the medical school and the community based hospitals also have-—
and the community based medical schools I should say, with their
hospitals, that is quite frequently the norm.

We went from a 2- to a 4-year degree granting institution in
1976. We did that because we were afraid that if we did not go to
a 4-year school — I am a product of the 2-year school and went to
North Carolina, Bowman Gray in Winston-Salem. I got back but
only 18 to 20 percent of us ever did.

Since we have gone to a 4-year degree granting school we have
about 43 or 44 percent of our people coming back. If you were to
take a graduate of UND School of Medicine who goes into one of
my family practice programs, about 73 percent come back. But I
am using North Dakota now just as a model for the community
based medical schools.

We have developed within our State something called the North
Dakota Center for Graduate Medical Education, which is a consor-
tium of the eight teaching hospitals and the University of North
Dakota School of Medicine. On that Board that we have are the
CEOs of the eight teaching hospitals, a campus educator from each
one of our campuses, and the medical school. And I represent the
medical school.

That body is empowered to take a look at the needs of the State,
the resources of the State, and act as a conduit for funding from
the Federal Government and from other sources that will flow from
the consortium into the family practice centers or the other resi-
dency training programs. We see that as a model that could be rep-
licated throughout this country.

We also have a P.A. school. As you pointed out, as was men-
tioned here earlier, Debra Folkerts is an advance nurse practi-

tioner. And our P.A, school has 90 nurse practitioners per class.
Those physician assistants come from about 20 to 25 percent from
North Dakota, but the remainder come from all sections of the
country.

So we feel very strongly about the training of nurses, physician
assistants and all other primary care health providers that would
take place under health care reform.

Another interesting thing, I think, is the fact that the Inmed Pro-
gram at the University of North Dakota School of Medicine — Indi-
ans into Medicine — 20 percent of all the Native Americans that
hold the M.D. degree have been trained at the University of North
Dakota School of Medicine.

The Chairman. Is that not interesting? INMED. We will put that
in the lexicon.

Dr. Jensen. INMED — Indians into Medicine.

The Chairman. Put that down.

Dr. Jensen. It is a federally funded program.

We feel that more and more teaching is going to take place in
an ambulatory setting. So the need for the larger hospitals and the
numbers of hospitals that have occurred in previous decades is re-
duced. More and more care is delivered on an ambulatory care
basis and we feel that ambulatory care and training can take place
most logically in smaller community hospitals and the tertiary care
facilities within our major cities within the State.

Thank you.

[The prepared statement of Dr. Jensen appears in the appendix.]

The Chairman. You did not run over time, sir. I think we got
your point and I think we now start to see if we cannot put this
together. When my time comes, I am going to ask you all, how
come dentists are kept out of medicine. It is not all just 19th Cen-
tury happenstance. But that is another matter.

Senator Dole, would you like to have the opening questions,
please?

Senator Dole. I will wait.

The Chairman. All right, sir. Do not wait long.

Senator Durenberger?

Senator DuRENBERGER. Thank you, Mr. Chairman, and thank
you for the format. I think it is helpful to our witnesses as it is
helpful to us. I assume that means additional commitment of your
time, our time later on for other hearings. But it certainly is going
to be more productive.

My first question may be directed to all of the panelists, but it
came off of looking at Peter's comments. I think they are somewhat
repeated by others. I am just quoting from part of the paper here.
"There is a clear need for a Federal policy. The distribution of spe-
cialists needs to be determined on a national basis to serve na-
tional health care needs rather than parochial interests of teaching
hospitals" and their training programs certainly endorse that.

I believe the best indicator of market forces at work is the phe-
nomenon described above in the previous comments. The number
of specialists being trained is increasing at an extraordinary rate.

Then to varying degrees the first two witnesses come to the con-
clusion that we need a national work force policy and we need
some kind of a process in which to deal with that. That is where

I am going. My question is fairly basic and I ask each of you to
respond to it.

If market forces gave us, in a dysfunctional marketplace, many
more doctors of a wider variety than we need and not enough em-
phasis on non-physician health care, at a time when we know that
we could do it better and perhaps less expensively with a wider
mix of trained professionals, why is it that just changing the sig-
nals and changing the incentives, and changing the national rules
so that we really have a market at work in this country would not
take us where we want to go? Why do we need a national board?
Why do we need national allocations, national consortia and so
forth?

And maybe just a couple of examples. Someone told me in the
last week or so that we are grinding out just as many gastro-
enterologists as we always have, but not one of them can get a job
in the State of California where markets are working — not per-
fectly but they sure are working. We could on with these type of
examples.

The Chairman. You cannot just leave that there. Is it the climate
or the orange

Senator DURENBERGER. It is the health buying and health pro-
viding climate where the emphasis now is on doing better for less
money in a variety of ways. The surpluses of specialties which are
in the national market, you know, make it impossible for them to
get jobs or for that surplus to get soaked up in places like Califor-
nia and Minnesota and other places where there is a fair amount
of change taking place in the marketplace.

The second part of that question, of course, gets to the presump-
tion we all make, that all we need to do with the doctor supply is
what Canada has done, and that is, half of them are general physi-
cians and half of them are something else, and that ignores the fact
that primary care can be delivered by other than M.D.s, and that
it is the team or the integrated system that has brought to bear
on a particular problem — its diagnosis, its therapy and its rehabili-
tation.

That is much more important than what you call the doctor that
is in charge of the system. And since I have observed, as many of
you have, these kinds of responses in integrated systems — and I
just use California, Minnesota, Oregon certainly. Last week we
used examples here of the difference between Oregon and Florida.

Why do we not just change the rules in health care reform for
how the market is supposed to work and then let the market de-
velop the right mix of medical and health specialties?

Dr. BUDETTI. Senator, I would certainly not mean to imply that
the market would have no effect. I think that the forces you de-
scribe are very real. Some people who are out in the job market
right now, either as generalists who are finding a new demand for
their services and high salaries, or as specialists as you mentioned
who are having difficulty getting jobs, once they get to that point
I think that the market for their services does play a very impor-
tant role and it will determine whether they will go on to practice
their specialty or not.

We have been very good at finding ways to practice specialties,
whether the market needed us or not, though, I must add.

But I think the question that I would raise, the response that I
would have, is principally this, that to the very degree that we
think that the market ultimately is going to mean that these peo-
ple will not get jobs in the specialty that we are training them for,
I think we have to seriously question whether we should keep
pumping $6 billion a year or so into producing them. I think that
is the real issue here.

If that gastroenterologist that you described had achieved the
Board certification in gastroenterology entirely at their own ex-
pense, that would be a market. But we are paying to produce gas-
troenterologists and we are paying large amounts of money. We
have two parts of Medicare that pump money into training resi-
dents in the different specialties.

So I think that is the central issue here, is what is the Federal
Government getting for its investment.

The Chairman. Was it not so that we began by observing that
we had perhaps the unintended consequence of building a great
many hospitals just after World War II under the Hill-Burton Act,
and then came Medicare and that attracted people into the hos-
pitals because the hospitals were there.

Then Medicare began subsidizing particular forms of education.
So we have a policy, not necessarily intended. And obviously the
Council has been trying to straighten it out.

Senator DuRENBERGER. Mr. Chairman?

The Chairman. Yes.

Senator Durenberger. If I may, just in conclusion, and because
various people have addressed the issue of graduate medical edu-
cation reimbursement, back in 1983 when we designed the DRG
system we set up 468 diagnosis related groupings and we took into
consideration everything other than the indirect subsidies for medi-
cal education.

So in other words we were saying, what does it actually cost to
provide a particular clinical outcome on the average for 468 proc-
esses. Well, if we had stuck with that literally, there would not
have been any money from Medicare as a third-party payer to con-
tribute to education.

So Sheila Burke and I, and perhaps some others, but at least two
people in this room, started working on how do you account for
that. I put out the fact that we could take the $1 billion we were
spending on medical education at that time in Medicare and send
it back to the States as a block grant. That was the federalist in
me or the anti-federalist.

Of course, I got an adverse reaction from all the private medical
schools who said the State Legislatures will spend this money in
the public schools and it will never get to us.

So after that, we came up with the design of the GME and then
the indirect teaching which directs us to some of these other areas.
I hear the message now is that what GME is doing because it sort
of reimburses hospitals rather than reimburses the professional,
what it is doing is giving us what those hospitals want to give us
and what those medical centers want to give us, which is super
specialists.

So regardless of the response to my question, what I think they
are saying to us is we very definitely need to redirect that medical,
that GME reimbursement.

The Chairman. Is that what you are saying?

Dr. BUDETTI. I am certainly saying that.

The Chairman. Dr. Colwill? Dr. Jensen?

Dr. Colwill. In a modified way,yes.

Dr. Jensen. By all means, yes.

The Chairman. Nurse Folkerts?

Ms. Folkerts. I would like to interject that although we may be
looking at redistributing funding for medical education, I think one
thing that we do need to look at is primary care providers and
accessing those providers.

It would seem that we do have an abundance of some physicians.
But still we cannot get an adequate number of physicians in rural
areas and in the inner cities areas. In the town in Kansas where
my parents live, they have been without a physician for 3 years.
They are being served solely by non-physician providers.

So we need to look that even though we may have an adequate
number of physicians, they may not be where we need them. And
the other thing is, with basic health services, do we need to access
the most expensive provider or do we need to look at a two-tiered
system?

The Chairman. Should we give Nurse Practitioner Burke an op-
portunity to be heard? [Laughter.]

Dr. Colwill?

Dr. Colwill. Yes, I had a couple of comments. Senator Duren-
berger, I have to say I was where you were at in my own thinking
just a few years ago.

But to make it in the marketplace, to make it really desirable to
be in primary care, you need to have the physicians in primary
care making what the surgeons make. That is not going to happen
very soon.

Senator Durenberger. It is getting close. A primary care doctor
is getting more than surgeons.

Dr. Colwill. In a few places. At the same time today, the num-
ber of trainees in cardiology fellowship programs will we increase
total cardiologists by 25 percent.

Senator DURENBERGER. Yes.

The Chairman. Thank you. Senator Durenberger.

Senator Breaux?

Senator Breaux, Thank you, Mr. Chairman, and I thank the
panel very much for their presentations.

This is a very interesting and very important area that we are
talking about, the role of the teaching hospitals. Both the Breaux-
Durenberger and the Clinton proposals are very similar in how we
treat academic teaching universities and how we try and encourage
doctors and practitioners to go to under served areas.

Do any of you have any thoughts — and maybe this is off what
you have talked about today — of how do public hospitals, many of
which are teaching hospitals, make the transition from where they
are now under Medicaid to where they would have to be in order
to to compete with private hospitals if everybody has health insur-
ance?

I really do not have an answer to that and maybe it is not the
subject of this panel. But we have a very large system of public
hospitals, charity hospitals, in Louisiana that have been there
since the days of Huey Long.

I am really concerned that they are not going to be in a position
to start competing with private hospitals until they upgrade their
facilities, which they would be able to do if everybody had private
insurance. But it is the chicken or the egg syndrome. They are not
going to be able to upgrade unless people come. People will not
come unless they upgrade. And these are the primary teaching fa-
cilities in our State of Louisiana and I guess maybe so in other
areas as well.

Does anybody on the panel have any thoughts about how that
might happen or what is likely to happen?

Dr. COLWILL. This is something that I think the academic medi-
cal centers can respond to far better than we can. On the other
hand, it is interesting for me to see how the Boston City Hospital
has been trying to reposition itself to be more responsive to com-
munity physicians. It is now in competition with the other hos-
pitals in the community to receive capitated Medicaid payments.

I have heard anecdotally from another hospital where the State
has provided major increases in Medicaid payments for obstetrics
and that city hospital is thinking about closing its obstetrics unit
now because it has not been competitive.

Senator Breaux. I do not have an answer for the problem. I
think it is a very serious problem out there. I do not think anyone
has suggested what the solution is and hopefully we will have some
more thoughtful discussion on that area.

Suppose Congress in our "wisdom," or lack thereof, makes a de-
termination that the proper mix between general practitioners, pri-
mary care physicians and specialists should be 55/45 or 50/50 for
that matter. Are we right in telling every teaching hospital that
that is also their ratio?

There are a lot of medical schools out there that specialize in the
training of oncologists or different types of surgery. They specialize
in teaching specialists. Are we to tell them that they have to com-
pletely revamp their operations and you have to do 50/50 and if you
do not we are going to penalize you by taking money away from
your teaching operation? Anybody.

Dr. BuDETTl. Well, Senator, I would be happy to answer that. I
think that we have to be very careful in that area. I think that
there are hospitals that really ought to be doing substantially dif-
ferent patterns of training than other hospitals.

I think an approach that says let us set the goal at the national
level, and then let us figure out some sensible way to make sure
we get to that endpoint, while making the best use of each hos-
pital's— I should not even say hospital, out of each training pro-
gram's resources and ability to train people in the different special-
ties, that that is really what we ought to have our eye on.

There have been different proposals to do that on a regional
basis or to do it on a smaller basis. Some proposals would do it at
the individual medical school or training program level. But I think
that is exactly the kind of area that we need to look very carefully
at in order to make sure

Senator Breaux. You are sa3dng we need flexibility on this.

Dr. BUDETTI. We need flexibility. I do not think we should avoid
putting the places like my alma mater, Columbia University, and
Harvard and some of the other schools to the test of seeing what
kind of job they can do in training primary care doctors. But I do
not think we should undermine their ability to train, if they are the
ones who do the best job of it, of training some of the other sophis-
ticated specialists.

So I think everybody ought to be pushed in the direction, but I
think the limits need to be flexible enough to allow the job to get
done right.

Senator Breaux. I would agree with that. I think that is very im-
portant.

Let me ask a question. It will be an argument between the uni-
versities, I guess, and the other people who have programs as op-
posed to being academic centers. Where should the money go? I
mean, does the money go to the schools or does the money go to
the programs? There are going to be some programs that are out
there that are teaching that are not part of an academic institu-
tion.

You know, we all know there is going to be a real battle of who
gets the funds for these types of training programs. Can you give
me any thoughts on pros and cons of where it should go? Anybody.

Dr. COLWILL. There are several proposals out there as to how to
do it. The PPRC has one. The Clinton health plan has another. The
COGME has another suggestion with regard to it. The COGME is
suggesting that the dollar should go to consortia consisting of
teaching hospitals, a medical school, and other organizations that
are working in graduate medical education.

Senator Breaux. Does that limit it to institutions of higher
learning or does that allow programs or does it not?

Dr. CoLWiLL. The consortia would then fund the programs. If you
are going to downsize the total numbers of physicians trained — and
incidentally, the total number of positions has increased 20 percent
in the past 4 years — you have to have some mechanism for doing
it.

The COGME feels that this needs to be done, the decisions need
to be made at the local level based upon the quality of local pro-
grams and based upon the needs of community.

Senator Breaux. Let me just ask one follow-up question. Do all
the programs, the bills that are pending, whether it is Cooper-
Breaux or Clinton or what have you, do you all agree with any of
them as far as how that issue is handled or are we all wrong in
that area?

Dr. Jensen. I would like to answer that one. I think there ought
to be flexibility. In other words, I think if it appears that the best
vehicle would be to go directly to the program in some States or
areas that should happen.

If it appears that it might be better to go to the consortia or to
the medical school, I resdly think that that should happen. I want
to go back

Senator Breaux. Each State could be treated maybe a little bit
differently depending on their needs?

Dr. Jensen. Yes. Because we have what is called the North Da-
kota Center for Graduate Medical Education. It would seem emi-
nently logical that it ought to go to the consortium and in this case
basically the medical school is responsible as a conduit, receiving
funding.

I would like to go back, however, just momentarily to the pre-
vious question that you had asked. In North Dakota, for instance,
we have 70 percent of our physicians in primary care, our resi-
dency training physicians.

It would seem to me that under a consortium arrangement it
would be possible for us, say, to take that extra 20 percent that we
have and credit it to some tertiary care university or hospital and
allow them to have a percentage of our primary care base or count,
if you will. Then we would have the opportunity to wangle some
sort of deal where we may be able to preserve a place in an ortho-
pedic specialty or a neurosurgical specialty or something like that.

The consortium gives everybody the opportunity to make the best
use of the resources that are there. I think it would be counter-
productive for a medical school that is basically tertiary care ori-
ented and does a fine job of producing subspecialists. I do not think
they ought to get into the primary care training programs. They do
not have the expertise, just like we do not have the expertise to de-
velop a neurosurgical training program.

Senator Breaux. I thank the panel very much.

Senator Packwood. I wonder, Senator Rockefeller, if we might
ask a favor. I am next on the list and then you and Senator Dole.
He has to leave at 11:15, if he could go next.

Senator DOLE. I just want to ask a couple of questions of Dr.
Budetti. You make no recommendations as to the training or use
of non-physician providers and we have already had testimony
from a number of rural States here where we rely on nurse practi-
tioners. What can we do to increase their numbers?

Dr. Budetti. Thank you, Senator. I think that is a big gap in my
testimony that I am glad for you to point out, which is that I am
a strong believer in the fact that primary care is a team work ap-
proach to delivery of comprehensive services. I am also a firm be-
liever of letting individuals practice up to the level of their training
and expertise.

I think that we should do everything we can. One thing is, as we
have discussed here, about redirecting funds for graduate medical
education is, of course, to make sure there is money going to grad-
uate nursing education as well and to make sure that money flows
in a guaranteed fashion, just like it would for training more doctors
in different specialties, that it flows to training advanced practice
nurses.

Just as we have to think about the different pots of money for
training medical students, training physicians in residencies, we
have to think about training both nurses towards their first degree
and then training advanced practice nurses. We need to make sure
there is money for both of those. I think that is an important as-
pect. That should always be part of the plan.

Senator Dole. You also talk about putting a cap on the number
of residencies, both you and Dr. Colwill. There are a limited num-
ber of States that produce the largest number.

The Chairman is not here right now, but I understand that New
York State alone trains 15 percent of all residents, 12 percent in
New York City alone and 60 percent more than the next largest
State, California. I, for one, do not want to tell the Chairman that
Kansas is going to gain residents at the expense of New York. So
maybe you could explain that.

How are you going to distribute residencies slots? Who is going
to make decision with respect to the caps?

Dr. COLWILL. The COGME proposal would suggest that the num-
bers of physicians be allocated from Washington under guidelines
that would be developed by the COGME, that each consortium at
the local level, whether in New York or in Kansas, would make de-
cisions about how to allocate positions to each specialty in each in-
stitution, based upon the quality of the programs in that institution
and based upon the needs that are in the region.

Now how do you deal with New York City? I think

Senator Dole. Very carefully in this case.

Dr. COLWiLL. Of course. [Laughter.]

We all understand the enormous issues that are there. I think
we need to try to separate the issues of graduate medical education
from the dollars that are involved and from the service that is
needed. If we separate the three of them, we can then try to ad-
dress the problems separately.

I would anticipate that there would be a drop in New York State
as well as in other States in the total number of positions. I know
that the Council on Graduate Medical Education in New York
State also subscribes to these goals.

Senator Dole. You also note in your statement that international
medical students fill approximately 21 percent of the residencies
nationwide. In New York State they fill 42 percent of the
residencies. Now if we are going to limit the number, who is going
to choose between U.S. graduates and foreign graduates? Who is
going to make that determination?

Dr. COLWiLL. Well, nobody would. They would compete for the
positions. I would anticipate that the best qualified people would
get those positions.

Senator Dole. I want to ask Ms. Folkerts — I appreciate, again,
your coming, your testimony. There has been a lot of thought given.
You have heard questions from other of my colleagues here the way
we reimburse for medical education, moving the funding away from
institutions that encourage in-patient versus ambulatory care.

Where do most advanced practice nurses receive their education
now? And what is the best way to provide funds that would get to
your colleagues, through grants or loans or some other way? And
how did you get through yours?

Ms. Folkerts. A good question. Basically, with advanced nurs-
ing education, nurse practitioners are currently educated in the
academic setting. Most of these are at the master's level so those
would be in the academic setting.

However, in regard to their preceptorships, many of them go to
the rural and inner city areas for their preceptor or their clinical
training. When I went to my program, that was in the very early
1980s, there were programs from the universities which went out
to the rural areas so that those practitioners could be accessed. I

believe that we know, especially in rural and inner city areas, that
if you can take a product from the community and educate them,
they are more likely to stay there.

The program that I went to was just for rural practitioners and
brought out from the university. The way that I financed my edu-
cation was with student loans. I solely financed that and we had
the burden. Likely, most nurses in advanced practice at this point
are on student loans. There are very, very few grants or stipends.
Their education is financed solely by themselves or through a
scholarship.

Senator Dole. Grants and stipends go to physicians?

Ms. FOLKERTS. Pardon me?

Senator DOLE. They go to physicians.

Ms. FOLKERTS. Right.

Senator Dole. Could I just ask one additional question? Is it true
that the declining number of physician assistants are choosing pri-
mary care as a practice area?

Ms. FOLKERTS. I cannot comment on physician assistants. That
is not as much my expertise as nurse practitioners.

Senator Dole. What about nurse practitioners?

Ms. FOLKERTS. Nurse practitioners choose primary care. Defi-
nitely.

Senator Dole. That stays about the same?

Ms. FOLKERTS. Yes.

Senator Dole. Could I just ask Dr. Jensen this — and tell Bill
John hello for me — where do specialists generally train in North
Dakota? Where do your specigQists come from?

Dr. Jensen. In North Dakota our family practice specialty train-
ing programs certainly take a large number of our graduates. The
internal medicine program. We have a surgery and a psychiatry
program. The remainder of the specialty training and subspecialty
training must be gained outside of North Dakota.

That is wherein I think a consortium arrangement for our stu-
dents and ultimately our residents would then go to some other
site. We could make arrangements with those types of facilities and
medical schools.

Senator Dole. What you were referring to earlier?

Dr. Jensen. Earlier, correct.

Senator Dole. My time has expired. But if the witnesses would
not mind, I have some additional questions I would like to submit.

The Chairman. Of course. Would you take more time, if you have
a moment to stay?

Senator Dole. No, I need to go somewhere.

The Chairman. Well, of course, we will put those questions in
the record.

Senator Dole. I hate to burden them with additional questions.
Thank you.

[The questions appear in the appendix. 1

The Chairman. Senator Packwood?

Senator Packwood. Dr. Jensen, if I might just follow up on the
last question Bob Dole asked.

Dr. Jensen. Yes.

Senator Packwood. You do train your psychiatrists and brain
surgeons in-State or do you not have the faciUties for that and you
send them out of State?

Dr. Jensen. We do not have the facilities, nor do we plan ever
on trying to advance those facilities.

Senator Packwood. No, I think that is very wise.

Dr. Jensen. Psychiatrists, however, we do have a psychiatry
training program. But that has a limited number of residents. I
think currently, as I recall, about 12.

Senator Packwood. Is your consortia a legal entity?

Dr. Jensen. Yes, it is. It is a nonprofit corporation that is vested
in the State of North Dakota.

Senator Packwood. Who makes up the consortia?

Dr. Jensen. Who put it together?

Senator PACKWOOD. Well, who is in it?

Dr. Jensen. The CEOs of the eight major teaching hospitals in
our four campuses, major metropolitan areas in the State.

Senator Packwood. Say that again.

Dr. Jensen. Eight CEOs of the eight major teaching hospitals in
the State of North Dakota, a campus educator from each

Senator Packwood. I thought you did not have any teaching hos-
pitals. I am confused.

Dr. Jensen. Well, we consider teaching hospitals our community-
based hospitals.

Senator PACKWOOD. Okay. Sort of generalist hospitals as I call
them.

Dr. Jensen. That is absolutely correct.

Senator Packwood. Okay. So they are in it.

Dr. Jensen. Yes. It is also made up of the four campus edu-
cators, one in each of the quadrants of the State; and then I sit as
the President and CEO of the organization.

Senator PACKWOOD. And this consortium gets all of the money
that the Federal Government gives for any kind of training; is that
correct?

Dr. Jensen. Well, we have had to go back to the hospitals and
ask for the funding. Because you will recall that currently both the
IMEs and the DMEs come directly to the hospital.

Senator PACKWOOD. Yes. But the hospitals have agreed to let the
consortium handle it all?

Dr. Jensen. Yes, and they have done a pretty good job about
that. I must confess, however, that under the Freedom of Informa-
tion Act, I had to get that information and then present it to the
hospitals. When they knew that I knew how many dollars were
being put into the hospital, they became much more cooperative.

The Chairman. Oh, my goodness.

Senator Packwood. I want to ask you what would happen. It
seems to me you have handled this problem very well. You are sug-
gesting that as a matter of Federal law we ought to do this Nation-
wide or maybe do it State-by- State or geographic in some way. But
you support the concept of consortiums?

Dr. Jensen. Oh, very much so.

Senator Packwood. Now, if you are in a State that has a num-
ber of major teaching hospitals, New York obviously being one.

they would all have to be in the consortium. I suppose everybody
has to be in it that has any significant involvement.

Dr. Jensen. Yes, they would and I am not sure I know how to
draw the lines, particularly in a community or a large city like
Philadelphia or New York. There has to be some rational way in
which that can be accomplished. But I can only speak now from our
State on a statewide basis.

Senator Packwood. I think I will not prolong this. I will address
this to the others. Let me ask Ms. Folkerts first. Would you be sat-
isfied with one of these consortia that your profession, and all these
you represent — ^you represent half a dozen today — would get a fair
shake out of the kind of consortia that Dr. Jensen describes and
Drs. Col will and Budetti are talking about?

Ms. Folkerts. What I would propose is that there would be one
work force to look at the need for M.D. programs, advanced prac-
tice programs.

Senator Packwood. What do you mean one work force?

Ms. Folkerts. Meaning one national work force or Council. You
know, what do we need as far as providers? Can we access primary
care providers with a lot of the advanced practice nurses which we
already have? Do we need more at that level? What is our need?
And that group needs to look at all providers of health care.

Senator Packwood. So you are looking at a national group to de-
termine the need; and then these consortia are going to allocate
monies to reach that need and allocate it maybe State-by-State or
some other method. I am not sure.

But you would be satisfied to live with the consortia, assuming
that they were working toward whatever the agreed national needs
are. Maybe you divide those up and say North Dakota provides so
many and Georgia provides so many. You could live with that.

Ms. Folkerts. As long as it was equitable; meaning it was con-
sidered with all health care providers, it was not just graduate
medical education.

Senator Packwood. No, no, I understand.

Ms. Folkerts. All primary care providers were considered, cor-
rect.

Senator Packwood. I understand that. Although the national
work force may not come out the way you would like it to come out,
in which case you are stuck with it.

Ms. Folkerts. Exactly.

Senator Packwood. Yes, sir?

Dr. Jensen. Senator Packwood, though this concept at the North
Dakota Center started with the family practice programs within
the State the vehicle is there and it is our intent that it should also
be the agent or responsible facility or whatever it is in the State
to take care of undergraduate medical education, to take care of
the needs of the State as far as physician assistants, as nursing
and so forth are concerned.

We do not see a reason to replicate this mechanism. What we are
going to do is make it broader or more inclusive and to include the
primary health care givers within the State.

Senator Packwood. Now, let me go to the two doctors here on
the consortia. Now we are in New York or we are in Boston where
you have major teaching hospitals. They are part of the consor-

tium, I am assuming, or the Deans of all the teaching hospitals and
major hospitals and you have all these community hospitals and we
are going to move toward more hopefully general practitioners.

Let us say New York State is a consortium and go State-by-
State. Does this consortium then say, the Columbia Presbj^erian or
NYU, you do very well at training heart surgeons £uid we are going
to have you continue to train the heart surgeons although we are
going to have 5,000 fewer residents all toll; and we are not going
to really ask you to train general practitioners because that is not
your forte. But we are going to cut back your residencies in this
State by 700 because we are going to sort of reallocate those to
community hospitals. Do I have a rough idea of the way this is
going to work?

Dr. COLWILL. I think there are multiple ways that it could work
and that possibly could be one. You could also assume that, say,
in Philadelphia there would be five consortia each built around a
medical school and its affiliated programs and each of those consor-
tia then would meet the overall goals.

So you could do it in multiple different ways. We do not want to
define every aspect of each consortium. We think that needs to be
defined at the local level.

Senator Packwood. I understand that. But if you have five in
Philadelphia, then we are going to have to hassle how much of the
Federal money each of the five gets.

Dr. COLWiLL. That is right. Any time you reduce the overall
funding or overall numbers of positions, you have to develop some
means of allocation.

Senator Packwood. Thank you, Mr. Chairman.

The Chairman. Did I hear ration?

Senator Packwood. Reallocation.

The Chairman. Reallocation.

Senator Rockefeller?

Senator Rockefeller. Thank you, Mr. Chairman.

Dr. Budetti, one of the things that we have to be obviously sen-
sitive to, as we address work force reform, is the fact that in States
like New York, where as Bob Dole says they train 15 percent of all
the residents, that there has to be some kind of a transition in
order to help support academic health centers and teaching hos-
pitals.

Although this is a problem in many areas, none may be quite as
important as New York because of their role in training so many
physicians. It is not inconsistent to talk about achieving work force
reform and getting to the 55/45 generalist/specialist ratio, if you in-
clude OB/GYN, and yet at the same time devising a mechanism of
transitional help to protect the academic health centers in New
York. Can we do both?

Dr. Budetti. Yes, Senator. In fact, I think we will have done it
wrong if we do not do both. I think that what we need to do — this
gets to the issue of two kinds of transitions that I was talking
about before. One is the transition of the training programs them-
selves, trying to decide nationally what the right balance is and
then figuring out what the best way to diwy up that is around the
country.

But the other is the transition with respect to service deUvery
and to make sure that the teaching programs in New York City
and throughout New York State, but especially in the city, that are
delivering so much service right now, and that exist largely to de-
liver service, that they be replaced by service delivery entities —
doctors, nurses, clinics, whatever it is that it takes to deliver the
services — and that we not pull out the teaching programs before we
make sure that there is access to adequate health care services, ei-
ther private offices or clinics or whatever else it is.

I think that in both cases there needs to be a transition. There
needs to be money to make sure that the teaching programs sur-
vive and continue to be able to do what they do well. But at the
same time we need to make sure that there are ways that the peo-
ple who are just going to those programs for service really could
be seen in a private doctor's office or could be seen well outside of
the sophisticated teaching program get access to care.

That is money, too. I think in both cases it is money and it is
also programs like National Health Service Corps, Community
Health Centers and other kinds of entities to set up in the areas
where we cannot get mainstream medical care.

So I think we do need to do both at the same time and it prob-
ably would take some more money.

Senator Rockefeller. Do you think it will take more money
than is currently in the administration bill?

Dr. BUDETTL I think that is not unreasonable to think about,
taking more money. Senator. In particular, there is a couple of year
gap where the Medicare payments fall off and the money that
would come from setting up the new delivery system is not able to
sustain the current levels of outside funding.

So I think that at an absolute minimum that rough transition
would need to be smoothed over. And then beyond that I think we
need to look real hard at how much money is needed. I think that
when we do look at that, there will be some tough questions as to
what it does cost to run a teaching program and where the money
ought to be going. But I think we need to face up to that.

Senator Rockefeller. I want to read a statement and see if you
agree with it. "Today the income at most academic health centers
is made up of only 5 percent or less from medical school tuition,
even though tuition may be greater than $20,000 a year. Most of
the income is now clinical income — from subspecialty procedures in
cardiology, gastroenterology, orthopedics, et cetera — and this rep-
resents about 40 percent of the total revenue. Research from the
NIH and other sources represents another 20 to 30 percent of the
revenue, and the remainder comes from State and local govern-
ments, especially for State schools."

In other words, virtually nothing comes from the drawing power
of the school itself

Dr. BUDETTL No matter how you add up the money, there is a
lot of public money going in. Just the other day I added it up and
it looked to me like you could easily make the statement that more
than half of the money going into our medical schools — now we
have to be careful to separate the medical schools from the grad-
uate medical education programs — but that more than half of the

budgets was coming one way or another from public sources, in-
cluding NIH grants.

Senator ROCKEFELLER. Let me read one more statement and see
if you agree. "What drives the academic health centers then is dol-
lars. It has to. When the source of funding was in research that is
what academic health centers did. When funding became available
from third party reimbursement for specialty care, that is were
academic health centers shifted. To have power as an individual
department, all you need is a research grant or a financially reim-
bursable clinical skill. "Since the leadership, the Deans, and the
Presidents of these academic health centers, do not control these
dollars, they have difficulty controlling the direction of the schools."
Would you agree with that?

Dr. BUDETTL I would certainly agree that they are good Ameri-
cans and they go where the money is. I am not sure what the lines
of power are, frankly. But I do think that it is the lines of power.
That is what the money argument was all about. Senator Breaux's
question about who should get the money and how the consortia,
if there is going to be consortia, how they should be structured,
that is the heart of the question.

Where is the money going to go? Is it going to get in the hands
of the people who are running the programs that we want the
money to end up in or does it go to the Department Chairs or the
Deans or the heads of the academic health centers into a genered
pot that they can then do whatever they want to with it? I think
that is an essential question.

Senator Rockefeller. I have a question, but my time is up.

The Chairman. No, no, Senator Rockefeller.

Senator ROCKEFELLER. I can wait.

The Chairman. We have one panel.

Senator Rockefeller. All right.

So in a sense, there seems to be a real difference, Dr. Budetti,
between the kinds of physicians that are needed by the country on
the one hand and the number and kinds of physicians that are
needed by the teaching hospitals. There may be different require-
ments, because I think only one out of every 1,000 people go to a
university hospital for care in any given month, although 250 of
1,000 people will see a physician in any given month.

So if we continue to decide to train physicians, depending on how
many doctors and how many specialists are needed to provide care
at our teaching hospitals, we will continue to train a vast over sup-
ply of subspecialists, and at an enormous cost to society.

Do you agree?

Dr. BUDETTI. Absolutely. I think that is exactly one of the key
points — that we are using public money right now to satisfy the
limited, central, very understandable needs of the teaching hos-
pitals rather than the public policy.

I think that we should not expect them to do any different. If we
are laying the money out there, they are going to behave in the
way that best serves their interests.

Senator Rockefeller. Thank you, Mr. Chairman.

The Chairman. Thank you. Senator Rockefeller.

Senator Grassley?

Senator Grassley. Thank you, Mr. Chairman.

Dr. Jensen, you stated that 55 percent of your people are in pri-
mary care. I think you indicated you do a pretty good job of keep-
ing them in your State. I guess my question is, since that is so out
of the ordinary, to explain how you do it and is it as good as what
you indicated. And particularly, what is it that keeps them within
your State if I interpreted that right?

Dr. Jensen. The weather. [Laughter.]

Senator Grassley. Before you answer, I might say that in my
State of Iowa, in the 1960s we had our professors at the University
of Iowa — this would be 30 years ago now; hopefully, it is not this
way now — you know, advising people, you know, go to California.
That is where the big money is in medicine.

So that kind of hurt our retention. Then we had various propos-
als made to the Legislature that if we would set up a Department
of Family Practice and have a specialty in that, that would help the
situation where the snobbery of medicine got people into specialties
because there was something about general practice that was not
quite as good as it should be, so that would raise the level of that
profession or that subspecialty.

And then later on in the middle 1970s, because I was chairman
of the Appropriations Committee at that particular time, they said,
well, just create some family practice residency programs around
the State. So we created eight of those. And if you get them to do
their residency in Iowa in family practice, the statistics show they
will stay within 50 or 60 miles of there.

I do not know whether those things work or not. But we spent
the money and we are still doing it in all those respects. Is there
any aspect of that that you use as well? Incorporate that into the
answer to your question.

Dr. Jensen. Well, the answer is many fold. Senator Grassley.
When I became the Chair we undertook a cohesive, coordinated ef-
fort to attract our students into family practice. Item number one
in the discipline. We think that family practice and primary care
are essential. We think that they practice excellent medicine which
is cost effective.

We also have on our Admissions Committee of 11 about 5 pri-
mary care physicians, of which 4 are family physicians. We select
students who are just primarily within the State as our candidate
for applicant pool for the University of North Dakota School of
Medicine.

We have family practice well represented throughout the first 2
years or the academic aspect in the classroom situation, with fam-
ily physicians as lecturers. We have at the end of the second year
our students go to community hospitals — 27 community hospitals
throughout the State to spend a 3-week period.

We have in my discipline anyway 110 family physicians around
the State and we require each and every one of our senior medical
students to go out to those sites to take an 8-week rotation. Then
we bring them back to the community hospitals at the end of the
fourth year, just prior to going into the residency training pro-
grams. They act as residents or subinterns in those community
hospitals where they were at the end of the second year. The cur-
riculum is in this document.

QT — OC? r\

We feel that in the proper setting and proper dimate and having
obvious pride in the disciphne of family medicine that we can at-
tract our people into family practice.

When I went through the 2-year school — North Dakota then was
a 2-year school — only 18 to 20 percent of us ever got back to the
State of North Dakota. Since we have granted the M.D. degree in
1976 we have about 43 to 44 percent total that ultimately come
back to the State to practice, recognizing many go out for obstetri-
cal training programs, neurosurgical programs and so forth.

If you were to take a graduate of the University of North Dakota
School of Medicine who goes through one of the family practice pro-
grams, 73 percent stay within either the State or the immediately
adjacent territory as we mentioned earlier with Senator Duren-
berger.

I think it is a commitment to primary care. It is a philosophy,
if you will, and it is a mission.

Senator Grassley. And I suppose that your point is that not
enough schools have that primary purpose and that respect for
family practice and the promotion of it that causes necessity to get
the Federal Government involved in making some determination of
the amount of family practitioners we have.

Dr. Jensen. I am not sure just exactly what you mean by that.

Senator Grassley. Well, you have done it without the interven-
tion of the Federal Government obviously.

Dr. Jensen. Yes.

Senator Grassley. And obviously other medical schools, presum-
ably because they have less emphasis upon primary care, do not
produce as many family practitioners and that is what has brought
us to the point of meeting a political determination of how much
more primary care we need.

Dr. Jensen. You are absolutely correct. It just strikes me that
the Federal dollars have to go into primary care training programs.
And it might even be necessary to put in some sort of stimulus, in
other words to support family practice resident programs at a high-
er level than some of the other programs, if that would appear to
be necessary.

Senator GRASSLEY. I will just ask one question, please, of Ms.
Folkerts.

The Chairman. Please, Senator.

Senator GRASSLEY. I wanted to thank you for mentioning the bill
that Senator Conrad and I put in. But more importantly, how do
you see nurses and nurse practitioners functioning under managed
care programs?

Ms. Folkerts. Nurse practitioners are trained to provide basic
primary care. I see nurse practitioners as being perhaps the first
level of care in a primary care setting. Meaning, when a patient
comes in with a sore throat, elevated temperature, at that level
they need primary care.

At that level, nurse practitioners are very cost effective in pro\dd-
ing the care that is needed. If the patient does not respond or his
or her needs become more critical, then in a managed care setting
I see accessing the physician level.

In other words, using physicians in the cases in which their ex-
pertise is needed and using nurse practitioners' expertise in the
basic health primary care services. They would work as a team.

Senator Grassley. Thank you, Ms. Folkerts.

The Chairman. Fair enough. Thank you. Senator Grassley.

Senator Conrad?

Senator Conrad. Thank you, Mr. Chairman. I thank all of the
members of this panel as well. I think this has been a good morn-
ing.

Let me ask Dr. Jensen first if I might — and I should tell my
panel members that Dr. Jensen was actually the personal physi-
cian for our State's Congressman when he was growing up in Val-
ley City, ND. So when he talks, we listen.

Dr. Jensen, at the University of North Dakota we have accom-
plished what is rapidly becoming a national goal, that is to try to
get more than 50 percent of our doctors who are in training to
focus on primary care. That is clearly emerging as a consensus na-
tional goal.

In terms of accomplishing that, you are at 55 percent at the Uni-
versity of North Dakota. What would you say are the most impor-
tant lessons to be learned at a national level if we are to adopt that
goal nationally in order to achieve it?

Dr. Jensen. Boy, you are asking me to put everj^hing into one
little capsule. I am not sure I can do that, Senator Coni-ad. I think
there has to be a national goal toward increasing the number of
primary care physicians. Yes, we have become a model. We have
a State-wide consortium that fits all into that concept. And we
have obviously a commitment to family care and family medicine
particularly.

In order to get the job done, in order to deliver cost effective med-
icine in my opinion in this country, we are going to have to rely
more on primary care people. That includes, as was pointed out
here by Debra, it is going to be nurse practitioners, it is going to
be physician assistants and it is going to be a large, large cadre
of primary care physicians in this country.

Senator CONRAD. To actually accomplish it nationally, what do
you see as the key hurdles? What are the things in the system that
prevent us from producing that kind of percentage of primary care
doctors? Is it financial disincentives that are in the system, finan-
cial incentives that are in the system? Is it a mind set that is out
there that the specialty doctors are a higher priority? What is the
culture that is in the medical system?

Dr. Jensen. It is all those that you alluded to. There is no ques-
tion about the fact that in the medical hierarchy primary care phy-
sicians are not up as far on the totem pole as the other super spe-
cialties like neurosurgery. There is no question about it. I think it
is an attitude in part. I think it is also the fact that Federal fund-
ing has been directed to the subspecialty producing institutions
preferentially; and I think that has to turn around.

Senator Conrad. All right. Maybe if I could ask each of the wit-
nesses, as you look at this whole issue of graduate medical edu-
cation and you see the plans coming forward, could you tell me,
what is the thing that strikes you as the single most important
message you would want to leave this committee with? I mean, if

you were to distill the message that this committee ought to absorb
today, what would it be? Dr. Budetti?

Dr. Budetti. I think for me, Senator, the single most important
message is that if you do not do anything at all, you are doing a
lot. And it is to continue the policies that are already in place and
sending large amounts of money and we are going to continue to
produce the kinds of imbalances that we have seen so far.

For number one it would be, do not think of leaving things alone
as leaving things alone. It is leaving in place policies that are going
in the wrong direction. Number two, what I mentioned before, try
to separate out the need to deliver services properly to people
which national health insurance ought to accomplish, from the
need to make sure the training programs do what they are sup-
posed to do, which is produce trainees.

Senator CONRAD. All right. Doctor?

Dr. COLWILL. I think Dr. Budetti said it all. I would add only one
other piece. Today we have the possibility of modifying graduate
medical education to prepare the doctors which the Nation needs.

Senator Conrad. All right.

Ms. FOLKERTS. I would ask that nursing graduate education be
continued with a directed revenue source so that nursing may pro-
vide and assist with the primary health care needs of the United
States in providing primary care.

Senator CONRAD. Dr. Jensen, what would be the message, the
single most important message you think the committee should
learn from this panel this morning? If you had to distill that mes-
sage into a few sentences, what would it be?

Dr. Jensen. Well, I think it would be to redirect the funding
from the tertiary based medical schools that have historically pro-
duced an oversupply of super specialists and redirect it to the pri-
mary care training programs within the country.

Senator Conrad. Maybe I could ask you, when you use the term
the "tertiary care facilities," what do you mean by that?

Dr. Jensen. Well, I am talking about those institutions that pri-
marily produce cardiologists, cardiovascular surgeons, neuro-
surgeons, et cetera, et cetera. We are seeing certainly an over-
supply of those types of subspecialties in this country.

Senator Conrad. If we had those people that represent those
subspecialties here today, would they agree with that characteriza- ,
tion?

Dr. Jensen. Well, I am not sure that they would. [Laughter.]

But I think it is because they would not agree because they have
a vested interest.

Senator CONRAD. All right. I thank the Chairman. I thank the
panel.

The Chairman. I thank Senator Conrad.

Dr. Jensen, you would not mind my suggesting that they have
a vested interest in the advancement of science.

Dr. Jensen. There is certainly no question about that and that
did not mean to imply that they did not have. Certainly many of
the true and great significant findings have taken place in these
institutions. That is the reason I feel that they ought to be doing
precisely what they are doing, but to a lesser degree, and
redirecting those funds.

I also think very strongly that there is a tremendous body of pri-
mary care research problems that need to be identified and rem-
edied. That is where I think the — I pointed out earlier I was in
support of and speaking really for the community based medical
schools. We feel that we are the schools that would be able to direct
our attention toward primary care research problems and be re-
sponsible for determining outcomes, which is terribly important.

The Chairman. I thank you, doctors all.

Senator Daschle?

Senator Daschle. Thank you, Mr. Chairman.

I'd like to take this opportunity to summarize what appears to
be an extraordinarily helpful hearing, and also to consider the
many excellent statements already given by the witnesses. Senator
Conrad, with his questions, summed up much of what I had in-
tended to address.

Dr. Budetti, I was particularly impressed by your last remark,
which properly describes the debate about all of health care reform
not just GME. Unfortunately, there are people who still believe
that doing nothing is somehow the most benign, the least detrimen-
tal course of action.

I think that, among all our options, doing nothing could have the
most detrimental consequences. I wish more people were here
when you said that yourself

Witnesses, thank you for your references earlier to some of the
legislation we have worked on. You mentioned just a moment ago
that a delineated funding stream was crucial to the role that nurse
practitioners can play in future primary care allocation. Could you
elaborate a little bit more about why a funding stream is important
and how you would implement it?

Ms. FOLKERTS. With education, as I had stated, nurse practition-
ers are currently left to bear the burden of their education alone.
There is no directed revenue source to help with graduate nurse
education that does not undergo yearly review to provide funding.

We have 6,000 advanced practice nurses currently who cannot
get into programs that are wanting to provide primary care. And
to have that funding available to provide for graduate nurse edu-
cation would be a great benefit to nursing, to help provide for the
primary care needs of the country.

Senator Daschle. Is it accurate to say that were you to fail to
achieve some delineated funding stream that the future plight of
nurse practitioners would be like the one they face today, where
the medical community is not able to make full use of their poten-
tial as providers of primary care?

Ms. FoLKERTS. Absolutely.

Senator DASCHLE. Senator Conrad asked the question that I was
thinking of asking all of you. I would like each of you to propose
an action plan that you think we need to consider, regardless of
which plan ultimately may come out of this committee.

What specific pieces related to GME are essential if we are going
to convert our over-reliance on subspecialists to a greater reliance
on primary care practitioners?

The impression I have from your testimony so far is that the key
issue is a delineated funding stream. If we fail there, we probably
will have failed to provide the opportunities necessary to reach the

goals set out in the Clinton plan. But is there more to it, and if
so, what? Dr. Budetti?

Dr. Budetti. Yes, Senator. Just to be clear, we are not just talk-
ing about medical schools. We are talking about the entire spec-
trum of where the training takes place after the medical schools
produce physicians. That would be both the hospitals, and what we
would like to see expand, the community based and ambulatory
care settings, in which primary care trainees need to do their train-
ing.

So I would say that the first thing is to set as a national policy
that we do want to put money into making sure that the future
work force that the health professionals of this country meet the
needs of the future, number one. That would mean that we would
require all payers to contribute equally and not just Medicare and
ad hoc from private sources.

And number two, establish a process like setting up the national
commission that is described in several of the bills, that would lay
out, as Dr. Col will has described, for the existing Council, the na-
tional policy and what the goals were and then tie the two to-
gether. Say the money is only going to be spent if it pursues these
national policies.

Then step number three, let us figure out a way of divvying up
the money to meet these policies. That is a complicated phase of
implementation, but it is not something that I think is impossible
to achieve.

Senator Daschle. Dr. Col will?

Dr. COLWILL. I think there is a dual goal. One is to have ade-
quate numbers of generalists. I think Dr. Jensen talked eloquently
on that and I have spent the last 22 years of my life doing similar
things.

Secondly, we need to find ways of reducing the number of spe-
cialists educated. Those come hand-in-hand. If you do one without
the other, you are not going to get the job done.

Senator Daschle. Ms. Folkerts, do you have anything to add to
that?

Ms. Folkerts. Approximately 70 percent of all nurses in ad-
vanced practice currently are providing primary care. So nursing is
not affected by this shift to primary care because we are already
doing it. What we need is the graduate nurse education funding to
enable us to do it even better.

Senator Daschle. Thank you. Dr. Jensen?

Dr. Jensen. Yes. I would suggest as Dr. Budetti has that it
should be an all payer system. I do not think there is any question
about that. I think it is unfortunate that currently it is just tied
to the Medicare system. We are talking about a change in the work
force and essentially a national policy. I do not see that that should
be limited just to the Medicare system. That does not seem logical
or rational to me an3rway.

The other thing is that I think it is important that you maintain
flexibility because a State like North Dakota with its State bound-
aries and with its make up of the medical school and the use of
our community facilities is considerably different than in Philadel-
phia or New York certainly.

I think that you ought to maintain the flexibihty in there to
make sure that the monies do come ultimately, primarily directed
back now appropriately to the primary care programs within the
country. That can occur within a consortium in a medical school,
in alliances, and hospitals joining those. And they may assume as
many different forms as essentially there are States. So I think
that is terribly important. I guess that is basically my advice.

Senator DASCHLE. Well, thank you all for your answers.

Thank you, Mr. Chairman.

The Chairman. Thank you. Senator Daschle.

We do, indeed, thank you. You can see the field of response here
from the Senators.

I guess what I would find myself interested in is the degree to
which — Dr. Budetti, you began the subject and then each of you
added to it — we have in place unacknowledged policies which have
consequences, which can be shown to be related to what we do,
even if we have not decided that is what we want to do. That is
something you find in government. It is a very common tradition.
If you wanted to supplement any of your statements in writing by
giving us an example there, we would appreciate it.

I wish someone just once would address the subject of dentistry.
[Laughter.]

Surely it is pure accident that dental schools and medical schools
developed separately in the 19th Century; is it not? I mean, are
teeth not part of the body? Do you not let medical students look
inside the mouth?

Dr. Budetti. Senator, that is a tough question. Why we have po-
diatry separate from medicine, focusing on one part, the other end
of the body.

The Chairman. There are historical reasons.

Dr. Budetti. There are historical reasons why we are there. It
may also be everybod/s natural aversion to the work of dentists
I suppose.

The Chairman. Well, then all the more the calUng should be
honored.

Dr. Budetti. Absolutely.

The Chairman. To take a life in which people avoid you. I have
given enough commencement addresses and have sat on enough
platforms on which the Dean of the Medical School, the Dean of the
Dental School said, oh, we are going to be merging any day now.
I first heard that 30 years ago. It calls for some attention. I would
just leave it to you. It is curious to me that it is not attended.

The other thing is just to say for the record, that the advance-
ment of science is a great national undertaking. I think we are in
the heroic age of discovery. Much of the beginning of this century
was the heroic age of physics. We got to the bottom of the matter
you might say. All was done in Europe. Americans just watched it.

Now this age of medical discovery is in the main happening here.
That is a change in the culture. Once you learn these things you
learn them for all time. America, the United States, is doing this
for the rest of the world.

I am told, and I do not know how to judge something like this,
that the advent of universal health care systems has had a sup-
pressing effect on medical research in Europe. I do not know how

you would count up the papers and references. There are ways to
measure science, who gets cited.

Maybe the last great event was the discovery of DNA at Cam-
bridge. I cannot think of anything else, but then I do not know the
field that well. If that were so, that is a question that needs to be
asked. Government policies have obviously facilitated what was
going to come an5^way, I think. It was our turn, as it were.

It was 250 years ago that Benjamin Franklin established the
American Philosophical Society for the advancement of useful
knowledge. I happen to be a member. We observed the transit of
Venus in 1760. It was the first American science noted in Europe,
before the American Association for the Advancement of Science,
the American Academy of Arts and Sciences in Cambridge.

Something makes me uneasy about government deciding what
people should do on the edges of knowledge. The government will
not know. I am appalled when I read about people who want more
research in this or that in X and Y university. I mean, research
will be done by people who want to do it.

In these great days we have let people follow their own directions
and extraordinary things have happened. I am just musing here,
but you follow perhaps what I am sa3ring. I cannot imagine any-
body walking in a room and telling an economist what he should
study. You do not know that. You can get pretty mediocre depart-
ments that way and the best ones will leave you and go to Toronto
where they will be allowed to do what they want to do, which is
another thought.

But the hour of noon having arrived and our party caucuses tak-
ing place, we want to thank you most sincerely. Do give us, if you
have a moment, and obviously this is your field. Dr. Budetti, and.
Dr. Colwill, you obviously are working at it, some idea of where you
think the hidden policies are. It would be nice to know how much
influence Hill-Burton had on the development of all those things.

A wonderful subject, beautifully elaborated. You can tell how
much we are grateful to each and all of you.

Dr. Budetti. Thank you, Mr. Chairman.

Dr. Colwill. Thank you.

The Chairman. The hearing is adjourned.

[Whereupon, at 12:00 p.m., the hearing was adjourned.]

APPENDIX

Additional Material Submitted

Prepared Statement of Peter P. Budetti

Mr. Chairman, Members of the Committee. I am Dr. Peter Budetti, the Director
and Founder of the Center for Health Pohcy Research at The George Washington
University. I hold an endowed chair as the Harold and Jane Hirsh Professor of
Health Care Law and Policy, and serve as a full-time tenured faculty member in
the Department of Health Services Management and Policy, School of Business and
Public Management. I also have joint appointments as Professor of Law in the Na-
tional Law Center and Professor of Health Care Sciences in the School of Medicine
and Health Sciences.

Mr. Chairman, my training is as both a Pediatrician and lawyer. A displaced New
Yorker, I earned my medical degree from Columbia University College of Physicians
and Surgeons. After being trained in pediatrics, I studied law at the School of Law
(Boalt Hall), University of California, Berkeley. My undergraduate degree was
awarded magna cum laude from the University of Notre Dame.

I am and have been Principal Investigator on a range of extramural funded
projects and have published a number of articles on workforce policies such as we
are discussing today. Between 1978-84, I served on the national Committee on Pedi-
atric Manpower of the American Academy of Pediatrics. As Chair of that committee
between 1982-84, I worked closely with members and staff of the Academy to de-
velop data and analysis on the need for training pediatricians.

Between 1984 and 1990, I served on the other side of Capitol Hill as Counsel to
the Subcommittee on Health and the Environment of the Committee on Energy and
Commerce. I was the professional staff member with primary responsibility for leg-
islation and policy concerning health insurance reform, health professions education,
and a number of related areas. This past year I was called upon to serve as a mem-
ber of the core legislative drafting group for President Clinton's Health Security Act.

From 1975 through 1984 I was with the Institute for Health Policy Studies,
School of Medicine, University of California, San Francisco, leaving as Associate
Professor-in-Residence of Social Medicine in Pediatrics. As Assistant Director of the
Joint Medical Program of the University of California at Berkeley and San Fran-
cisco in 1982-84, I was deeply involved in issues of medical education.

Mr. Chairman, as someone who has spent many years deeply involved in this
issue, I very much appreciate the opportunity to discuss my personal thoughts on
the restructuring of our health professional workforce with you. I would emphasize
that I am here to present my own views, and I am not speaking on behalf of the
Administration, The George Washington University, the American Academy of Pedi-
atrics, or anyone else. Because I recognize well your time constraints, I ask that my
full written statement be included in the Record of this hearing, and I will make
only a few particular comments here today.

Mr. Chairman, I believe that six main points should be emphasized with respect
to the need for federal action in shaping the future supply and distribution of health
professionals. First, there is a serious imbalance of health professionals, with far too
many in specialties other than primary care. This imbalance is costly in economic
terms, inappropriate in medical care terms, and escalating rapidly. Second, this ex-
cess supply of practitioners in specialties and subspecialties is not merely a product
of market forces at work. To a very large degree it is an unintended and counter-
productive effect of certain existing federal policies. As a result, without new federal
initiatives to reverse these perverse consequences, those federal policies will con-
tinue to exacerbate the situation. Third, even modifying current federal policies
would not be sufficient. Federal action to limit growth in nonprimary care special-

(37)

ties is needed to assure that we have an appropriate health care workforce in the
future — neither the current market forces nor foreseeable changes in the health care
market will produce the mix of practitioners necessary to serve patient care needs.
Fourth, federal action will be effective and need not be overly intrusive or heavy-
handed. While there will be inevitable transitional problems, these can be mini-
mized. Fifth, health care reform presents a unique opportunity to reduce the need
for many people in the inner-city to go to large teaching hospitals and clinics for
their medical care, and to redirect specialty training at the same time. Universal
coverage will provide new opportunities for everyone to receive mainstream medical
care, and new challenges to teaching programs to broaden clinical teaching beyond
the traditional population of low-income individuals. Sixth, health care reform itself
could well be jeopardized by failing to reform the workforce. Continued growth in
the number of inappropriately trained specialists will create an ever-larger cadre of
health professionals who would feel threatened by and work to defeat comprehen-
sive health care reform.

First, there is a serious imbalance of health professionals, with far too
many specialties other than primary care. This imbalance is costly in eco-
nomic terms, inappropriate in medical care terms, and escalating rapidly.
Insufficient numbers of^ primary care practitioners are available for deployment
where they are needed most, while highly specialized physicians proliferate and
dominate medical care practice and spending patterns. The proportion of physicians
in family medicine, general internal medicine, and general pediatrics has fallen pre-
cipitously as the number in other specialties has skyrocketed. In 1931 about 87 per-
cent of U.S. physicians were engaged in primary care; by 1970 the share was re-
duced to 38 percent, and by 1990 to 31 percent. When obstetrician-gynecologists are
added in, the total is just under 36 percent. (Figure 1)

The Association of American Medical Colleges reports that between 1982 and
1993 the proportion of graduating medical students planning to become board-cer-
tified in Family Medicine fell from 15.5 percent to 11.8 percent, in General Internal
Medicine from 14.4 percent to 4.5 percent and in General Pediatrics from 6.2 per-
cent to 3.0 percent. (Figure 2) Overall plans to enter those general specialties fell
correspondingly, from 36.1 percent in 1982 to 19.3 percent in 1993.(Figure 3) Even
after a small rebound from historic low rates in 1992, the 1993 figures still show
that nearly 50 percent fewer graduates foresee careers in primary care than a dec-
ade ago.

While fewer students are going into primary care, there has been an expansion
of residency positions in nonprimary care specialties that is nothing short of stag-
gering. In 1988, there were under 85,000 physicians (M.D. and D.O.) in residency
training; by 1992, there were over 101,000 — a 19 percent increase in only four years.

Barely one-fourth of that expansion has been in primary care and obstetrics-gyne-
cology; the bulk of it has been in the other specialties and subspecialties. Between
1988 and 1992, the number of trainees in medical subspecialties grew by over 60
percent, and in other specialties by 28 percent. Cardiology expanded by 50 percent,
Pulmonology by 65 percent, Gastroenterology by 45 percent, and other medical spe-
cialties by 69 percent. In contrast, primary care residents increased by just under
1 1 percent, as did surgical specialists. (Figure 4)

Mr. Chairman, the pipeline of specialists and subspecialists in training that was
already glutted is now threatening to burst at its seams.

Second, this excess supply of practitioners in specialties and subspecial-
ties is not merely a product of market forces at work. To a very large de-
gree it is an unintended and counterproductive effect of certain existing
federal policies. As a result, without new federal initiatives to reverse these
perverse consequences, those federal policies will continue to exacerbate
the situation. Federal policies designed for other purposes have had the unin-
tended and unfortunate effect of creating a climate in medical education that is not
hospitable to the production of an adequate number of primary care practitioners
and that rewards expansion of positions in other specialties. These policies include:
generous funding for Graduate Medical Education (GME) through Medicare and, in
some states, Medicaid; Medicare's payment policies for hospital and physician serv-
ices; and, support for a vast expansion of biomedical research in academic health
centers and teaching hospitals.

Although nominally neutral on the distribution of residents among specialties,
Medicare's GME payments in reality strongly encourage non-primary care physician
specialization. They do so in part because they focus nearly exclusively on hospital-
based training, cutting off the development of training sites needed for primary care
experiences. Training in teaching hospitals is centered on severely ill patients re-
ceiving the latest in high-technology medical care. While such experiences are criti-
cally necessary for a broad, modem medical education, they are not adequate for

learning the skills and developing the practice style necessary to practice sophisti-
cated primary care.

In addition, Medicare pays for graduate medical education at a level and in ways
that create incentives for hospitals to train large number of physicians in highly
specialized fields. Medicare's hospital- and physician-payment policies work hand-in-
hand with the way that GME pajonents are made to encourage hospitals to empha-
size non-primary care specialties. Under Medicare's hospital-payment policies, spe-
cialist residents and fellows help generate far greater patient-care revenues than do
primary care residents. This not only encourages teaching hospitals to favor special-
ties that treat the most profitable DRGs, but also provides a highly lucrative bonus
by multiplying the DRG payments more and more as hospitals add residents.

Medicare's GME payments have become a major source of revenue for teaching
hospitals. In 1993 Medicare GME payments were projected to be $5.5 billion. In con-
trast, federal grant programs to support all primary care physician training were
some $64 million.

While primary care programs struggled, other specialties benefited from far great-
er funds from Medicare in payments for direct and indirect graduate medical edu-
cation costs. The stated rationale for Medicare's GME payments is to compensate
for costs borne by educational programs that are not paid for by patient care reve-
nues. That rationale would apply equally to the ambulatory care training sites
central to primary care as to teaching hospitals, but federal policy generally has
been not to pay primary care sites directly for their GME costs. Hospitals can re-
ceive GME payments when their residents rotate through primary care sites, but
the sites are not paid for the costs of their own trainees. Non-hospital-based primary
care programs are generally not eligible for GME payments, although in a few cases
like the Federally Qualified Health Center program, direct medical education costs
are allowable. As a result, primary care programs have been greatly restricted in
their ability to develop outside of hospitals.

The incentives for hospitals to have large house staffs are particularly striking for
Medicare's indirect GME pajonents. Indirect costs are those that cannot be meas-
ured directly, such as extra demands on staff, as well as tests and procedures or-
dered for learning purposes. They also include costs attributed to the increased se-
verity of illness of teaching patients, even though those are also addressed by other
adjustments to hospitals under Medicare's prospective payment system (PPS).'^

The complicated indirect GME formula increases diagnosis-related group (DRG)
payments as the hospital adds interns and residents. For example, a hospital with
a ratio of 0.26 interns and residents per bed has its DRG payments increased by
18.54 percent. On average, this amounts to about $2000 per Medicare discharge in
the major teaching hospitals. Those 230 hospitals were expected to receive about
$9989 in PPS payments per DRG in 1993 with the indirect GME adjustment, some
26 percent more than the $7901 they would have received without it.

Indirect GME payments to hospitals were about $3.3 billion for fiscal year 1993;
under current law, they are projected to reach $4.14 billion in fiscal year 1994, and
$4.48 billion in 1995. Putting the magnitude of these pajonents in perspective, the
indirect GME payments to only seven big teaching hospitals, which average about
$9 million each, equal the entire appropriation for primary care training programs.

"Direct" GME costs are measurable ones such as house staff and faculty salaries.
Unlike the DRG multiplier used for indirect payments, direct GME pays hospitals
a certain amount per resident, based on their historical costs inflated to the present
and their proportion of Medicare patient days. The grand total for direct GME is
projected to reach $1.8 billion in fiscal year 1994, and about the same in 1995.

For many years, Medicare paid direct costs without regard to the specialty or
length of resident training. In the mid-1980s a provision was adopted that limits
pajTnents for residents beyond an "initial residency period." That change, albeit a
modest one, represented a recognition on the part of the Congress that a shift in
federal policy in the direction of primary care was needed.

GME payments interact with Medicare's hospital and physician payment policies
to encourage hospitals to emphasize non-primary care specialties. Hospital pay-
ments under PPS help specialist residents generate far greater patient care reve-
nues than primary care residents. While every hospital has strong incentives to
favor specialties that treat the most lucrative DRGs, the teaching hospitals have the
added incentive of the indirect GME multiplier. With GME payments ostensibly
blind to a hospital's specialty distribution, residency programs can be tailored to
make it attractive for specialists to bring their patients to the teaching hospital.

In sum. Medicare's GME payments have created strong financial incentives for
hospital-based training and the growth of large physician house staffs.

Finally, the emphasis on biomedical research has produced a generation of stu-
dents who have rarely seen primary care researchers, particularly not ones in posi-

tions of prominence. Instead, these students have been impressed by the complex-
ities, stature, and potential funding for biomedical research. As a result, many think
that primary care concerns such as treating chronic conditions among the elderly
or common low-back pain are less intellectually challenging and less important than
life-or-death problems such as heart disease and cancer.

In 1940 total funds for biomedical research had been estimated at $45 million: by
1987 they had risen to $16.2 billion. In contrast, primary care research has lan-
guished. Federal biomedical research support is well over $10 bilUon while that for
primary care is well under $100 million. Lacking in funds, primary care researchers
are far less numerous or visible to students and generally not found in prestigious
positions within health professional schools.

Each of the existing federal policies noted above needs to be modified or
counterbalanced if the educational setting is to encourage primary care. Failing to
change these federal policies is not a neutral position; such failure is an action that
will continue to use federal dollars to subsidize and encourage ever greater-speciali-
zation.

The Congress has addressed these issues in the past, and now has the opportunity
to include comprehensive measures in health reform. In particular, a complete revi-
sion of the approach to paying for graduate medical education is central to this
strategy. Encouraging primary care will require that payments be made for training
in the ambulatory-care sites, not just for intensive high-technology care in teaching
hospitals. Payments should not reward expansion of the number of highly special-
ized residents. And, additional support to develop primary care research is needed
to enhance knowledge in the field and attract the nest and brightest students.

Third, even modifying current federal policies would not be sufficient.
Federal action to limit growth in nonprimary care specialties is needed to
assure that we have an appropriate health care workforce in the future —
neither the current market forces nor foreseeable changes in the health
care market will produce the mix of practitioners necessary to serve pa-
tient care needs. The first federal attempt to rely on a market approach was to
increase the overall supply of physicians with the assumption that a sufficient por-
tion would be primary care generalists. Beginning in the 1960s, the U.S. did succeed
in increasing overall supply: medical school first-year enrollments rose from 8,483
in 1961 to 15,998 in 1990. Moreover, International Medical Graduates entered the
country in large numbers. Unfortunately, while the overall physician-population
ratio nearly doubled (figure 5), the proportion of primary care practitioners de-
creased.

Much of the expansion of highly specialized medical practice during that earlier
period was made possible by the type of health insurance coverage that most Ameri-
cans had, indemnity plans that paid on a fee-for-service basis. In recent years, more
and more Americans have had their coverage changed to a wide array of managed
care plans — HMOs, PPOs, and other arrangements that limit utilization and spe-
cialty referrals. Some group- and staff-model HMOs that employ their own doctors
or otherwise limit the number of physicians available to subscribers now report a
shortage of available primary care practitioners. In response, these HMOs have put
together aggressive recruiting packages, including high initial salaries for new grad-
uates of primary care residencies. Other managed care entities are buying up estab-
lished primary care medical practices at a rapid rate.

These developments have led some to suggest that the private sector will modify
the training of specialists on its own in response to these changing market forces.
As a result, they argue, federal intervention will not be necessary. Unfortunately,
that optimistic view fails to consider the most important factors that determine the
rate of production of nonprimary care specialists — the financial and professional
self-interests of teaching hospitals and training programs.

Anecdotal reports about developments in the job market for primary care practi-
tioners are unlikely to have a substantial effect on clinical program directors in
teaching hospitals who work to maintain the size of their residency programs at
nearly all costs. Nor will they deter hospital administrators who rely on specialty
services to generate revenues. The specialty societies and boards themselves have
been extremely reluctant to introduce restrictions on their numbers, in part out of
antitrust concerns. Third- and fourth-year medical students who have been im-
pressed with the high status and lucrative financial prospects of the high-technology
specialties — and who are counting on high earnings to pay their medical school
debts — will continue to respond to those forces.

Moreover, even if changes in the market for physician services due to expansions
in managed care were to influence the residency training market, the process would
take so long that far greater excess numbers of specialists would be trained in the
meantime. Enrollment in group and staff model HMOs and other relatively tightly

managed care plans cannot suddenly replace indemnity fee-for-service coverage
overnight. It could well take five to ten years to get most people into such plans.
Many parts of the country do not lend themselves to the urban large HMO model,
and many consumers would resist such a trend. Financial rewards for nonprimary
care specialties will continue for the foreseeable future, even under health reform.

Recognizing the need for public intervention into the training of specialists, some
states nave taken measures to affect the distribution of trainees. These measures
can only affect what goes on within state borders, however, and will have little over-
all effect.

If growth in primary care is to be enhanced and in nonprimary care specialties
is to be restricted, there is a clear need for new federal policy. The distribution of
specialists needs to be determined on a national basis, to serve national health care
needs rather than the parochial interests of teaching hospitals and their training
programs. The American College of Physicians (ACP), in its proposal for national
health reform, recognized the interaction of graduate medical education payments
with other factors in influencing the supply of generalist physicians.^ The AC? also
called for regulatory controls on physician supply and distribution.

Mr. Chairman, I believe that the best indicator of market forces at work is the
phenomenon described above: the number of specialists being trained is increasing
at an extraordinary rate. This enormous growth of specialty training has taken
place even as managed care has been growing at a similarly impressive rate. Fur-
ther delays in taking action will only mean that the baseline is that much more
skewed, and that many more professional lives will be disrupted. I believe it is nec-
essary to establish clear federal policies concerning the appropriate distribution of
specialists for the future, and to assure that those policies are implemented effec-
tively.

Fourth, federal action will be effective and need not be overly intrusive
or heavy-handed. While there will be inevitable transitional problems,
these can be minimized. The federal government can take steps that will
effectively redirect the training of specialists. Although substantial work needs
to be done to develop the best implementation strategies, the time for further study
of the problem has long since passed. It has been some two decades since the federal
Graduate Medical Education National Advisory Committee (GMENAC) was estab-
lished. In 1980 that advisory body forecast overall and specialty physician surpluses.
In response, federal legislation created an advisory body, the Council on Graduate
Medical Education (COGME), which has continuedf to study and monitor the situa-
tion but has had little impact on physician supply and distribution in the face of
countervailing federal policies and private incentives. Under Dr. Philip Lee's leader-
ship, the Congressional Physician Payment Review Commission began its ongoing
analysis of strategies for modifying physician specialization, and the Office of the
Assistant Secretary for Health now has a major emphasis on this subject.

These federal experiences provide a sound basis for a thoughtful, reasonable ap-
proach to the predictably difficult task of cutting the training programs in certain
specialties. A variety of models for the federal system could be developed, ranging
from highly centralized to largely decentralized. With substantial private sector in-
volvement, the traditional professional lines of decisionmaking need not be highly
disrupted. The prospect of such involvement has grown recently. Unlike their pos-
ture for many years, many of the affected specialties, training programs, and aca-
demic health centers now seem poised to cooperate with appropriate federal meas-
ures. First, the number of practitioners needed in each field can best be forecast on
a national basis. Then, the flow of training funds can be directed to assure that they
go toward meeting this goal. All of this can be done in a way that assures that the
integrity and quality of specialty training is preserved, and that opportunities are
not unfairly restricted. Whatever system for implementing residency controls is put
into place, the legislative tool to accomplish this task is simple: redirect training
monies. Unlike the open-ended approach that has characterized Medicare GME pay-
ments, future payments for specialty training should only be made to programs
whose physician training furthers the national policy. Public funds should no longer
be used to subsidize the production of unwanted numbers of specialists who will
continue to drive up health care expenditures and frustrate reform efforts.

In addition, the benefits of being included in health plans under the new system
should only be available to training sites that participate in the national program.
Without this lever, training programs will simply use the public support for ap-
proved residencies, and will keep unapproved ones going with patient care revenues.
The rationale for cutting off self-funded programs is that precisely those specialties
that are lucrative enough to generate sufficient patient care revenues to support
residency programs are the specialties that are to be reduced in the future. Continu-
ing to pay for operating certain residencies but permitting additional residencies to

operate at their own expense would not control specialty size. Just as Medicare
GME payments helped subsidize a vast expansion of specialties and subspecialties,
even vastly expanded federal payments would not assure a redistribution without
adequate measures to prevent the development of "rogue" programs. Without a
strong provision, many highly remunerative programs would be developed and so
subvert the policy that 55% of new physicians should be trained in primary care.
Since virtually all of the patient care dollars that would be used will be either public
funds or funds being spent under the federal mandate, programs should use those
funds to further the national purpose and not to continue specialty expansion.

Fifth, health care reform presents a unique opportunity to reduce the
need for many people in the inner-city to go to lar^e teaching hospitals and
clinics for their medical care, and to redirect specialty training at the same
time. Universal coverage will provide new opportunities for everyone to re-
ceive maistream medical care, and new challenges to teaching programs to
broaden clinical teaching beyond the traditional population of low-income
individuals. Mr. Chairman, I believe it is critically important to separate the serv-
ice function from the teaching mission in medical education. In many cases, teach-
ing hospitals are located in areas where few practitioners provide service. Because
residency training necessarily involves doing-while-learning, many people have be-
come dependent on the services provided by residents and fellows. But I believe that
we should recognize that relying on training programs to deliver services in health
professional shortage areas is at best a stopgap measure for desperate situations.

One major implication of sustaining unnecessary hospital-based, high-technology,
residency and fellowship programs simply because they provide needed services is
that excess numbers of speciaHsts get trained in the process, and move on to prac-
tice in other communities. Training programs are, in a real sense, production lines,
not service delivery entities. Medical schools produce physicians, residency programs
produce specialists and subspecialists. While residents may represent a source of
cheap and highly profitable labor while in training, reliance on training programs
for service ultimately is extremely costly and inefficient in the long run when train-
ees become specialist practitioners.

Another serious implication of sustaining training programs for their ancillary
service function is the character and quality of the care provided. Mr. Chairman,
even the smartest and most dedicated medical students and residents are not as
skilled when they are in training as they are when they finish and go into practice.
By definition, they are not as experienced as they will be during their careers. And,
because they are in training, they turn over on a regular basis. People who have
no choice but to rely on training programs for medical care are assured neither sea-
soned, competent practitioners nor continuity of care.

For many years, however, the dilemma has been that the sudden withdrawal of
services delivered by training programs would be highly disruptive unless other ar-
rangements were made to assure access to practitioners and facilities. That is pre-
cisely why the logic is so strong for redirecting our training programs in the context
of national health care reform. Universal coverage for comprehensive benefits will
permit many individuals to receive private care for a sustained period for the first
time. With fully universal, comprehensive coverage, there should be little financial
reason for discriminating between teaching patients and private patients.

Nevertheless, it is clear that some measures will be necessary to assure access
even to insured individuals in many low-income and traditionally underserved
areas, since practitioners may not move in overnight to set up private offices there.
The solution, however, is not to sustain training programs, but to expand service
delivery programs. Health plans should be required to provide services throughout
local areas. Community health centers, public hospitals and clinics, and National
Health Service Corps sites should be sustained and expanded as necessary. There
should be no question of reducing jobs, only of emphasizing jobs in the delivery of
health care rather than training of health professionals. Individuals should be ad-
mitted to teaching hospitals because they need the sophisticated care available in
those hospitals, not because unneeded trainees require clinical experiences to be-
come certified.

In the short run, of course, there will be problems in the transition period. Some
hospitals that have relied on certain lucrative clinical services staffed by residents
will have to develop alternative staffing patterns, or close down those services. Fac-
ulty unaccustomed to active clinical practice may have to see patients and take
night call themselves, or be replaced by health professionals who do so. Financial
and organizational assistance to achieve these changes should be provided as part
of the health reform package.

Mr. Chairman, for all the wonderful efforts that so many teaching physicians and
trainees have made over the years to care for people in their clinics and hospitals,

I feel strongly that health reform should offer mainstream care to everyone. Teach-
ing programs should be sustained for teaching purposes, not to deliver services.

Sixth, and last, health care reform itself could well be jeopardized by fail-
ing to reform the workforce. Continued growth in the number of inappro-
priately trained specialists will create an ever-larger cadre of health pro-
fessionals who would feel threatened by and work to defeat comprehensive
health care reform. One further consequence of failing to bring the production of
specialists into line with overall federal policy is that the continued production of
more and more practitioners in the high-technology procedural specialties will make
it all the more difficult to control spending and achieve universal coverage. We phy-
sicians have proved quite enterprising in finding ways to be paid to put our training
into practice, whether needed or not. The more surgeons, the more surgery; the
more gastroenterologists, the more fiberoptic tubes that find their way into gastro-
intestinal tracts.

A substantial excess of specialty care in active practice inappropriately defines
what care is needed. If the standard in the fee-for-service sector is excessive care,
it is all the more difficult for HMOs and other managed care systems to set more
rational standards. Similarly, it is more difficult to develop and expect physicians
to follow more rational medical practice guidelines if the standard of practice re-
flects the supply of physicians and technology more than the needs of patients. Al-
lowing the surfeit of highly specialized physicians to continue to grow will sustain
pressures against a system of care based on sound scientific knowledge and reason-
able medical decisionmaking.

In the absence of sound national policy to the contrary, if we continue to produce
hundreds of thousands of highly trained physicians we should not expect them read-
ily to suffer the prospects of limited opportunities. Even as their numbers have sky-
rocketed in recent years, highly specialized physicians have been able to achieve a
remarkable and sustained growth in their incomes relative to those of primary care
physicians. (Figure 6) Having survived more than seven years of advanced training,
specialized physicians quite reasonably are likely to resist the expansion of managed
care plans and cost-containment measures that they perceive as likely to curtail fur-
ther growth in their earnings. Federal funds have too long been used to create this
well-heeled constituency with strong interests against reform. Continued expansion
of their numbers will only exacerbate both their motivation and their numbers.

GRADUATE MEDICAL EDUCATION TRAINING PROVISIONS IN HEALTH REFORM PROPOSALS

(figure 7)

1. Administration Plan: S. 1757: Mitchell

Each of the priority areas that I have identified is addressed in the Health Secu-
rity Act. A national goal is established to have 55% of residency graduates enter
practice in primary care, and numerous mechanisms to attain that goal are created.
Existing federal policies are revised: Medicare funds for graduate medical education
are pooled with those from other public and private sources, and are spent only on
residents who come under the national program. Permanent, mandatory sources of
all funds are provided. The Secretary of the Department of Health and Human
Services and a National Council on Graduate Medical Education are charged with
setting limits on the number of graduates from specialty training programs, with
extensive private sector involvement. There is some enhancement of primary care
research, along with the authorization of additional funds to support biomedical and
behavioral research in the area of health promotion and disease prevention. And,
although I have not mentioned the important facet of teamwork in primary care
previously, substantial funds are provided for training of a wide range of primary
care practitioners, including advanced practice nurses.

2. S. 491: Wellstone

Mandatory targets are established, to reach a 50-50 distribution of residents in
primary care within five years. An Advisory Committee to the National Board on
Health Professions Education is established. The Board would enforce the target by
cutting payments to State health security programs if goals are not met.

3. S. 1770: Chafee

Establishes up to seven demonstration projects to permit states to increase pri-
mary care by pooling direct GME payments to test ways to change specialty mix.

4. S. 1579: Breaux

Places limits on the number of specialty residents. Health Care Standards Com-
mission would determine the number and funding level of residency positions.
Eliminates current GME funding and establishes a national medical education fund.

with payments into the fund from Medicare and health plans. Provides for retrain-
ing in primary care for physicians in other specialties.

CONCLUSION

Time and again, the Congress has recognized the importance of federal direction
and support in the training of health professionals. The federal primary care grant
programs, the incentives built into the RB/RVS system of paying physicians under
Part B of Medicare, the modest adjustment of Medicare GME payments in the direc-
tion of primary care, and the long history of support for the construction and expan-
sion of medical schools and teaching hospitals are all testimony to Congress's com-
mitment to ensuring that the health professionals of this country serve the nation's
needs. Now, as you address the pressing need to enact comprehensive health care
coverage for all, you have the opportunity to assure that the system of training
health professionals helps and does not hinder accomplishing comprehensive health
reform.

Mr. Chairman, I believe that it is time to direct public funds and efforts to assur-
ing a mix of practitioners that will serve the needs of the public and to stop subsi-
dizing the wasteful expansion of specialty training. I thank you for your attention,
and I would be delighted to answer any questions.

ENDNOTES

1. Budetti P. Achieving a Uniform Federal Primary Care Policy. Opportunities
Presented by National Health Reform. JAMA 1993;269:498-501.

2. American College of Physicians. Universal insurance for American health care.
Ann Intern Med 1992;117:511-519.

45
APPENDIX

Physician Supply

By Specialty, 1990

other + (11.2%)^

Other Spec. (36.5%)

Primary Care * (35.9%)

Surgical Spec. & Subsp. (16.4%)

* Includes Family Practice, General Practice. General Internal Medicine, General Pediatrics, and OB/GYN.
-I- Other includes Not Classified, Inactive, and Address Unknown.

Source: Physician Characteristics & Distribution in the US. 1993 and previous editions. AMA
American Osteopathic Association, FV-go Data, Biographical Records, 1993.

Figure 1

f>om 'A Oisilboot on A* Siifplj, Tmimiiig,

and Dittribntiom of Ftrftiaaiu'

a. ScUowaj, K. Wtia, MJ. FafOM

Jamuaij 1994

Ctutrfor HtaUi FeUey Kisiarch
7k« Gtorgt Washimglom Vmiftnitj

Specialty Certification Plans

Of Graduating Medical Students

Family Practice

— H—

Gen. Internal Med.

Peds. (General)

internal Med. Subsp

1982 1983 1984 1985 1986 1987 1988 1989 1991 1992 1993

Source 19821893 AAMC Madical School QuMtioaira. Saclion for Educational Rnoarch.

Figure 2

Chmrl pnpand by P. Bitdiiti A M. Fagam

Cimtrfor Htaith Poliej ftistmrth
Thi Gtorge WaihingtOH l/mirtraty

Specialty Certification Plans

Of Graduating Medical Students
By Specialty Grouping

Generalist Spec

MedicsU Spec.

Surgical Spec.

Support Spec.

Source: 1982-1993 AAMC M»die«i School Graduatan Qu*«tana>«, Saction for Educational Raaaarch.

Figure 3

dun prrpand by P. BudtOi i M. Fag"'

CtHUr/or Htalih Polley Kttiarck
Tht G*ort* WasJuMitom Vmirtnity

Growth in Residency Positions

By Specialty, 1988-1992

Primary Care Surgic. Spec.

Int. Med. Subsp. Other Spec.

Source: AAMC. GME Counts by Program Year, 1993. AOA, Biographical Records, 1993,

With analysis by David Kindig, MD. PhD, and Donald Ubby, PhD, University of Wisconsin,
School of Medicine, Health Policy Program.

Figure 4

'A Otaitbook en Ih* Supply, Tnimint,

amd Diitributiom of PlifsiaaMS'

M. SoOowmy, K. Wtits, HI. Fagam

Jvumiy 1994

CiMtrfor HialA Polky Rtttanh
Th* Gtorgt WaMHtton Vmifmitf

250

200

150

J 00

Patient Care Physicians*

Nonfederal Physicians

Nottt: * Includat otfic«-baa»d phyiiciana. hotpitaJ-baaad phyiciana.and raaidanta. Oiimfor 1890 and 1992 includ* ■ new category of
clncal UllowB. which ■ecount for mpactwaly 8.691 and 7,128 phyticiaiM.

Sourcaa;

US Buraau of tha Canaua. 'Cunant PopuMlon Raporta*. Sariaa P29. Noa. 1079 & 1043. US GPO. Waahinytoh. OC. March 1990 & 1992.
Health Manpowar Sourca Book. US Dapt of Haaith. Educmlnn. A Walfara: PuUic Haatth Sarviea. PublBstion No. 263. Sac.20. US GPO. 1968
PhytcanCharactaratKt & Oiatnbwtion in tha US. 1993 & pravioua aditiona. AMA.

Figure S

*A CJiartbook on Uu Supply, TnimiHt,

umJ DiHribiUUH ofFkjticiaiu'

M. StOcway, K. Wtist, HI. Ffit

Jmnumiy 1994

Ctmtr/or Htcilk Policy Knmreh
Tkt Gtorgt WathiHgton Uminnity

m
T3

C
(tj

3
O

240

220
200
180
160
140
120-
100
80-
60-

Median Physician Net Income

After Expenses, Before Taxes
Growth from 1981-1991

1981

1991

GP/FP
Surgery

Internal Medicine
Radiology

Pediatrics
Anesthesiology

Note: The incomes represented are in nominal dollars.

Source: Socioeconomic Chracteristics of Medical Practice, 1993. AMA

Rgure 6

Ptom 'A dimrtbcok M Ik* S^ply, Tnuumt,

MMd nitribmiim of FHfiieimms'

U. ScOawtcf, K. Wtii$, HJ. Afwi

jMMimij 1994

CtHUr/or HmUh PoUef Kumrtk
Tlu Gtorgt WmihimtlOH Umiwtnitf

SUMMARY OF
REFORMS IN HEALTH PROFESSIONS EDUCATION

CDRRENT

AMriaDHMlth

HMlUiSMMitr Act

VmUtEumtrtmi

» , '

STTVATION

SmrnkjAit

HR3MVSI757

AccM Kcfam Todqr

roMpHitiin Act tt

mtl2M/S4n

PnmOmilCamtamJ

AttidVn

MfHtf oWWfIIHi I

GqilMidtaiitcWi

HR37M/S177t
ThaoMt/ClMfcc

mt3222/S157»
Cooper/Brtwn

• S0« GME pud for

• Mandatory nfoam

• Mandatoiy refoma

• Voluntary reforms

• Mandatory reforms

by Medkaie. which

• EataUidiM lai|cl of

• Provides new

• Creates GME

• Establishes National

hvon isnury «»«

1:1 pnmary care

CBtitlemeat grant

demonstratian projects

fimdiag acadennc

which allows Slates to

Fund

• Only 14% of

five yoan after

health oenten fisr

pool GME funds and

• Eliminates TfTTT***

cumnt mfriiol

eaactamt of legulatiaa

nif^ti^^i edncaticn

change specialty mix

medical educatioo

studeou ire chooong

• FaaHiJira Adviaory

• Replaces GME snd

• Provides tax

payments under

pnnuuy c«re (1992)

Commiltee on Health

IME payments for

incentives for primsry

Medicare

lees than half the rate

Medicare

care providers in

• Limils the number

(36«) in 1982

• Reduces pajmienti to

• GME payments to

nndetaerved areas

of qiecialty

States d>at fiul to meet

C^DPoS&ZD DnflH^T

* Increases tlM

residencies to 110%

natiaaal goals for

care tfiimm

autboiuation for

of spplicsnts

graduate ttf*^*'^!

• liittite the immh^r

pnmafy care

• Diffiefential fimding

of qwculty

physicians

for pnmary care:

• HMlth Roaid will

T9udtadm

• Increaaes the

25% higher than

ealabliah target onmber

• Incnnet the

specialty slots

of midlevel pnmary

■utfaoriTiiifi for

funding for training of

• Increaaes the

•

care practitioaen by

tUDQIfiS for liMiHifiy

imrse practitioners snd

suthorizuian fw

yew7n)0

of tuasB prectitiooers

physician s«siitsnti

funding for training

* Increases fimdiag to

and physidaa

• Ls liana the

of mid-level

nppoit health

assistants

snthnri ration for

prectitiooers. NHSC,

• c«»«Ki;.i.^

funding for PHS and

and Area Health

and mminf educatioo.

National Council of

NHSC

indudiiig mme

GME within DHHS

• Overrides

practitiaaets. certified

• Authohzes

for NHSC loans

registered nune

expansioa of NHSC

practice laws bat

anesthetirti, certified

• Overrides

mirae midwives, and

restrictive Stale

decide which

physKian tniitanti

practioe laws but

pfoviden it allows to

• Increases fimding for

health plaiM can still

partidpaie in their

NHSC

deade which

paitidpale m their
netwoffcs

networks

Kaiier Commission on the Futurt of Medicaid

Rguie 7

Responses of Dr. Budetti to Questions Submitted by Senator Dole

Question No. 1. In your testimony you suggest that the current method of financ-
ing manpower training has led to an over supply of specialists.

If the problem is money, why not simply change the financing and let the market
work? Wriy do we have to force allocation of residencies by placing absolute Federal
limits on the number and type of residencies?

Answer. In my opinion, the current method of financing of graduate medical edu-
cation (GME) has been a major factor in creating an over supply of specialists in
fields other than primary care, agree that it would seem natural to seek a solution
by simply changing the financing. To date, however, the only approaches to chang-
ing the financing that seem likely to have the desired effect require limits on the
number and type of residencies. For example, one might set a policy that GME
funds would be provided only to primary care residencies, however many there are,
and other programs would be on their own. In that case, the likely result would be
that the other specialties would continue to expand. It is precisely those specialties
that are lucrative enough to generate sufficient patient care revenues to support
residency programs that are the specialties that are to be reduced in the future. If
one were to pay for operating primary care residencies but additional residencies
could operate at their own expense, there would be no effective control on specialty
size. Without controls on their numbers many highly remunerative programs would
be developed to serve the short-term financial interests of the teaching hospitals and
thereby subvert the policy that 55% of new physicians should be trained in primary
care.

In addition, to the extent that the market can help redirect specialty training,
there would be an enormous time lag. In the meantime, so many additional special-
ists would be trained — largely at public expense — that the realignment would be
even more difficult. In short, federal action to limit growth in nonprimary care spe-
cialties is needed to assure that we have an appropriate health care workforce in
the future.

Question No. 2. Once you cap the absolute number of residencies and the distribu-
tion— what makes you think physicians will choose to locate where you believe they
belong? Nothing we've done so far has achieved the kind of geographic distribution
we need.

Answer. I agree that specialty and geographic distributions are quite different.
Each needs its own policy support. In large part, imiversal coverage is one approach
to moderating inequities in the location of physicians by permitting choices to be
made without regard to the financial status of individuals in the area. Nevertheless,
even with universal coverage, many rural and inner-city areas will lack adequate
health professionals. Programs such as the National Health Service Corps, Commu-
nity and Migrant Health Centers, and essential community providers are likely to
be necessary to assure adequate access for some time in the future.

Question No. 3. You have made no recommendations as to the training or use of
non-physician providers. In the rural states like Kansas, nurse practitioners, optom-
etrists and others are vital. What can we do to increase their numbers and their
use?

Answer. As I noted, my testimony focused on physicians, but I strongly support
enhancing the training of nurse practitioners and other health professionals by
redirecting and adding to funds now available for that purpose. Not only are they
important in many rural states and other areas, they also enhance opportunities for
the delivery of comprehensive services. Nurse practitioners are a valuable compo-
nent of a team-approach to primary care. Physician assistants as well as nurse prac-
titioners can also be trained in specialties other than primary care to help alleviate
the need to have residents simply for the purpose of service delivery.

Question No. 4. When you place a cap on the total numbers of residencies how
do you envision that we would distribute these numbers? There are a limited num-
ber of states that produce the largest numbers of residencies. For example, I under-
stand that New York state alone trains 15 percent of all residents. (12 percent in
New York City alone — 60 percent more than the next largest state, California.)

I, for one, don't want to tell the Chairman that Kansas is going to gain residents
at the expense of New York.

New York also has a very large number of international medical graduates. How
do you propose we choose between U.S. and foreign students?

Answer. There are a variety of ways that the residency slots could be distributed.
The total number of residents in each specialty should be determined on the basis
of the best estimates of future national needs. Then, these could be allocated on a
national, regional, or state basis. Clearly, any allocation system should take into ac-
count the fact that certain areas of the country have developed the capacity to oper-

ate large numbers of excellent training programs. It would be wasteful and create
a great deal of hardship simply to redistribute programs on a formula that fails to
recognize these differences.

Nevertheless, it is also important to separate the service function from the teach-
ing mission in medical education. To the extent that training programs are sus-
tained not for their excellence but because many people are dependent on the serv-
ices provided by residents in teaching hospitals in areas where few practitioners
provide service, the problem is one of access to care that needs to be addressed di-
rectly. Reliance on training programs for service is extremely costly and inefficient
in the long run when trainees become specialist practitioners, and does not assure
people a continuing source of high-quality care.

As efforts to expand services proceed, it will be necessary to sustain existing deliv-
ery systems such as large urban teaching hospitals for so long as they are essential
in their communities. The sudden withdrawal of services delivered by training pro-
grams would be highly disruptive unless other arrangements were made to assure
access to practitioners and facilities. That is why changes in training programs need
to be done in the context of national health care reform. Health care reform presents
a unique opportunity to reduce the need for many people in the inner-city to go to
large teaching hospitals and clinics for their medical care, and to redirect specialty
training at the same time. Universal coverage will provide new opportunities for ev-
eryone to receive mainstream medical care. In the short run, however, there will
be problems in the transition period. Financial and organizational assistance to
achieve these changes should be provided as part of the health reform package.

I do not propose that we choose between U.S. and foreign students. Choices
among applicants to residency programs should be made by the programs them-
selves.

Question No. 5. Given the amount of time necessary to train a physician (3-8
years of residency following medical school), what happens if we guess wrong and
produce the wrong distribution? Demographics being what they are — I can't imagine
we won't need happens if we guess wrong and produce the wrong distribution? De-
mographics being what they are — I can't imagine we won't need urologist, cardiolo-
gists, and other specialties.

Answer. Precisely because of the long lag time from training to practice and the
uncertainty of any human predictions, all such decisions should be based on the best
available evidence and in a way that is flexible enough to adapt to changing cir-
cumstances. At the present time, we are skewing the future supply of specialists on
a far less rational basis. We currently provide substantial federal funds to teaching
hospitals without regard to societal needs. Specialty training programs can receive
subsidies to expand for whatever reason they choose, and tend to do so in the areas
that serve the immediate needs of the institutions. The remarkable expansion of
specialty residency slots by 60 percent in the four years between 1988 and 1992 can
hardly be explained by parallel changes in future practice needs.

Question No. 6. We will hear from Dr. Colwill that decision making has to be
local — ^you suggest that it should be national.

Answer. Please see my answer to number 4, above.

Responses of Dr. Budetti to Questions Submitted by Senator Grassley

Question No. 1. You noted on page three of your statement that one of the Federal
incentives that helps to produce an excessive number of specialists is ". . . support
for a vast expansion of biomedical research in academic health centers and teaching
hospitals."

This raises a number of interesting questions.

Does your point imply that we should be cutting back on such investments in re-
search? And, if we do, aren't we going to deprive our citizens of the benefits of that
research?

And, if we want the benefits of that research, don't we have to train the special-
ists who can use it in providing care?

Answer. The quantity and quality of biomedical research in the United States is
one of the jewels in the crown of American medicine. Our national commitment to
such research should not be reduced. It is the very magnitude of our investment in
biomedical research that highlights the paucity of our spending for primary care re-
search. What is needed is a substantial commitment to primary care research both
to advance knowledge and to attract young physicians into that field.

Primary care research addresses the knowledge base supporting primary care
practice, the biobehavioral environment of primary care, and the organization and
financing of primary care services, i It strives to focus on the individual disease or
organ system, and to emphasize prevention, 2 not a Opposition from proponents of

biomedical research and a lack of perceived value have made it difficult to establish
an adequate research base for primary care.

For its own part, with little federal financial support, primary care research has
been slow to develop. Only since the establishment of the Agency for Health Care
Policy and Research (AHCPR)^ has there been a federal entity dedicated to primary
care research, the Division of Primary Care within AHCPR. This is far less than
a full-fledged Institute for Primary Care,"* but the field has not had the necessary
recognition or constituency for an Institute to date.

The relative order of magnitude of federal research support makes it clear that
developing a substantial primary care research base will be difficult. For FY93, NIH
has funding of $10.4 billion, while AHCPR has total funding of about $129 million.
One recent estimate was that probably no more than $40 million in federal funding
is available for primary care research from all sources. Ironically, the NIH was the
source of about one-half that amount, even though spending on primary care at that
rate would represent only 0.002 of the NIH budget.^

Primary care research also has had an image problem that exacerbates the dif-
ficulties of attracting students into the field. Some $4 billion in biomedical research
support goes to medical schools, accounting for about 20% of medical school budg-
ets.^ Unable to attract funds on that order of magnitude, primary care researchers
are far less numerous or visible to medical students and rarely found in prestigious
positions within medical schools. Moreover, because primary care research is seen
as dealing with mundane, everyday health care concerns rather than high-tech or
life-and-death diseases, it has long been undervalued by policymakers.'^

Medical students identify with faculty whom they perceive to have the highest
status. With infrequent exposure to well-established primary care researchers in
prominent positions, students have the notion that only specialists in other fields
can do important research. This is a barrier to many students appreciating the
value of a career in primary care.

To benefit from any research, of course, we need to train specialists who can use
the findings of that research. Subsidizing the training of unlimited numbers of spe-
cialists is a crude and inefficient way to reach that goal — and, in itself, is no guar-
antee of success. First, well-trained primary care practitioners are fully qualified to
practice quite sophisticated medicine. For care that is beyond the ability or expertise
of primary care specialists, what is needed is the appropriate number of specialists
in other fields.

The best way to assure that public funds are generally going toward production
of the most appropriate mix of specialists is to make decisions based on the best
available evidence and in a way that is flexible enough to adapt to changing cir-
cumstances. At the present time, we are skewing the future supply of specialists on
a far less rational basis. We currently provide substantial federal funds to teaching
hospitals without regard to societal needs. Specialty training programs can receive
subsidies to expand for whatever reason they choose, and tend to do so in the areas
that serve the immediate needs of the institutions. The remarkable expansion of
specialty residency slots by 60 percent in the four years between 1988 and 1992 can
hardly be explained by parallel changes in future practice needs — let alone by the
need to incorporate scientific breakthroughs into medical practice.

Question No. 2. As you know, may of our rural and frontier areas, as well as many
of our inner city areas, have experienced problems over the years in recruiting and
retaining health care providers.

May I have your views on how we should address this? It is hard for me to believe
that just producing more primary care providers would have that result.

Answer. I agree that simply changing the specialty mix to favor primary care will
not completely solve problems with geographic distribution. Doing so will certainly
help, however, since primary care practitioners are more willing to work in sparsely
populated areas and are not dependent on having sophisticated hospitals nearby. In
large part, universal coverage is one approach to moderating inequities in the loca-
tion of physicians by permitting their choices to be made without regard to the fi-
nancial status of individuals in the area. Nevertheless, even with universal cov-
erage, many rural and inner-city areas will lack adequate health professionals. Pro-
grams such as the National Health Service Corps, Community and Migrant Health
Centers, and essential community providers are likely to be necessary to assure ade-
quate access for some time in the future, and health reform should address this
need.

In addition, strong support for enhancing the training of nurse practitioners and
other health professionals by redirecting and adding to funds now available for that
purpose will also help address geographic disparities. These practitioners are very
important in many rural states and other areas. In addition, they enhance opportu-
nities for the delivery of comprehensive services through linkages into a team-ap-

proach to primary care. Physician assistants as well as nurse practitioners can also
be trained in specialties other than primary care to help alleviate the need to have
residents simply for the purpose of service delivery purpose.

ENDNOTES

1. Hibbard H, Nutting PA. Research in primary care: a national priority, in Pri-
mary Care Research: Theory and Methods. Rockville, MD: Agency for Health Care
Policy and Research (Publication No. 91-0011); 1991.

2. Estes EH. Primary care research: Where have we been? Where are we going?
in Primary Care Research: An Agenda for the 90s. Rockville, MD: Agency for Health
Care Policy and Research, DHHS Publication No. (PHS) 90-3460, 1990.

3. Title IX, Public Health Service Act (42 U.S. C. 299) and section 1142, Social
Security Act (42 U.S.C. 1301 et seq.)

4. Graham R. The professional organization's perspective of primary care re-
search, in Primary Care Research: An Agenda for the 90s. AHCPR Conference Pro-
ceedings. Rockville, MD: Agency for Health Care Policy and Research, DHHS publi-
cation no. (PHS) 90-3460, 1990.

5. Mullan F. The federal government in primary care research, in Primary Care
Research: An Agenda for the 90s. Rockville, MD: Agency for Health Care PoUcy and
Research, DHHS Publication No. (PHS) 90-3460, 1990.

6. Jolin LD, Jolly P, Krakauer JY, Beran R. U.S. medical school finances. JAMA
1991;266:985-90.

7. Budetti P. The legislative perspective on primary care research, in Primary
Care Research: An Agenda for the 90s. Rockville, MD: Agency for Health Care Policy
and Research, DHHS Publication No. (PHS) 90-3460, 1990.

Prepared Statement of Jack Colwill

Senator Moynihan, Senator Packwood, and Members of the Senate Committee on
Finance:

I am Jack Colwill, M.D., Professor and Chairman of the Department of Family
and Community Medicine at the University of Missouri-Columbia School of Medi-
cine. I am a member of the Executive Committee of the Congressionally authorized
Council on Graduate Medical Education (COGME) and I speak on behalf of the
Council.

Fundamental problems exist in the composition of this nation's physician
workforce. We have too many specialists and too few generalists. We face an in-
creasing surplus of physicians (Figure 1) while the number of minority physicians
and physicians serving in rural and inner city locations continues to be totally inad-
equate. The percentage of generahsts — those in family practice, general internal
medicine, and general pediatrics — has been declining throughout the past 40 years.
(Figure 2) Today only a quarter of allopathic medical school graduates are entering
generalist practice. (Figure 3) At the same time, inadequate numbers of generalists
will impede the development of managed systems of care and will limit our ability
to address physician workforce needs of rural and inner city settings.

Today, our physician supply is more than adequate. Tomorrow, we shall face an
increasing surplus. The physician to population ratio will increase by almost 25%
between now and 2020. Twenty-four thousand physicians are now entering graduate
medical education mually — 35% greater than the total of U.S. allopathic and osteo-
pathic medical school graduates. The total number of residents in graduate medical
education has increased 19% between 1988 and 1992 as increasing numbers
subspecialize. An increasing surplus of physicians will stimulate excessive utiliza-
tion of services in the fee-for-service sector. Increasing underemployment of physi-
cians will occur as managed care, with its reduced physician requirements, serves
higher proportions of the U.S. population. My comments today focus upon those
components of COGME's Fourth Report which deal with graduate medical education
(GME).

Medicare currently pays teaching hospitals approximately six billion dollars annu-
ally for the direct and indirect costs associated with graduate medical education.
There is no limit on the numbers of positions funded and no stipulation on the spe-
cialty mix of positions funded.

COGME believes that Medicare funds utilized to support graduate medical edu-
cation should be utilized to train the number and specialty mix of physicians which
are needed by this nation. The Fourth Report of COGME recommends fundamental
restructuring of the funding of GME. Its goals are to reduce the number of positions
funded to the number of U.S. medical graduates plus ten percent and to achieve a
50% mix of generalists and specialists. These overall goals have been endorsed by

many other groups as well as the Clinton health plan. COGME recommends that
we accomplish these goals in a predictable and timely fashion decentralizing deci-
sion making to the local and private level under broad national workforce mandates.

COGME believes that market forces created by a changing health care system will
not correct these workforce deficiencies in the near future. The financial rewards for
specialists in the marketplace, the specializing influence of medical education, and
the dependence of teaching hospitals on residents to provide service have been pow-
erful forces which have tended to maintain the status quo.

COGME's Fourth Report makes legislative recommendations which:

• assure that 50% of graduates become generalists;

• limit total funded positions to the number of U.S. medical school graduates in
1993 plus ten percent;

• allocate the reduced number of GME positions to medical school coordinated
consortia;

• provide funding for graduate medical education by all third party payers;

• provide transition payments to those hospitals most affected by the loss of resi-
dent positions;

• expand incentives for individuals and institutions to graduate more generalist
and minority physicians, to improve the geographic distribution of physicians,
and to build the primary care teaching capacity necessary for an expanded
training of generalists by increasing funding of Title VII and the National
Health Service Corps;

• establish a National Workforce Commission to oversee allocation of residency
positions and to advise Congress and the Department of Health and Human
Services (DHHS) on issues of physician workforce policy.

The centerpiece of COGME's proposal is the development of private sector consor-
tia which would fiinction as accountable partnerships in the allocation of residency
positions. These consortia would be composed of one or more medical schools, teach-
ing hospitals, other institutions, and representatives of the public. The Department
of Health and Human Services would allocate an overall reduced number of resi-
dency positions to each consortium utilizing criteria developed by the National Phy-
sician Workforce Commission. Each consortium, coordinated by one or more medical
schools, would be expected to increase generalist physicians and to reduce specialty
positions so that half of all trainees would become generalists. Funding of the con-
sortium would be conditioned upon achieving the above expectation. Decisions on al-
location of residency positions within each consortium would be made collectively by
the consortium based upon local, state, and regional health care needs as well as
the quality of individual programs within the consortium. Funding for the trainee
and associated educational costs would follow the trainee to sites of education. This
consortium proposal does not attempt to define at the national level the exact num-
ber of residency positions that should be offered in each of the 81 specialties at each
institution. COGME believes that this task would be extraordinarily difficult and
would provide excessive micromanagement of the system. It recommends that these
decisions be made at the local level.

A National Workforce Commission should monitor trends in workforce production
and needs. It should recommend to Congress and the Secretary of DHHS ongoing
modifications in workforce goals, provide guidelines for allocations of overall posi-
tions to each consortium, and provide recommendations for addressing shortages
and surpluses in specific specialties. In order to carry out its mission, this National
Workforce Commission must be adequately funded and staffed.

COGME believes strongly that all third party payers should contribute to the
costs of graduate medical education. Medicare currently pays its pro rata share of
the cost of graduate medical education. The remainder of the direct costs are de-
rived primarily from other sources of patient care income. As teaching hospitals in-
creasingly compete with community hospitals on the basis of price, they will find
it progressively difficult to fund graduate medical education — especially the high
costs related to the education of generalists.

Society will be benefited by implementation of COGME's proposals. However, a
reduction in residency positions is not easily accomplished. Institutions express con-
cerns about methods of allocating reduced numbers of positions, means of providing
services currently provided by residents, the potential loss of GME income, the re-
quirement that 50% generalists be graduated, and the governance and function of
consortia.

COGME is continuing to refine its recommendations about these issues. It recog-
nizes that most residency programs already are affiliated with medical schools. Con-
sortia already are developing in many areas. Under COGME proposals, decisions
about allocation of residency positions should be made collectively by the member-

ship of the consortium. The membership of each consortium is not locked in stone.
Individual member institutions may find it advantageous to move to other consortia.
Loss of GME funds poses a significant problem. Financial considerations need to be
separated from needed GME changes. Thus, the current stream of funds to institu-
tions most affected might be maintained to make it easier for them to employ other
providers to meet service needs. Assignment of National Health Service Corps per-
sonnel to settings such as New York City might also be of assistance. The rec-
ommended changes should be implemented over several years to reduce the imme-
diate impact upon individual institutions. Some states may wish to develop dem-
onstration projects for allocation of residency positions under overall federal guide-
lines as included in the Fourth Report. Additional options for governance and alloca-
tion of funds within the consortia are being explored.

If Congress enacts COGME's recommendations, our educational institutions would
increase the proportion of generalists educated to 50%. The physician growth rate
would more closely parallel that of the population. (Figure 4) An increased produc-
tion of family physicians would increase the number of rural physicians. The in-
creased numbers of generalists would provide the needed generalist physician infra-
structure for expansion of managed systems of care. Fewer specialist physicians
would be underemployed and the tendency to provide unnecessary services would
be reduced. Our nation would provide a physician workforce much more closely
matched to tomorrow's health care needs.

I wish to thank the Committee for this opportunity to present the recommenda-
tions of the Council on Graduate Medical Education.

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COUNCIL

ON GRADUATE

MEDICAL

EDUCATION

Fourth Report
to Congress and the
Department of Health
& Human Services
Secretary

Recommendations to Improve
Access to Health Care Through
Physician Workforce Reform

January 1994

U.S. DEPARTMENT OF HEALTH & HUMAN SERVICES

Public Health Service

Health Resources and Services Administration

FOURTH REPORT OF COQME

EXECUTIVE SUMMARY

Purpose

This Fourth Report of the Council on Gradu-
ate Medical Education (COGME) provides
policymakers with specific legislative recommen-
dations which, if enacted, would establish a national
physician workforce plan and approach to meet the
nation's health care needs in the 21st century.

Deficiencies in the
Physician Worlcforce

Recent data reinforces the conclusions of the
Council's Third Report that the nation's physician
workforce is not well-matched with public needs.
Specifically, the nation has too few generalist and
minority physicians, too many specialists, and poor
geographic distribution of physicians. The mis-
match between physician supply and health care
requirements will be magnified as the nation estab-
lishes universal access to care and the system shifts
to systems of managed care. In a managed care
dominated health care system, the Bureau of Health
Professions projects a year 2000 shortage of 35,000
generalist physicians and a surplus of 1 15,000 spe-
cialist physicians if current patterns of specialty
choice and numbers of graduates persist.

Given health care requirements, COGME be-
lieves the following physician workforce goals
should be attained by the year 2000:

• First year residency positions should be lim-
ited to 10% more than the number of US medical
school graduates (USMGs plus 10%).

• At least 50% of residency graduates should
enter practice as generalist physicians (family phy-
sician, general internists and general pediatricians).

• The number of under-represented minority
students should be doubled.

nated.

Primary care shortage areas should be elimi-

If COGME's year 2000 goals were adopted
and attained, the nation would produce 25% fewer
physicians annually, of whom at least half would
practice as generalists. This output is projected to
produce a more balanced generalist physician
workforce in the year 2020 and a much smaller
specialty suqjlus. Improved minority representa-

tion and geographic distribution would significandy
enhance care in many underserved communities.

Present trends are not encouraging with re-
spect to meeting the physician workforce goals out-
lined above. Despite projections of a total physi-
cian and specialty surplus, the number of first year
residents has continued to grow and the percentage
of residency graduates choosing generalist careers
has remained low. Although the percentage of
minority entrants to medical school has reached a
record high, the numbers are well below the desired
goal. Continued increases in the ratio of physicians
to population has not been associated with a reduc-
tion in primary care shortage areas.

In the long run, COGME believes that market
forces created by a changing health care system
will change the specialty and geographic distribu-
tion of the workforce. However, the Council does
not believe that these market forces alone will pro-
duce the needed physician workforce in a timely or
predictable manner. Disincentives in the "educa-
tional" marketplace, particularly Medicare gradu-
ate medical education (GME) financing policy, blunt
the impact of health systems reform on the
workforce. Furthermore, the nation lacks a coher-
ent approach to invest public funds in physician
training based upon health care analytic require-
ments. If not con^cted, these deficiencies will
continue to hinder efforts to expand health care
access and to control costs.

COGME'S Legislative
Recommendations

The Council's legislative recommendations are
designed to:

• utilize public fiinds which support GME to
achieve the number and specialty mix of physicians
needed by the nation

• provide incentives to increase the number
of minority graduates, to increase interest in gener-
alist careers, and to improve geographic distribu-
tion

• assist educational institutions in expanding
their primary care capacity and in improving the
quality of primary care education

FOURTH REPORT OF COGME

The proposed physician workforce legislation:

• articulates the year 2000 workforce goals
which were identified above

• mandates funding of graduate medical edu-
cation (GME) by all payers

• establishes a National Physician Workforce
Commission

• limits total funded residency positions to the
number of 1993 US medical school graduates plus
10%

• allocates the reduced number of GME posi-
tions to medical school coordinated consortia

• provides transition payments to hospitals
most effected by the loss of resident physicians

• provides incentives to indt»'iduals and insti-
tutions designed to graduate more minority physi-
cians and generalists, to improve geographic distri-
bution and to build primary care teaching capacity

The Council reconuncnds that all third party
payers explicitly pay for GME. Graduate medical
education is largely funded by teaching hospitals
from their patient care income. Both the total pay-
ment and accounting of GME funds remain unclear
and are poorly coupled with physician workforce
requirements. Furthermore, as teaching hospitals
increasingly compete with non-teaching hospitals
for participation in low cost health care plans, fund-
ing of GME may become increasingly difficult.

A centerpiece of the COGME proposal is that
funds and slots would be allocated through medical
school coordinated GME consortia. These consor-
tia would function as "accountable education part-
nerships." Each consortium would include one or
more medical schools and a diverse spectrum of
representatives of institutions which train physi-
cians, utilize their services, or represent the public.
Each consortium, coordinated by a medical school,
would collectively determine the specialty mix of
residency positions based on local, state and re-
gional health care needs under broad national guide-
lines which specify the number of residency posi-
tions and mandate that 50% of graduates be gener-
alists. Consortia would help integrate undergradu-
ate, graduate and continuing physician education
and make the educational system more responsive
and accountable to public needs. Many consortia
are already operating despite the absence of sup-
portive policy.

The Physician Workforce Advisory Commis-
sion is central to the proposal. In addition to its
advisory role in implementing legislative goals, the

Commission would be responsible for monitoring
workforce trends, workforce needs, and recommend-
ing necessary ongoing modification of goals to Con-
gress and the Health and Human Services Secre-
tary.

COGME believes that its legislative recom-
mendations will achieve year 2000 goals in a timely
and predictable fashion. The consortium approach
will minimize federal or state government
micromanagement and maximize private sector in-
put and creativity. Incentives for individuals and
for institutions will assist in the transition, helping
new physicians and the medical education system
respond to changing demands of the health care
market place.

FOURTH REPORT OF COGME

vji

Members off the Council on
Graduate Medical Education

*David Satcher, M.D^ Ph J).
Chairperson (Jan. 1992 - Aug. 1993)

President, Mehairy Medical College
Nashville. Tennessee

Paul C. Bnicker. M.D.

President, Thomas Jefferson University

Philadelfrfiia, Pennsylvania

George T. Bryan, M.D.

Dean of Medicine, Vice President

Academic Affairs

The University of Texas Medical Branch

Galveston. Texas

•Jack M. Colwill, M.D.

Professor and Chairman. Department of Family
and Community Medicine
University of Missouri-Columbia
Columbia. Missouri

Peggy Connerton, Ph.D.
Director of Public Policy
AFL-CIO Service Employees
International Union
Washington, DC

Christine Gasiciel
Manager of Health Care Plans
General Motws
Detroit, Michigan

•Lawrence U. Haspel, D.O.

Executive Vice President

Chicago College of Osteopathic Medicine

Midwestern University

Chicago, Illinois

•David A. Kindig, MJ)., PhJ).

Director. Programs in Health Management
Department of Preventive Medicine
University of Wisconsin
Madison, Wisconsin

•Stuart J. Marylander, M.PJI.

Vice Chairperson

Acting Chairperson (Aug. 1993 - present)

President & Chief Executive Officer
Triad Healthcare
Encino, California

•Huey L. Mays, M.D., M.BA., MJ».H.

Senior Medical Advisor
Capital Blue Cross
Harrisburg, PA.

Pedro Ruiz, M.D.

Professor & Vice Chair, Mental Sciences Institute,

Department of Psychiatry &

Behavioral Sciences

The University of Texas

Houston, Texas

Robert L. Summitt, M.D.
Dean, College of Medicine
University of Tennessee
Memphis, Tennessee

Eric E. Whitaker, MX)., MP.H.
Resident, Primary Care Int. Medicine
UCSF/San Francisco General Hospital
San Francisco, California

•Modena H. Wilson, MJ).

Director, Division of General
Pediatrics and Adolescent Medicine
The Johns Hopkins University
Baltimore, Maryland

•Charles E. Windsor

President and Chief Executive Officer, St. Mary's

Hospital

East St. Louis. Illinois

Federal COGME Members

Fitzhugh Mullan, M.D.

Director, Bureau of Health Professions

Health Resources and Services Administration,

Public Health Service

Rockville, Maryland

Dierdre Duzor

Director, Division of Medicare Part A

Analysis

Office of Legislation and Policy

Health Care Financing Administration

Washington, D.C.

Elizabeth M. Short, M.D.
Associate Chief Medical Director
Department of Veterans Affairs
Washington, D.C.

Manben of Uie Executive Cominiaee

83-267 0-95-4

FOURTH REPORT OF COGME

stafr

Marc L. Rivo, M J)., M J»JI.
Executive Secretary of COGME

Director, Division of Medicine

Carol S. Gleich, PhJ).

Chief. Special Projects and Data Analysis Branch

F. Lawrence Clare, M J)., M.P.H.
Deputy Executive Secretary of COGME

Chief, Data Analysis Section

Jerald M. Katzoff

Staff Liaison. Physician WcHkforce Issues

Debbie M. Jackson. MA.

Staff Liaison, Medical Education Programs and

Financing Issues

Paul M. Gilligan
Statistician

P. Hannah Davis
Statistician

Lanardo E. Moody. MA.
Staff Liaison. Minority Representation in Medi-
cine Issues

Eva M. Stone

Committee Management Assistant

Susan S. Sumner
Secretary

Acknowledgements

The Council on Graduate Medical Education
gratefully acknowledges the contribution of the fol-
lowing HRSA and Bureau of Health Professions
Staff to the development of this Fourth Report:

Staff

Office of Health Professions Analysis and
Research

Jerald McQendon
Director

Carol M. Bazell. MD., MP.H.
Deputy Director

Heiten G. Traxler, Ph.D.

James M. Cultice

Sandra R. Gamiiel

Claire Neally

Office of the Bureau Director

Robert M. Politzer. ScD.

Associate Director for Primary Care Policy

Division of Associated,
Dental and Public Health

Michael Parkinson. MS)., MP.H.
Deputy Director

D.W. Chen, MD., MP.H.

Susan M. Klein, D.N.Sc., RJSl.

HRSA Office of Communications

James L. Walker

Maik Roebuck
Kimberly Dickerson
Francis M. Harding

FOURTH REPORT OF COGME

Expert Advisory Group on Graduate
Medical Education Policy

Jack W. ColwiU, M.D.
COGME Member, Chair

Lawrence U. Haspel, D.O.
COGME Member, Vice Chair

Paul C. Brucker, M.D.
COGME Member

Christine Gasiciel
COGME Member

Fitzhugh MuUan. M.D.
COGME Member

Peter Bouxsein
Baltimore, Maryland

John M. Eisenberg, M.D.
Chairman, Department of Medicine
Georgetown University Medical Center

David A. Kindig, M.D., Ph.D.
Director, Programs in Health Management
Department of Preventive Medicine
University of Wisconsin

Gordon Moore, M.D.
Director of Teaching Programs
Harvard Community Health Plan

Jack Wennberg, MJD.
Director for the Center for the Evaluative
Clinical Sciences & Professor of Epidemiology
Dartmouth Medical School

Consultant support to the Council and

Advisory Group on

Graduate Medical Education Policy

Michael E. Whitcomb, M.D.,

Director, Program for Health Policy and Health

Services Research, Ohio State University,

for his pivotal report to the Council,

Physician Workforce Policy:

Goals, Strategic Options, Implementation Issues,

and Legislative Proposals.

Expert Advisory Group on Minority
Representation in Medicine

David Satcher, M.D., Ph.D.
COGME Member, Chair

Pedro Ruiz, M.D.

COGME Member, Vice Chair

Angela Blount

Legislative Assistant

Health and Medicine Council of Washington

Carol Gleich. Ph.D.

Chief, Special Projects Data Analysis

BranchDivision of Medicine

Ruth Johnson

Deputy Director of Program Development

Legislative Officer, Bureau of Health Professions

Lanardo Moody, M.A.
COGME Staff Liaison
Minority Representation in Medicine

Herbert Nickens, M.D.. M.A.
Vice-President Minority Health Education,
and Prevention,
Association of American Medical Colleges

Marc L. Rivo, M.D., M.P.H.
COGME Executive Secretary

Clay E. Simpson, Ph.D.

Director, Division of Disadvantaged Assistance

Bureau of Health Professions

Responses of Dr. Colwill to Questions Submitted by Senator Dole

Question No. 1. You have suggested, wisely I believe, that a great deal of decision
making regarding specialists and residencies, must take place at the local level.
However, once your consortia have made the decision as to how many of a particular
group are to be trained in that area, how do you keep them there?

Answer. Residency positions, as you have implied, would be allocated on a formula
basis to consortia. These consortia of a medical school, teaching hospitals, and other
organizations participating in graduate medical education would develop from natu-
ral affiliations, the majority of which already exist. At the local level, the consortia
would allocate residency positions to the various specialties in the various institu-
tions under national guidelines to achieve a 50/50 mix of generalists and specialists.

Graduates of these programs would have a higher likelihood of staying in that re-
gion than if they were educated elsewhere. Numerous studies over the years have
demonstrated that physicians tend to settle in the region where they were educated.
For example, approximately 70-80% of physicians can be expected to settle in a
state if they grew up in the state, attended medical school in the state, and subse-
quently completed residency training in the state. Roughly one third will stay in the
state of residency training if they have no other roots to the state.

If a region has no training programs, few attractive features, and is economically
weak, a shortage of physicians is highly likely. In virtually all nations, the most
rural areas have physician shortage. Placement of physicians in these areas must
be addressed through incentives and through programs such as the National Health
Service Corps.

Question. No. 2. In your opinion what, besides money, interests residents in locat-
ing in rural or inner-city areas?

Answer. A rural background and an inner-city background both are predictors of
practice in these locations. Educational programs in these locations also may stimu-
late individuals to practice in these areas. Finally, as noted above, incentives may
be necessary such as loan forgiveness.

Question. No. 3. International medical students (IMG) fill approximately 21 per-
cent of the residencies nationwide. It is my understanding that in New York State
they fill 42 percent of the residencies. If we are to limit the total numbers of
residencies, what would you suggest with respect to these physicians? Who makes
the choice between U.S. grads and foreign grads?

Answer. COGME recommends that all physicians, regardless of where they ob-
tained their medical school education, should compete for the limited number of
residency positions. Each residency program would select the best qualified appli-
cants for their positions.

Question No. 4. It is my understanding that your organization has selectively
identified specialties that are a particular problem; for example, cardiology. But spe-
cialties like rehabilitation medicine and general surgery may well be in short sup-
ply. Can't we help you target the areas where the problems are?

Answer. COGME believes that decisions about allocation of positions to individual
specialties should be made at the local' level within each consortium based upon
quality of educational programs and local needs. While COGME believes that the
resultant allocation of positions is unlikely to unduly harm any specialty, it does
provide a mechanism for addressing inadequate numbers of positions within individ-
ual specialties should this occur. COGME recommends careful monitoring of the al-
location of positions by specialty. In the event of shortage, incentives could be pro-
vided to increase positions in those specialties. Alternatively, additional positions
could be allocated to these specialties from the national level.

In conclusion, COGME believes that the nation is moving toward a progressive
physician surplus with a relative shortage of generalists. As the proportion of the
population in managed care increases with its lower utilization of physicians serv-
ices, the oversupply in the fee-for-service sector will be magnified. Underemployed
physicians represent a poor investment in graduate medical education by this coun-
try. Federal funding of graduate medical education should fund only the number of
physicians needed and should address the desired specialty mix. COGME rec-
ommends that the number of residency positions be limited to 110 percent of U.S.
medical school graduates and that half of these positions be in the generalist spe-
cialties. A reconstituted Council on Graduate Medical Education is essential to mon-
itor trends and make mid-course modification in goals based upon further changes
in the health care system, increasing medical capabilities, and local needs.

Prepared Statement of Debra J. Folkerts

Good morning Mr. Chairman and members of the Committee, I am Debra J.
Folkerts, ARNP, a family nurse practitioner from Manhattan, Kansas. I am a mem-
ber of the Kansas State Nurses Association and the American Nurses Association.

The American Nurses Association Associating (ANA) is the only full-service pro-
fessional organization representing the nation's 2.2 million registered nurses, in-
cluding staff nurses, nurse practitioners, clinical nurse specialists, certified nurse
midwives and certified registered nurse anesthetists, through its 53 state and terri-
torial nurses associations.

I am also testifying today on behalf of the:

American Association of Colleges of Nvirses, representing 456 senior col-
leges and universities with baccalaureate, master's, and doctoral nursing edu-
cation programs across the United States;

American Association of Critical-Care Nurses, the largest specialty nurs-
ing association in the United States with over 78,000 members who are dedi-
cated to the welfare of people experiencing critical illness or injury:

American Organization of Nurse Executives, representing 6,000 nurse
executives and managers in 120 chapters nationwide:

Association of Operating Room Nurses, Inc., the professional organiza-
tion of 48,000 periosperative nurses dedicated to enhancing the professionalism
of perioperative nurses, promoting standards of perioperative nursing practice
to better serve the needs of society and providing a forum for interaction and
exchange of ideas related to perioperative health care;

Association of Spinal Cord Injury Nurses, a professional association rep-
resenting 1,500 nurses involved in the specialty of spinal cord injury nursing;

Emergency Nurses Association, the voluntary membership association of
over 21,000 professional nurses committed to the advancement of emergency
nursing practice; and the

National Nurse Practitioner Coalition, a group of nurse practitioner orga-
nizations who advocate for universal access to basic health care and the re-
moval of barriers to consumer access to nurse practitioner care.

I appreciate the opportunity to testify today on graduate nursing education and
other implications of health care reform on those who provide care. As you know,
the health care industry is the nation's third largest employer; it accounts for one-
seventh of the nation's economy and has been the largest creator of new jobs since
1980. Clearly, major shifts affecting this industry will have great implications for
our nation.

To move ahead with health care reform without anticipating the impact it will
have on the current industry workforce would be like writing only the first act of
a two-act play. We cannot afford to wait until a new health care structure is set
up to find out whether we have the qualified persons to deliver promised services.
We commend you for seeking answers to one of the most critical questions in health
care reform: will the skills of the nation's health care workers match the needs of
the system?

Access to high quality, affordable health care is of concern to millions of Ameri-
cans— not only to the over thirty-seven million who are uninsured, but to the grow-
ing number of currently insured who fear that changing or losing their jobs will re-
sult in loss of coverage or that skyrocketing costs will make their dependent's cov-
erage or their own out-of-pocket health care costs unaffordable.

America's 2.2 million registered nurses deliver many essential health care services
in the United States today in a variety of settings — hospitals, nursing homes,
schools, home health agencies, the workplace, community health clinics, in private
practice and in managed care settings. Nurses know firsthand of the inequities and
problems with our nation's health care system. Because we are there — twenty-four
hours a day, seven days a week — we know all too well how the system succeeds so
masterfully for some, yet continues to fail shamefully for all too many others.

Nurses see people on a daily basis, who are denied or delayed in obtaining appro-
priate care because they lack adequate health insurance or are unable to pay for
care. These people often postpone seeking help until they appear in a hospital emer-
gency department with an advanced stage of illness or with problems that could
have been treated earlier in less costly settings, or more appropriately, prevented
altogether with earlier treatment or prevention services.

Our country needs a health care system that makes universal access a reality,
that effectively contains costs and that maintains and improves quality. We need
a system that stresses primary care and prevention and that unleashes the great
potential of nurses and other health care professionals to provide these services.

Nursing is committed to supporting and implementing initiatives that fully address
these key issues. We are very encouraged that many of these issues have been ad-
dressed by the President's Health Security Act, and Senator Wellstone's health care
plan, Senator Chafee's proposal, and other comprehensive health care reform initia-
tives.

All available health care professionals must be fully utilized in order to achieve
universal access. Advanced practice nurses — nurse practitioners, clinical nurse spe-
cialists, certified nurse midwives and certified registered nurse anesthetists — are al-
ready prepared to provide primary care and specialized services, but barriers to
their full utilization must be lifted if the goals of health care reform are to be met.

GRADUATE NURSING EDUCATION

Nursing commends the Congress and the Administration for its increased focus
on nurse education issues. It is clear that the United States health care system has
an increasingly urgent need for primary care providers. Funding must be made
available to strengthen existing advanced practice nurse programs and to establish
new programs to prepare the primary care providers so urgently needed.

Data indicates that there is a need to increase primary care providers to meet the
health care needs of all Americans. The Administration's plan would shift the fund-
ing under Graduate Medical Education from specialty physicians to primary care
physicians. Advanced practice nurses will also be increasingly needed to fill the fu-
ture gap created by this shift to primary care providers as well as in some specialty
areas.

We are pleased that President Clinton's health care reform proposal, The Health
Security Act, contains a provision for funding for graduate nurse education. This
would provide a stable, on-going revenue source to expand the production of ad-
vanced practice nurses, a vital resource to meeting health care needs. Advanced
nurse education includes the preparation of nurse practitioners, clinical nurse spe-
cialists, certified nurse midwives and certified registered nurse anesthetists. These
advanced practice nurses are prepared as expert clinicians to deliver primary care
and other services vital to America's health care needs. As health care reform re-
shapes our health care delivery systems, it will be essential to ensure that there
is an adequate supply of advanced practice nurses to meet the needs of universal
coverage.

The expanded role of nurses including advanced practice nurses, in a reformed
health care delivery system is critical to ensuring access as well as delivery of need-
ed health care services to all populations, including the underserved. An important
element of most health care reform proposals currently pending before Congress is
the emphasis on preventive and primary health care services. These services have
been at the very center of nursing practice since the inception of the profession.

Nurses are well-positioned to fill many of the current gaps in accessibility and
availability of primary and preventive health care services. Advanced practice
nurses are trained to provide from 80 to 90 percent of the necessary primary care
services of the nation. Primary care services include: preventive care and screening,
physical examinations, health histories, basic diagnostic testing, diagnosis and
treatment of common physical and mental conditions, prescribing and managing
medication therapy, care of minor injuries, education and counseling on health and
nutrition issues, minor surgery or assisting at surgery, prenatal care and delivery
of normal pregnancies, well-baby care, continuing care and management of chronic
conditions, and referral to and coordination with specialty caregivers.

Of the 2.2 million registered nurses in the United States, approximately 90,000
are considered advanced practice nurses with advanced education and training in
providing primary care. This training includes an advanced certificate or degree be-
yond the four-year Bachelor of Science degree. Of the total advanced practice nurses
currently in the workforce, about 50 percent are engaged in primary care.

Today, there are approximately 25,000 nurse practitioners practicing — most of
whom are engaged in the delivery of primary care services. Most of the 150 nurse
practitioner programs in the United States grant a Master's degree. Nurse practi-
tioners can write prescriptions in 35 states.

Most of the 40,000 clinical nurse specialists currently practicing are in the areas
of cardiology, mental health, cancer care or neonatology. Other clinical nurse spe-
cialists are case managers in the care of chronic health conditions such as diabetes,
or health and nutrition educators and work in a primary care health setting. Clini-
cal nurse specialists have often earned their master's or doctoral degrees in their
specialty areas of practice. As the hospital workforce shifts to a lesser dependency
on medical residents, hospital administrators are depending on the use of advanced
practice nurses, such as nurse practitioners and clinical nurse specialists, to fulfill

many of the responsibilities once undertaken by the medical residents. This
workforce is critical to the continuing acute care operations of many hospitals.

In addition to the above advanced practice nurses, there are certified nurse mid-
wives who are engaged in prenatal and gynecological care as well as the delivery
of babies. Most certified nurse midwives receive 12 to 18 months advanced training
above their basic education. Certified registered nurse anesthetists receive a grad-
uate education approximating 27 months of which the first nine months are spent
in the classroom with the remaining 16 months spent in clinical training.

Extending health care coverage to the 37 million Americans currently uninsured
will increase the demand for primary care services beyond the level it is expected
to grow under the current health care system. Programs are needed, however to pro-
vide the education necessary to prepare these professional nurses to provide the nec-
essary care. President Clinton's Health Security Act includes a provision which pro-
poses a stable dedicated revenue stream for graduate nurse education. This funding
would provide a reliable revenue source that is not subject to the annual appropria-
tions process to expand the current production of advanced practice nurses. The
nursing community is working with the Department of Health and Human Services
to determine how the new program could be operationalized.

Representatives of major nursing organizations have agreed on a set of criteria
that we believe should guide the formation of a graduate nursing education pro-
gram. The criteria are as follows:

• The funding focus should be on educational support for advanced practice nurs-
ing students;

• Graduate Nurse Education funds should not be used to support undergraduate
nursing education;

• The Graduate Nurse Education fund should have a dedicated funding stream
to provide monies in addition to the currently available nursing and allied
health funds under the graduate medical education program which is used
largely to support nursing diploma programs;

• Funding through a Graduate Nurse Education must be in addition to current
authorizations under Title VII and Title VIII of the Public Health Service Act.
The later would provide the necessary infrastructure for the Graduate Nurse
Education program and would ensure that there is an adequate supply of fac-
ulty and researchers;

• Students eligible for the Graduate Nurse Education funds should be post-bacca-
laureate, advanced practice nursing students enrolled in a program that is
linked to an academic institution; and

• All educational programs that incur costs for support of advanced practice nurs-
ing education will have access to the Graduate Nurse Education monies for stu-
dent stipends, costs of clinical nursing faculty supervision at the clinical sites,
and program expenses including salaries of support staff. Clinical sites include
nursing centers, hospitals, ambulatory care facilities, and home health agencies;

• Classroom costs incurred by rural and urban underserved providers that have
agreements with academic institutions should be reimbursed.

The Graduate Nurse Education program would help many graduate nursing stu-
dents who are currently attending school part-time due to financial constraints to
become full-time students. The current cost of attaining a nurse practitioner edu-
cation is similar to students pursuing master's degrees in other areas of study. The
American Association of Colleges of Nursing found that based on 1988 dollars, its
costs a graduate nursing student about $36,837 without financial aid to receive a
master's degree.

A large portion of a graduate nursing student's programs is in clinical practice.
Some certifying exams require the graduate to spend one-third of his or her ad-
vanced nurse education experience in the classroom and two-thirds in clinical prac-
tice, although in most all cases, the classroom and clinical studies are integrated
throughout the graduate student's curriculum. In other words, even as advanced
practice nurses are training for their degrees, their services are utilized in providing
much needed health care services.

Study after study demonstrates that advanced practice nurses are an essential
means to providing health care services in a cost efficient manner and to under-
served populations. Preliminary data from a study being conducted at the Univer-
sity of Wisconsin under a Robert Wood Johnson grant show that when nurse practi-
tioners are utilized by health maintenance organizations (HMOs), the need for phy-
sicians decreases from 30 to 50 percent. The data also show that the inclusion of
nurse practitioners on the patient care team doubles the efficiency of that team. An-
other recent survey {Survey of Beneficiaries of Nursing Education Projects, Decem-
ber 1993) found that 90 percent of nurse practitioner and certified nurse midwife

graduates are engaged in direct patient care. Of those nurses surveyed, more than
60 percent provide maternal and child health care; 25 percent are involved with car-
ing for the homeless; 40 percent provide care to the elderly; and 28 percent care for
HIV infected individuals.

The advanced practice nurse is a vital component to increasing access to quality
health care services in a reformed system. The costs of preparing the advanced prac-
tice nurses are currently borne almost entirely by schools of nursing and the stu-
dents themselves, each with very limited resources. In order to quickly expand the
numbers of these expert clinicians, there must be an increased Federal commitment
to graduate nursing education. Investment in the Graduate Nurse Education pro-
gram will ensure that advanced practice nurses are able to meet the needs of a re-
formed health care system.

MEDICARE AND MEDICAID REIMBURSEMENT

Education programs for advanced practice nurses alone, however, will not solve
nursing's ability to provide full primary and preventive health care services. The
ability of nurses to provide health care services has been continually hampered by
a number of artificial barriers that serve to cut the consumer off from access to serv-
ices provided by these competent and qualified health providers. Factors such as ar-
tificially depressed wages, lack of third party reimbursement policies by Federal and
state programs and private insurers, limitations of State nurse practice acts, the un-
availability of malpractice insurance and institutional opposition to nurses practic-
ing to their full legal scope of practice have had a major negative impact on the abil-
ity of advanced practice nurses to fully practice within their educational parameters.
The fastest way to expand the number of advanced practice nurses in this country
would be to eliminate the barriers to practice and reimbursement which prevent
these nurses from practicing to their fullest capability.

The laws regarding reimbursement for advanced practice nurses are extremely
complicated and convoluted as to which categories of advanced practice nurses may
be reimbursed, in what geographic areas, who may be paid and whether or not col-
laboration with other health providers is required. The current laws are so confus-
ing and complex for carriers, providers, and consumers that they have become a bar-
rier to access to these services in and of themselves.

The Health Security Act goes part way in guaranteeing that barriers to health
care for the nation's elderly are removed. ANA was pleased to have the opportunity
to work closely with Senator Tom Daschle (D-SD) and other members of this Com-
mittee to achieve enactment of the Rural Nursing Incentive Act. That provision
which was included in the Omnibus Budget Reconciliation Act of 1990 (Public Law
101-508), enables nurse practitioners and clinical nurse specialists who practice in
rural areas to receive direct reimbursement under Medicare. The Health Security
Act expands this provision by allowing Medicare reimbursement for all nurse practi-
tioners and clinical nurse specialists, regardless of the geographic settings, but in-
hibits the practice of some advanced practice nurses by setting artificial barriers on
the practice setting and the association of the advanced practice nurse with another
health care provider. Under The Health Security Act, Medicare reimbursement
would not be allowed for nurse practitioners and clinical nurse specialists for in-hos-
pital settings and all advanced practice nurses would have to demonstrate collabora-
tion with a physician to be eligible for any Medicare reimbursement. We believe
that these restrictions will significantly hamper the ability of the advanced practice
nurses to provide their services to the elderly.

Legislation (S. 833) has been introduced by two members of this Committee, Sen-
ators Charles Grassley (R-IA) and Kent Conrad (D-ND) to remove all arbitrary re-
strictions from Medicare reimbursement for advanced practice nurses and better
serve the needs of the nation's elderly. In addition, modeled after the current pro-
gram of bonus payments to physicians who work in health professional shortage
areas, this legislation would extend a bonus payment to advanced practice nurses
when they work in health professional shortage areas. This provision is designed to
encourage non-physician providers to relocate to areas in need of health care serv-
ices. Extending bonus pa3mients to non-physician providers has also been rec-
ommended by the Physician Payment Review Commission. We endorse this legisla-
tion.

Another example of payment inequities for nurses under the Medicare system is
the lack of reimbursement for operating room nurses serving as assistants at sur-
gery. The issue of Medicare reimbursement for registered nurses who assist at sur-
gery has been an important issue for ANA and the Association of Operating Room
Nurses since a provision was included in the Omnibus Budget Reconciliation Act of
1986 that permitted reimbursement for physician assistants who first assist at sur-

gery, but not for registered nurses who have functioned as first assistants for dec-
ades and are reimbursed by many private payors. The abiHty of physician assistants
to be reimbursed under Medicare has created employment disparity for nurses who
provide the same service, but are not reimbursed under the law. Legislation (H.R.
1618) has been introduced in the House of Representatives to permit direct payment
under the Medicare Program for the services of registered nurses as assistants at
surgery. We support this legislation.

In addition to the access problems confronted by our senior citizens, many Medic-
aid recipients are also being forced to forego essential health care services because
health care providers are not available to them. In order to improve access to care
under Medicaid, certain reforms in payment and coverage policy must be enacted
by the Congress. At the present time, the Federal Government mandates that states
provide for direct Medicaid reimbursement of certified nurse midwives, certified pe-
diatric nurse practitioners and certified family nurse practitioners. However, it does
not mandate the coverage of services furnished by other nurse practitioners, or by
clinical nurse specialists and certified registered nurse anesthetists. Some states
have opted to cover the services of additional nurse practitioners, clinical nurse spe-
cialists and certified registered nurse anesthetists. Other states have chosen not to
include services of advanced practice nurses beyond the Federal mandate. This
means that access to services for many Medicaid recipients remains limited despite
the availability of professionals who are willing and qualified to provide services to
them — such as women's health nurse practitioners, gerontological nurse practition-
ers and others. The Medicaid program- needs to directly reimburse for the services
of all advanced practice nurses so that they may be utilized by Medicaid recipients.
This is a step that can be taken to increase access immediately.

Senator Tom Daschle (D-SD) has introduced a bill (S. 466) to improve access to
the services of nurse practitioners and clinical nurse specialists by mandating the
coverage and payment of all nurse practitioner and clinical nurse specialist services
under the Medicaid program. An identical bill (S. 1683) has been introduced in the
House of Representatives by Representative Bill Richardson (D-NM). The Congres-
sional Budget Office has estimated that the cost of enacting this proposal would be
$46 million over a five-year period. That is a very small amount when compared
to the value of increasing the access of Medicaid recipients to badly needed health
care services.

In addition to the general examples of barriers to practice just noted, there are
three specific Medicare reimbursement barriers to practice that exist for certified
registered nurse anesthetists (CRNAs). First, the current Medicare conditions of
payment for anesthesiology services that anesthesiologists must meet in order to be
paid for Medicare for medically directing a CRNA, restrict CRNAs from performing
all the components of an anesthesia service that they are legally authorized to per-
form. For example, some anesthesiologists insist on performing the anesthesia in-
duction on all patients themselves, then leaving the CRNA to finish the case. Sec-
ond, the current Medicare hospital condition of participation for anesthesia services
and the Medicare ambulatory surgical center condition of participation for coverage
for surgical services restrict CRNA practice by requiring physician supervision of
CRNAs. Third, the current Medicare regulation on payment for the services of
CRNAs states that if a CRNA and anesthesiologist work together on one case, the
anesthesiologist may bill the case as if he/she personally performed it and receive
100 percent of the Medicare payment. No Medicare payment is typically made to
CRNAs involved in such a case, even if the CRNA was the provider actually admin-
istering the anesthesia to the patient.

Just as nurses throughout the United States have demonstrated their abiUty to
provide high quality, cost effective and accessible health services, consumers have
shown their widespread acceptance of these services and their willingness to con-
tinue receiving priniary care services from nurses. A recent Gallup poll revealed
that the vast majority of Americans (86 percent) are willing to receive everyday
health care services from an advanced practice registered nurse that they now must
go to a physician to receive. Only twelve (12 percent) percent said they would be
"unwilling" to go to a registered nurse. Nurses are currently working with
consumer-oriented organizations in order to promote shared principles of health care
reform. We are confident that as the American public becomes more familiar with
the primary care services that nurses can provide, and as more Americans have an
opportunity to receive such care from nurses, that the "unwilling" category will de-
crease sharply. In fact, we believe that, based on the experiences of advanced prac-
tice nurses in HMO, clinic, and private practice settings, more and more Americans
will identify nurses as their provider from whom they select to receive primary care
services.

REMOVING BARRIERS TO PRACTICE

One of the key features of the Administration's proposal is the elimination of anti-
competitive practices in the health care industry to ensure that health providers are
treated equitably within the health system by removing barriers to practice. In dis-
cussing how this can best be achieved, nursing has stressed aggressive enforcemerit
of antitrust guidelines and a reiteration of its commitment to encouraging competi-
tion in the health care marketplace.

Nursing is concerned with aspects of the Administration's proposals for establish-
ing fees in a reformed health care system Nursing opposes the broad antitrust ex-
emption contained in Section 1322(c) of that proposal. This provision which would
permit providers to negotiate collectively with alliances (or states) over the fees paid
under any fee-for-service schedule, does not assure that nurses and other
nonphysician providers would participate equally with physicians in such negotia-
tions. Without assurances of such equal participation, nonphysician providers could
be placed at a serious competitive disadvantage by this provision, and ultimately,
consumers would suffer as well, since their access to nonphysician providers would
be artificially limited and the prices paid for physician services could be too high.
In short this exemption, as presently drafted, could exacerbate two of the most seri-
ous problems with the current health system.

In addition to violations of the antitrust laws, there are other anticompetitive bar-
riers that prevent the optimal use of nurses. For example, restrictive language in
state laws and regulations that determine the scope of nursing practice prevents
nurses from offering many services that they are clinically competent to provide.
Legal requirements that nurses perform certain services only under the "supervision
of," or "in collaboration with," physicians, are examples of such anticompetitive bar-
riers. These supervision or collaboration requirements are often found in the state
laws prohibiting or drugs appropriate to their scope of practice. Other anticompeti-
tive barriers faced by nurses include the lack of direct reimbursement for nursing
services in many settings, the unavailability of malpractice insurance, and the bar-
riers to obtaining institutional privileges. These barriers not only prevent nurses
from practicing fully; they provide pretexts for health plans not to hire nurses.

Nursing encourages this Committee to develop a new health system that will com-
pel all business entities to treat all health providers in accordance with the legal
scope of their practice and will review all actions taken by corporations working
within a health plan, especially when they adversely impact one class of health pro-
fessionals.

CONCLUSION

Mr. Chairman, we support health care reform that provides universal access to
care, and balances the need to contain costs with the need to provide quality health
services. We have always endorsed the use of the most appropriate provider to meet
the consumer's health care needs in every setting. We applaud this Committee for
its strong commitment to developing a health care system that provides access to
quality, affordable health care. As your deliberations proceed, we urge you to con-
tinue to address the education and reimbursement needs of the health care
workforce. The system cannot succeed without skilled nurse providers.

We appreciate this opportunity to share our views with you and look forward to
continuing to work with you as comprehensive health care reform is developed.
Thank you.

Responses of Ms. Folkerts to Questions Submitted by Senator Dole

Question No. 1. There is a clear desire on the part of many to move away from
fee-for-service as a method of payment, yet you strongly argue for fee-for-service for
many nurses. Row can we achieve your goal of equality without fee-for-service?

Answer. It is true that many wish to move away from fee-for-service payment and,
in fact, there is already a significant trend away from this form of payment toward
capitated and similar payment arrangements. Nursing recognizes this trend. Our
call for making payment available for advanced nursing services under fee-for-serv-
ice arrangements is not motivated by a commitment to this form of payment over
all others. It is our belief that where fee-for-service payment is available for health
care professionals' services, such payment should be available to advanced practice
nurses on the same basis as it is to other providers, such as physicians. A clear ex-
ample of this is in payment for services provided under Medicare Part B. Such pay-
ment remains largely fee-for-service, and is unavailable for most services of ad-
vanced practice nurses in non-rural areas. One key to providing accessible, high-

quality, and cost-effective services to the Medicare population is allowing advanced
practice nurses to be paid for providing such services to them.

At the same time, there must be coverage for services provided by advanced prac-
tice nurses under capitated and other managed care arrangements. The record here
is uneven. In many staff-model HMOs, for instance, advanced practice nurses are
utilized to provide a broad range of primary health services to plan members. In
many other managed care organizations, such as PPOs and IPAs, advanced practice
nurses have been wholly excluded, as a class, from membership on provider panels.
This has completely eliminated these providers from these plans and made it impos-
sible for plan members to obtain their services.

Nursing has advocated antidiscrimination measures that would prevent managed
care organizations from discriminating against any class of health care professional
that provides covered services. The discrimination against whole classes of providers
serves only to inhibit competition among health care providers.

Question No. 2. We are currently concerned with the inappropriate distribution
of primary care physicians versus specialists. While 50 percent of the nurse practi-
tioners are currently engaged in "primary care" — what is to prevent nurses from
shifting to more institutional or specialty pro? As I understand it, a declining num-
ber of physician assistants are choosing primary care as a practice area?

Answer. First, while most advanced practice nurses seek careers in primary care,
many do, in fact, specialize. Unlike in medicine, specialization in nursing does not
generally lead to greatly increased levels of compensation. For many, it is simply
a matter of where positions and funding are currently available. As medical edu-
cation shifts to a greater focus on primary care, there will be a continued and ex-
panded need for advanced practice nurses in hospitals, and particularly in specialty
areas, to provide services that are currently furnished by physician residents.

But many, many advanced practice nurses seek their advanced education pre-
cisely it offers an opportunity to function as a primary care provider. Many nurses
feel that this is a logical extension of the fundamental role of the nurse in address-
ing the needs of the whole person. Primary care is a field that is very attractive
to many nurses because of its emphasis on assessing and managing a patient's
needs and working closely with patients over a long period of time. Whereas physi-
cian assistant practice is based on the practice area of the supervising physician,
advanced practice nurses are educated to practice independently and are not con-
strained by the career paths and choices of physicians.

Question No. 3. Ms. Folkerts, I would appreciate your telling us about your own
personal experience in servicing a rural county and working with physicians ad oth-
ers. How do you set-up collaborative relations?

Answer. I am a product of the rural area where I have practiced for ten years.
I attended a certificate Nurse Practitioner Program in 1983 in Hays, Kansas. This
program was run as a satellite of Kansas University and designed especially for
rural areas. The structure of this program facihtated establishing collaborative rela-
tionships. Students were required to be in Hays for three days every two weeks for
classroom instruction. The remaining days were spent with the precepting physi-
cians. In my case, this allowed me to have as preceptors physicians who practiced
in my own rural community. I established collaborative relationships and worked
side-by-side with the physicians in the community where I would be practicing as
an advanced practice nurse. The preceptorship resembled a medical residency in
that the student "shadowed" the preceptor for one year ad shared In the long hours,
emergency calls, etc.

The physicians whom I worked with served a four-county area. This fact also pro-
vided me opportunities to establish collaborative relationships with physicians in
those counties.

In 1990 the physician whom I worked with relocated to Colorado. At that time,
I knew a physician in a near-by town who was retiring. He was the sole provider
for a community of 600 people; it included a 40 bed nursing home. This physician
thought that his practice was perfect for me. I was able to establish collaborative
relationships with two physicians who had served as preceptors for me during my
training, and I began to practice at the Glasco clinic. The town was pleased to have
continued access to health care services. Sixty-eight percent of my patients were
Medicare beneficiaries.

I faced numerous challenges as a rural practitioner. Many of my patients had no
means of transportation. The science of physical examination became an art because
I did not have the luxury of an x-ray machine to diagnose congestive heart failure.
I was able to establish service with a mobile ultrasound service to come to the clinic
once a week to do some procedures. I used a courier lab service.

Among my patients, the most common diagnoses were congestive heart failure, di-
abetes, and hypertension, all of which require close monitoring. I supplied many pa-

tients with their medications from drug samples. The abiUty to estabUsh a Rural
Health Clinic was instrumental in allowing me to continue to provide services to a
population with a large percentage of Medicare beneficiaries, since office visits ac-
counted for the majority of the revenue.

When I practiced in Glasco, the relationships I had nurtured during my preceptor-
ship were again helpful. Physicians in four counties accepted my referrals ad readily
provided consultation. I had excellent rapport. Hospital privileges also came easily
because of the support I had from the physicians.

Once a collaborative relationship has been established, I have found that the phy-
sician continues to promote nurse practitioners. Dr. Carl T. Newman of Denver, Col-
orado, is the first collaborative physician with whom I practiced. He is currently
working with a hospital to provide urologic managed care in Denver. His strategy
is to use nurse practitioners to screen and treat chronic and acute patients. I con-
tinue to consult with him regarding roles ad strategies.

In summary, I believe that the role of the Nurse Practitioner must be understood
in order for collaborative relationships to be established. One way to achieve such
understanding is to train nurse practitioners and residents side-by-side in some seg-
ments of their education. An alternative would be to ensure that students receive
their education and preceptorships in the communities where they wish to provide
service — as happened in my case. I strongly believe that programs to educate nurse
practitioners need to be established in the rural areas where the providers are need-
ed. People who are interested in serving in rural areas tend to be from those areas.
In the case of nurses ad nurse practitioners, many are women. They have families
in rural areas and cannot leave those areas to continue their education; but for the
same reason, i.e., their ties to the rural community, individuals from those areas
who do complete nurse practitioner programs are committed to returning to, or stay-
ing in, those areas. Satellite programs can be particularly effective in educating
more rural providers.

Question No. 4. We are thinking of changing the way we reimburse for medical
education and moving the funding away from institutions that encourage inpatient
versus ambulatory care. Where do most advance practice nurses receive their edu-
cation now? What-is the best-way to provide funds to your colleagues — through
grants and loans or some other way?

Answer. The majority of nurse practitioners currently receive their education in
graduate programs that award a master's degree.

The best way to provide funds to nurse practitioners is through a combination of
grants for the development of programs, such as those provided for in Title of the
Public Health Service Act, and funding for students through a Graduate Nursing
education program. This combination is critical; students cannot attend programs
that do not exist; and they cannot go to school if they are unable to pay tuition and
living expenses.

Historically, nursing education has not been driven by the same force driving
graduate medical education, namely, providing services to hospitals. In those in-
stances where nursing education has been used primarily to provide staff to hos-
pitals, as in diploma schools of nursing run by the hospital, the nursing programs
have not generally been among the academic leaders of the profession.

Nursing education needs to be based primarily in educational programs (as op-
posed to institutions) that have strong linkages to clinical training sites in the com-
munity. The combination of program support and ONE funds to students, with some
mechanism to direct the funding according to public need, is the right approach.

The nurse practitioner movement itself is an excellent example of how federal
funding has created a new group of providers. In the past twenty-five years, thou-
sands of nurse practitioners have been educated, thanks in large part to federal fi-
nancial support. Federal policy, backed by federal dollars, has produced providers
oriented toward primary care. This approach has worked better than a more laissez-
faire orientation of funding practice sites, primarily hospitals and acute care set-
tings.

Question No. 5. In November of 1992, a Task Force on Barriers to Practice for
Non-Physician Providers prepared a report identifying several areas of concern.
Among these areas were liability and malpractice insurance issues. I know in our
own state of Kansas the cost of malpractice, particularly for OB-GTH's, has been
a real problem?

How much of a problem is malpractice insurance for nursing professionals like
yourself? Are you and "added liability" for physicians you work with?

Answer. Nationwide, nurse practitioners have access to malpractice insurance at
a traction of a physician's cost. Currently my malpractice premium is $640.00 per
year for coverage of $1,000,000 per claim per year and $3,000,000 total per year.

I know of no situation in which a physician paid more for insurance coverage due
to his collaboration with a nurse practitioner.

In Kansas the Practice Act for nurse practitioners states that we are directly re-
sponsible to the patient for our professional actions. I therefore do not believe that
I am an "added liability" for any physician or other professional whom I work with,
since I am legally responsible and accountable for exercising my own professional
judgment in providing care.

Prepared Statement of Senator Orrin G. Hatch

Mr. Chairman: I will keep my remarks brief, but I just want to make a couple
of observations.

First, it is clear to all of us that we have too many physicians in specialties, and
too few in primary care. Estimates are that one-third of American physicians prac-
tice primary care; in other countries, such as Canada, that number approaches 55
percent.

Second, it is equally clear that there are serious imbalances in where health pro-
fessionals are practicing.

This Committee has always been especially sensitive to the needs of rural Amer-
ica. It is crucial that we maintain — I venture to say, even heighten — this sensitivity,
as our debate on health care reform unfolds.

I tend to agree with our colleague. Senator Kassebaum, who has called this the
"sleeper issue" in health care reform.

Medicare pays $5 billion annually to teaching hospitals, so it is obvious that the
federal government has a role to play here.

What is not obvious to me is that the federal government must reach down and,
in effect, set arbitrary quotas for medical school enrollment. Rather, I think the
Committee should direct its efforts toward setting a rational policy that will en-
hance naturally evolving trends that call for greater and greater numbers of pri-
mary care practitioners.

This hearing will be helpful to the Committee in meeting that goal, and I want
to welcome our witnesses today.

Prepared Statement of Clayton E. Jensen

Community-Based Medical Education in Health Care Reform

1. Introduction

Chairman Moynihan, Senator Conrad and other members of the Committee on Fi-
nance of the United States Senate, I am deeply honored to appear today to present
testimony on health care reform. I am Clayton Jensen, M.D., interim dean of the
School of Medicine of the University of North Dakota (UNDSOM) and chairman of
the Department of Family Medicine. I am a family physician and came to my cur-
rent positions after 25 years of primary care practice in Valley City in east-central
North Dakota. Valley City has a population of 7163 and is situated on the Sheyenne
River in a beautiful, rural setting. There are 635,000 people in the State of North
Dakota.

The School of Medicine of the University of North Dakota congratulates this com-
mittee on your recognition of the need to consider the perspective of rural America
and of community-based medical schools as you wrestle with health care reform. We
believe the model of medical education that we are successfully implementing in
North Dakota offers important lessons for other schools and, when appropriately
supported, is uniquely able to address health care work force needs of our region.

2. An Overview of UNDSOM

We are a small school. A typical entering class has 57 students, 7 of whom are
American Indians (12 percent). Most of our students are from North Dakota and
surrounding states. Although we started as a two-year school in 1905, we converted
to M.D. degree-granting status in the late 1 970s. We graduate approximately 55
physicians per year. We have four family practice residency sites and residency
training programs in medicine, surgery and psychiatry.

UNDSOM is a community-based medical school. We have affiliation agreements
with private and public hospitals, but have no ownership in these hospitals. Most
of our clinical faculty are community physicians who enjoy teaching medical stu-
dents and residents and have been willing to do so for token or no payment. We
have four regional campuses and more than 30 preceptorship sites throughout the

region. Approximately 55 percent of the graduates of UNDSOM enter residency
training in the primary care specialties of family medicine, internal medicine, ob-
stetrics and gynecology, and pediatrics. For several years, our school has been recog-
nized as a national leader in the percentage of graduates who enter family medicine.
In 1993, 27.7 percent of our graduates entered family practice residency training
compared to the national rate of 10.8 percent (Appendix One). When UNDSOM was
a two-year school, fewer than 20 percent of our graduates returned to practice in
the state. Today, about half of the state's physician work force are alumni of
UNDSOM. A recent study by Rosenblatt, which appeared in volume 268 of the Jour-
nal of the American Medical Association (September, 1992, pp. 1559-1565), states:

Medical schools vary enormously in the likelihood that their graduates
will enter rural practice. The range is from 41.20% of the graduates from
the University of North Dakota practicing in rural areas to 2.3%

One of the reasons that new state-supported medical schools were created
was local legislative concern about the paucity of physicians in rural areas.
The data in this article suggest that this was both a rational and effective
policy. States like North Dakota that are predominantly rural are unlikely
to have very many physicians unless they invest in their own medical edu-
cation programs.

Our own data indicate 72 percent of the physicians who complete our M.D. pro-
gram and also complete our family practice residencies establish practices in North
Dakota or in the close-by regions of the states that surround North Dakota.

The curriculum that is utilized by UNDSOM is summarized in Appendix Two. A
map of the preceptorship sites is shown in Appendix Three.

3. The North Dakota Center for Graduate Medical Education (NDCGME) — A Model

Consortium for Medical Education
The national average direct medical education (DME) reimbursement from Medi-
care in 1992 was $73,383. The average allowed reimbursement for DME for North
Dakota in 1992 was $21,915, a difference of $51,468 (see Appendix Four). This dis-
crepancy, as well as cutbacks in state funding of the UNDSOM family practice resi-
dency programs, led to formation of a consortium which is diagramed in Appendix
Five. This consortium currently consists of the eight teaching hospitals located in
the state's four largest cities. The consortium establishes policy for graduate medical
education in North Dakota and has recently agreed to be the recipient agency for
graduate medical education funding. The consortium was successful in securing an
amendment in the Omnibus Budget Bill passed by the 1992 U.S. Congress. This
amendment addresses some of the inequities in the Medicare funding of our resi-
dency programs.

4. Financing of Medical Education

UNDSOM is successfully addressing many of the physician work force needs of
North Dakota and the region. The curriculum of the school can be improved, in sev-
eral aspects to improve the training of medical students, residents and other mem-
bers of the health care team for practice in the region and to increase the likelihood
that they will practice in North Dakota.

The major obstacle for accomplishing these goals and for maintaining the pro-
grams that have been established is an inadequate funding base.

We strongly support the principle that all payers must support education and
training of the workforce as well as providing an environment in which education
and clinical research can flourish. Education and training must be supported at ac-
tual costs.

5. Community-Based Medical Schools

UNDSOM is one of approximately 25 community-based medical schools. These
schools represent a group of primary care intensive institutions that are both inte-
grated with and responsive to their communities. Community-based schools have
been shown to be quite efficient in the education and training of primary care physi-
cians. According to data from the latest AAAfC Institutional Goals Ranking Report,
community-based medical schools constitute 10 of the 13 leaders in the production
of primary care physicians.

Unique to the collective mission of the community-based medical schools is:

• a primary care focus upon which their education, research and service missions
are based;

• a responsiveness to local and regional work force, education and service needs
in the rural and urban areas they serve, and

• both the use of and cooperation with community resources to provide education
and training, including volunteer physicians and other health care profes-
sionals, community hospitals and clinics.

In common with other medical schools, the community-based medical schools sup-
port and engage in the advancement of knowledge in behavioral, biomedical, preven-
tive and clinical-outcomes research. Further, each is primarily responsible for un-
dergraduate medical education and assumes a major role in directing or coordinat-
ing graduate and continuing medical education for their region.

Representatives from several of the Community Based Schools recently assembled
to draft a position statement on several issues raised in the Health Security Act and
other health care reform proposals that are being considered by Congress. The posi-
tion statement is attached as Appendix Six.

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APPENDIX ONE

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APPENDIX TWO
UND SCHOOL OF MEDICINE CAMPUSES

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MEDICAL EDUCATION CURRICULUM - UNIVERSITY OF NORTH DAKOTA

PHASE I 2 WEEKS ORIENTATION

Probism Solving: Primary Cars in North Dakota

PHASE II

36 WEEKS

Year 01:

BiochaiTustry

Hiatology and Organology

Human Bshavior

Grand Forl(S

Gross Anatomy

Physiology

NauroBciencs

Focal Problams

PHASE IV (Continued)

Year 04:

Family Modicina Clerkship Required

Family Physicians' Offices

Six 4-Week Electjves

32 WEEKS

8 Weak*
Statewlda

During tha fourth year, students will study on one of the
four clinical campuses: Bismarck. Fargo, Grand Forks,
Mi not.

PHASE V

4 WEEKS

Year 02: (Continued)
Pathology
Pharmacology
Microbiology

PHASE III
Introduction:

PHASE IV

35 WEEKS

Epklamiology

Human Behavior

Introduction to Clinical Medicine

Fooal Problams

3 WEEKS

Hospital-Based Practice of Medicine

28 Community Hospitals In-Stste

48 WEEKS

Yeer03:

Medicine

Surgery

Obstatrics/Gynecology

Psychiatry
Padlatiics

33 Students wilt study on tha Fargo Campus
22 Students will study on the Bismarck Campus

Advanced Clinical Experience

Phase V is the third and final transitional phase in the
Medical School curriculum. It is 4 weeks in length and
taught in the rural hospitals utilized in the Phase III program.
The Phase V students return to the same sites where they
perticipated in Phase III. Prereouisites: Successful
completion of the first four phases of the UND Medicel
School training program. The objectives of this rotation is
to prepare the senior medical students for residency training
and to act as teachers for the Phase III students.

M.D. Degree:

Residency:

Upon Completion of requirements.
Graduation from UND Medical School.

3 - 5 years post-graduate training.

APPENDIX THREE

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APPENDIX FOUR

UND School of Medicine

Direct Medical Education Reimbursments from Medicare: 1992
North Dakota Teaching Hospitals

Per Resident

National Average Reimbursement $73,383

Average Allowed Reimbursement for North Dakota $21.915

North Dakota receives under 30% of the National Average
Reimbursement for Direct Medical Education.

North Dakota Underfunding from National Average $51,468

Average North Dakota Medicare Utilization Rate 47.50%

Underfunded reimbursement per Resident $24,447

Number of Residents at UND School of Medicine 110

Total Underfunding of North Dakota Direct GME $2,689.203

UND School of Medicine is a national leader in the percentage of
its graduates (more than 25%) who pursue Family Practice
residency training. More than 80% of UND School of Medicine
graduates who pursue Family Practice take their training in UND
Family Practice residency training programs. These model
programs deserve increased federal support.

APPENDIX FIVE

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APPENDIX SIX

POLICY POSITIONS ON HEALTH CARE REFORM

This document constitutes a draft position statement by the Community-
Based Medical Schools on several issues raised in the Health Security Act. The
document draws upon the thoughts and writings of other groups including the
Association of American Medical Colleges (AAMC), Association of Academic
Health Centers (AAHC) and the Academic Health Center Working Group. However,
it broadens the principles so as to be more inclusive of the mission of the
Community-Based Medical Schools.

The concept of the Academic Health Center (AHC)as referred to in the
Health Security Act should be enlarged to include all the relevant teaching
institutions that contribute to health professions education in a given region. Thus,
we propose to expand on the concept of the AHC which we now refer to as the
Medical Education Consortium (MEC).

1. MEDICAL EDUCATION CONSORTIA:

A Medical Education Consortium (MEC) consists of one or more allopathic or
osteopathic medical schools, affiliated teaching hospitals and other facilities utilized
in the teaching/training of medical students, residents and other health
professionals. It may include other health professions training programs as
appropriate.

The MEC is the accountable agent for achieving regional health care
workforce needs and objectives including, but not limited to, the number of
positions in, and specialty mix of, regional residency programs. The MEC may
assume similar responsibilities for allocating number and mix of other health
professions trainees.

The MEC should receive all training funds associated with programs operating
within its auspices. The designation of the responsible fiscal agents within the MEC
should be determined by the consortium members.

The MEC will be responsive to community/regional health workforce needs for all
health professions.

All training programs must align with at least one MEC.

2. NATIONAL COUNCIL ON HEALTH PROFESSIONS EDUCATION AND TRAINING
(NCHPETt:

A national council should be established within the Department of Health and
Human Services (DHHS) as an advisory body on all health professions education
and training. It should make recommendations on how federal funds should be
utilized to support primary care and other specialties within medicine as well as
other health professions that are determined to be in short supply. The NCHPET

APPENDIX SIX
(continued)

should be formed in such a way as to be responsive to regional and local needs.
The membership on the council should be broadly based.

A separate group should be formed to be concerned with the allocation of total
GME slots and total GME funds to regional consortia (Medical Education Consortia)
based on policy guidelines of the NCHPET. The separate group should be given
relief from Federal Trade Commission regulations in order to address health work
force needs.

The Medical Education Consortia should be responsible for all GME positions within
their regions, including those supported by federal funding and those supported
from other funding sources. There should not be federal restriction on GME
positions supported by non-federal funds if those other positions are deemed
necessary to meet the workforce needs of the consortium.

3. PRIMARY CARE:

There is need for a shift to a better balance among primary care and specialty
physicians approaching a 55:45 ratio, or such ratio that better meets national
workforce needs. The education and training of primary care physicians begins
with medical student education and continues through and beyond residency
training. Such training involves multiple training sites in non-traditional settings
(ambulatory sites vs. inpatient hospital wardsland is more expensive than training
in traditional sites. The education and training for primary care must be supported
at actual cost levels in order to achieve stated objectives.

4. UNIVERSAL ACCESS:

The Community-Based Medical Schools strongly support univeral access to
health care by all persons.

5. PUBLIC HEALTH SERVICE INITIATIVES:

A wide range of public health initiatives is essential to provide the infrastructure of
health care services to the diverse populations and regions of the country. Funding
for these programs under health care reform should be in addition to current base
levels and should be financed through a dedicated mechanism that reflects a
portion of the total health care premiums and/or other designated public source.

6. CONTINUOUS QUALITY IMPROVEMENT MEASURE:

The MEC must participate in the National Quality Management Council, the
National Quality Consortium and regional professional foundations, as specified
under the Health Security Act.

c:\wp\codn3-2.i30

Responses of Dr. Jensen to Questions Submitted by Senator Dole

Question No. 1. What is your experience in the development of collaborative rela-
tionships in which nurse practitioners and others work with primary care physi-
cians in rural settings?

Answer. I have had the opportunity to work with physician assistants and nurse
practitioners in a practice setting in a community health center. The Department
of Family Medicine is currently responsible for a large segment of the medical stu-
dents' education. This occurs at the end of the second year (a three week rotation
in a rural hospital), during the fourth year (an eight week family practice rotation
in rural settings) and at the end of the fourth year (a four week rotation, again in
a rural community hospital setting). During these periods, our students have the
opportunity to work with all the disciplines — nurses, nurse practitioners, physician
assistants, laboratory and x-ray personnel and hospital administrators. It is during
these rotations that our students learn to work in a collaborative relationship with
primary care physicians, nurse practitioners and the whole spectrum of allied health
disciplines.

Question No. 2. Where are the specialists who practice in North Dakota Generally
trained?

North Dakota has residency training programs in Family Medicine (four pro-
grams), Internal Medicine, Psychiatry and a small Surgical program. Training in
the remainder of the subspecialties must be received out of state.

Question No. 3. Obviously your success in meeting the needs of those in North
Dakota was largely a result of your ability to design your own program.

In your view, is the answer to the bigger, nationwide problems that face us, a na-
tional cap on residencies with a mandatory allocation of slots? Or should we simply
remove some of the financial incentives to choosing a specialty and remove the bar-
riers for those who want to set up consortia like your own.

Answer. The answer to question number three would be the second option, "Re-
move some of the financial incentives to choosing a subspecialty and remove the
barriers for those of us who want to set up a consortia such as the North Dakota
Center for Graduate Medical Education." There is also a rationale for building in
financial incentives for primary care residency programs.

Communications

Statement of the American Academy of Family Physicians

On behalf of the over 77,000 members of the American Academy of Family Physi-
cians, please accept this submission for the record of the hearing of the Senate Fi-
nance, Committee held on March 8, 1994. We are privileged to have this opportunity
to express our views on the physician workforce issues raised in the Health Security
Act.

Despite a substantial and sustained investment in physician training by the fed-
eral and state governments and the private sector, there is a growing disparity be-
tween the product of medical education and the health care needs of society. The
emergence of the health system reform movement has highlighted the fact that, in
addition to having the highest per capita health care costs, the U.S. health care sys-
tem has the lowest proportion of generalist physicians in the developed world. The
evidence linking excess costs to the extreme over-specialization of the U.S. physician
workforce has been corroborated in a number of recent studies. Furthermore, the
specialty imbalance is steadily worsening. According to projections recently pub-
lished by the Council on Graduate Medical Education, without changes in the' cur-
rent physician training pipeline, by the year 2000 there will be a shortage of 35,000
generalist physicians and a surplus of 115,000 specialist physicians. It is eminently
clear that if health system reform is to provide universal access to appropriate care
within reasonable cost constraints, the proportion of generalist physicians' in prac-
tice must be substantially expanded.

Over the past few years there has emerged a growing consensus regarding the
need to correct the specialty imbalance (currently 30 percent primary care and 70
percent non-primary care) to one in which there is an even balance between primary
care and non-primary care. Organizations supporting a one-to-one ratio between
generalists and specialists include the American Medical Association, the American
College of Physicians, the Council on Graduate Medical Education, the Association
of American Medical Colleges, the Physician Payment Review Commission, and oth-
ers. The existence of a consensus on the need to correct the specialty imbalance is
especially important because the efforts to achieve a balance will require significant
changes in current federal policies and aggressive new interventions. These inter-
ventions are controversial because they challenge the status quo, but they are essen-
tial if we are to achieve affordable and universal access to comprehensive health
benefits.

PROVISIONS in the HEALTH SECURITY ACT

The mix of physicians currently produced by the U.S. medical education system
is a direct reflection of the financial incentives in the federal programs supporting
these activities. Specifically, the strong inpatient bias in Medicare's graduate medi-
cal education support and Medicare's traditional over-reimbursement of procedural
services have powerfully influenced the distribution of the physician workforce to-
ward the procedurally oriented subspecialties. Ironically, while the market for medi-
cal care increasingly demands more primary care services, the market facing medi-
cal educators continues to provide powerful incentives to produce physicians nar-
rowly trained in subspecialty fields. Changing the specialty mix of the physician
workforce will require a reversal in the current incentives and establishing a mean-
ingful connection between the market for medical care and the market for medical
education.

The Academy is pleased that provisions of the Health Security Act related to the
physician workforce constitute a substantial redirection in current federal graduate
medical education (GME) policies. Section 3001 of the Act establishes a National
Council on Graduate Medical Education within the Department of Health and

(88)

Human Services. The National Council is required to allocate the designated annual
number of specialty positions nationwide among eligible programs on the basis of
medical need. At least 55 percent of individuals completing eligible programs must
be in primary care (Section 3012). Furthermore, the National Council is required to
reduce the total number of residency positions.

Section 3013 of the Act requires that the historical distribution of specialty posi-
tions among different areas of the country and the quality of each of the programs
be included among the factors considered in making allocations among programs.
It also provides incentives to increase the number of under-represented minorities
in the field of medicine.

With respect to GME funding, approved physician training programs must agree
that the number of enrollees in their programs will be in accordance with national
goals (Section 3011). The definition of an approved physician training program is
expanded to include programs based in ambulatory settings whether or not they
also provide inpatient hospital services.

Section 3033 of the Act establishes an all-payer health professions workforce ac-
count for making payments to eligible programs. Payments are based on the na-
tional average of the costs of training residents and will be made directly to the pro-
gram. In addition, Section 3051 takes into account the short-term strain this shift
will place on some subspecialty training centers by authorizing payments to provide
transitional support to institutions that lose residency positions.

In addition to the Act's provisions related to direct GME support, Medicare's cur-
rent indirect GME support is replaced by federal formula payments to teaching hos-
pitals and to academic health centers to cover their specialized teaching costs (Sec-
tions 3101-3103). These funds would be distributed in proportion to the product of
their relative gross receipts for patient care and Medicare's current indirect teaching
adjustment. The Secretary is required to report to the Congress by July 1,1996, with
any recommendations for allocating funds among centers. Medicare payments for in-
direct graduate medical education costs are terminated on October 1, 1995. Funds
for the annual academic health center account are to come from Medicare, corporate
alliances, and regional alliances.

Section 3071 of the Act establishes or strengthens existing programs with respect
to training primary care physicians. This new focus will include programs (1) to re-
train mid-career physicians previously certified in a non-primary care specialty; (2)
to expand the supply of physicians with special training to serve in medically under-
served areas; (3) to expand the training of under-represented minorities and dis-
advantaged persons; (4) to expand service-linked educational networks for training
in community settings; (5) to provide training in managed care, practice manage-
ment, continuous quality improvement, and culturally sensitive care; and (6) to en-
hance information on primary care workforce issues. These programs are to be car-
ried out through existing programs in Titles VII and VIII of the Public Health Serv-
ice Act.

We believe that the Act contains important and essential reforms for achieving
an appropriate balance between generalist and specialist physicians. Except for a
few small, categorical programs authorized under Title VII of the Public Health
Service Act, the current system of funding physician training is characterized by
open-ended financing and a complete abdication of accountability for the expendi-
ture of billions of public dollars. Furthermore, no developed nation has been able
to achieve an appropriate supply and specialty mix of physicians without taking a
much more prescriptive and targeted approach than is currently taken in the U.S.
The physician workforce provisions in the Health Security Act are an important step
toward achieving this end for our nation.

DEFINITION OF PRIMARY CARE

As this committee grapples with strategies for meeting the demand for primary
care service, we urge that primary care not be trivialized in the process. The Act
defines primary care as the specialties of family practice, general internal medicine,
general pediatrics, and obstetrics and gynecology. The inclusion of obstetrics and
gynecology is contrary to most definitions of primary care and may compromise ef-
forts to address the severe maldistribution of physicians by specialty.

The fact that ob-gyns provide certain services that are within the domain of pri-
mary care is well recognized. However, the commonly accepted definition of primary
care incorporates a much broader range of skills and knowledge than is present in
the practice of most ob-gyns or in their training. As defined by the Council on Grad-
uate Medical Education, primary care entails first-contact care of persons with un-
differentiated illnesses, comprehensive care that is not disease or organ specific,
care that is longitudinal in nature, and care that includes the coordination of other

health services. In its fullest sense, primary care includes the assessment and eval-
uation of signs and symptoms initially presented by the patient, the management
of acute and chronic medical conditions, the identification and appropriate referral
of patients with conditions requiring specialized care, and the provision of health
promotion and disease prevention services. While a number of providers receive
training in and typically provide some important aspects of primary care, it is only
the primary care specialties of family practice, general pediatrics, and general inter-
nal medicine that are specifically and fully trained to provide the broad range of
primary care competencies. The ob-gyn literature clearly acknowledges the limited
role of ob-gyn in the provision of primary care.

As the definition of primary care is used in the Health Security Act, it dictates
a substantial redistribution of training funds among physician specialties. Because
the role of the ob-gyn in primary care is limited, efforts to improve access to primary
care will be diluted by including ob-gyn in the definition of primary care. Increasing
the training funds for ob-gyn will not substantially improve the number of providers
of primary care services. Furthermore, including ob-gyns in the definition of primary
care suggests that there are available many more primary care physicians than is,
in fact, the case.

It is commonly understood that many women may, by personal preference, choose
to obtain the majority of their routine health care from an obstetrician-gynecologist
during certain periods of their lives. This is clearly an option that will be preserved
under the mandatory fee-for-service plans, and it is expected that many managed
care entities will allow women to utilize an ob-gyn routinely. The larger issue is im-
proving access to primary care services. An important part of addressing this issue
is training more primary care physicians, which can best accomplished by leaving
undiluted the current definition of primary care (family medicine, general internal
medicine, and general pediatrics).

We believe it critically important that the traditional definition of primary care
(family medicine, general internal medicine, and general pediatrics) be retained.

IDENTIFYING PRIMARY CARE TRAINING PROGRAMS

An issue related to the definition of primary care is the criteria by which primary
care residency programs are identified. In order to accurately allocate approved resi-
dency positions between primary care and non-primary care specialties, there must
be some assurance that graduates of primary care residency programs actually enter
primary care practice. A varying proportion of physicians who complete residency
training in the primary care specialties elect to subsequently enter subspecialty
practice. For family medicine residency graduates this proportion is less than five
percent. For internal medicine and pediatrics, the proportion of residency program
graduates who elect subspecialty practice ranges from thirty to sixty percent or
more.

In order to identify those internal medicine and pediatric residency programs that
are dedicated to producing physicians who actually enter primary care practice, the
Academy supports a two-pronged approach. The regulatory criteria that are cur-
rently employed to identify programs eligible for support under Title VII of the Pub-
lic Health Service Act are sufficiently stringent that programs identified with these
criteria tend to produce a relatively high proportion of primary care physicians.
These criteria include faculty experienced in general internal medicine and general
pediatrics, selection of trainees who have applied specifically for a generalist pro-
gram, the use of ambulatory training settings, the provision of continuity of care to
a patient population in each year of training, and a planned curriculum emphasiz-
ing primary care.

An alternative outcomes criterion would be employed in the case of training pro-
grams that do not meet the current Title VII regulatory criteria. Training programs
would be eligible for designation as a primary care program if over a three year pe-
riod an average of 80 percent of its graduates have entered primary care practice
three years after completing residency training.

COMPOSITION OF NATIONAL COUNCIL ON GRADUATE MEDICAL EDUCATION

Section 3001 of the Act specifies that the membership of the National Council on
Graduate Medical Education be representative of consumers, medical school faculty,
physicians in private practice, health alliances and health plans. Curiously, in a
council that is devoted to overseeing graduate medical education, there is no re-
quirement for representation from physicians who are faculty in residency pro-
grams. We strongly recommend that faculty members of generalist residency pro-
grams be specified for membership on the National Council in lieu of faculty mem-
bers of medical schools.

CAP ON AGGREGATE NUMBER OF TRAINING SLOTS

Section 3012 of the Act requires the National Council to ensure that the total
number of residency positions be reduced to a number that bears a relationship to
the number of graduates of U.S. medical schools and takes into consideration the
need for additional physicians. Implicit in this provision is a broad consensus on an
aggregate surplus of physicians in the U.S. The U.S. Bureau of Health Professions
projects an overall surplus of 80,000 physicians by the year 2000, rising to a surplus
of 200,000 by the year 2020.

Due to the long length of the physician training pipeline, any limit on the number
of residency positions will not have a perceptible impact on the physician supply for
well over a decade. Because of the size of the physician surplus, the Academy be-
Heves that the Health Security Act should specify a tighter limit on the number of
first year residency slots than is currently provided. Specifically, there should be es-
tablished an initial limit on the number of first-year allopathic and osteopathic resi-
dency positions of no more than 110 percent of the number of 1993 U.S. allopathic
and osteopathic medical school graduates. As part of its on-going duties the Na-
tional Council on Graduate Medical Education should develop and propose rec-
ommendations to revise the limit on residency slots by the year 2000. This rec-
ommendation is consistent with one recently proposed by COGME. The change lies
in fixing the aggregate number rather than letting it float based on the number of
graduates produced by the medical schools. According to COGME, it would reduce
the number of approved positions from 24,000 to 19,000, and would result in a level-
ing of the growth of the physician supply relative to population by 2010.

SUPPORT FOR AMBULATORY AND PRIMARY CARE TRAINING

The Academy believes that graduate medical education funding must be revised
in a manner that recognizes the changing realities of medical practice. An increas-
ing proportion of medical care is now delivered in the ambulatory setting. As a re-
sult, inpatient hospital utilization has steadily declined. In contrast, current GME
funding is, for all practical purposes, only available to inpatient institutions and
provides powerful incentives to focus on training in inpatient care. If the U.S. physi-
cian workforce is to be responsive to actual health care needs, the health system
must provide substantially greater support to ambulatory training. In this regard,
the workforce provisions of the Health Security Act are a good start, but they could
be substantially improved.

As noted above, the Health Security Act proposes to establish an all-payer GME
fund based on a national average per-resident training cost. Currently, Medicare di-
rect GME payments are based on cost reports submitted by each sponsoring institu-
tion, and per residents amounts range widely from approximately $10,000 per year
to well over $100,000 per year. Establishing a national average per resident cost
helps address this unjustifiably wide variation in direct GME payments. However,
training in the ambulatory setting is substantially more expensive than training in
the inpatient setting. We are concerned that payments based on average per-resi-
dent training costs will be inadequate to support residency programs that contain
a large ambulatory component. Typically, it is the primary care specialties that em-
phasize ambulatory training.

Our concern regarding inadequate direct GME payments based on a national av-
erage per-resident amount is heightened by the Act's provision related to indirect
payments. As noted above, support for indirect teaching costs will continue to be
funneled exclusively through inpatient facilities and will do little to support the am-
bulatory training of primary care physicians.

In order to adequately fund ambulatory and primary care training, it will be nec-
essary to direct a larger proportion of the GME funding in the Health Security Act
to programs in the primary care specialties. The Academy recommends that Section
3033 be amended so as to up-weight direct pa3rments to primary care residency pro-
grams by a factor of two. Payments to programs in the non-primary care specialties
would be adjusted to achieve budget neutrality.

CONSORTL\

Section 3013 of the Health Security Act requires the National Council on Grad-
uate Medical Education to allocate the designated annual number of specialty posi-
tions nationwide among eligible training programs. We believe that after setting na-
tional goals related to the aggregate number of training positions and the primary
care — non-primary care mix of specialties, the actual allocation of approved posi-
tions to training programs should be accomplished through a more decentralized
process. Specifically, the Academy supports the allocation of residency positions to

be funded and the distribution of GME training funds through regional or state
training consortia operating within broad national goals related to the aggregate
number and specialty mix of training positions. GME training funds should be dis-
tributed to the legal entity sponsoring the residency program. This approach would
provide for more private sector involvement and would be more sensitive to local
needs.

Each consortium should be a non-profit entity broadly composed of all institutions
in the region or state that legally sponsor residency training programs. Other insti-
tutions with an interest in graduate medical education, such as medical schools,
may serve the consortia in an advisory capacity. Each consortium should be gov-
erned by a board of directors elected by the members of the consortium.

In regard to the specific role of medical schools in consortia, we note that only
one-third of family practice residency programs are administered by medical schools.
Many medical school environments socialize medical students away from career in-
terests in family practice. However, since medical schools will need to prepare stu-
dents for career choices in available residency positions, it is important that medical
schools be involved in consortia activities.

Two or more consortia should be allowed to enter into negotiations regarding the
distribution of residency positions such that the aggregate number and specialty
mix conform with national goals specified by National Council on Graduate Medical
Education. However, no consortium should have less than 40 percent of its approved
residency positions in the primary care specialties of family medicine, general inter-
nal medicine, and general pediatrics. This recommendation provides some limited
flexibility in meeting the national goal of 50 percent primary care. However, it es-
tablishes a floor of 40 percent, below which no consortium can fall. This floor is es-
tablished to emphasize the shift; to a primary care-based model of health care deliv-
ery in all areas of the country, and the necessity for all medical education and train-
ing institutions to be directly involved in meeting the public's need for primary care
physicians.

Within the limitations set by the Act, the National Council on Graduate Medical
Education sets national goals related to the aggregate number of residency positions
and the minimum percentage of positions in the primary care specialties. Except as
noted below, consortia would approve residency positions in a manner that is con-
sistent with national goals and responsive to the need for medical care within the
state or region. NCOGME should review consortia decisions related to the specific
number and specialty mix of approved residency positions for conformance to na-
tional goals. In addition, NCOGME may modify national goals related to specific
specialties that remain in under- or over-supply. This provision recognizes that in
certain very narrow specialties, training programs prepare graduates for a national
rather than regional market. It establishes a mechanism to address a situation
wherein the aggregate decisions of all consortia fail to address current or projected
shortages of physicians in specific specialties. For example, it may be that in the
aggregate consortia fail to provide for a sufficient number of training positions in
preventive medicine or child psychiatry. NCOGME should be able to make specific
modifications in national goals and negotiate with specific consortia to ensure that
such shortages are addressed.

SUPPORT FOR FACULTY DEVELOPMENT

The vast majority of family practice residency program graduates enter clinical
practice. Consequently, a major impediment to the expansion of family practice resi-
dency programs is a shortage of trained and experienced faculty. The Academy be-
lieves that among the related programs established in Section 3071 should be a sub-
stantial expansion in the funds available for primary care faculty development. This
is a critical variable in successfully accomplishing the goal of increasing the produc-
tion of family physicians.

PRIMARY CARE RESEARCH

In Sections 3201 and 3202, the Health Security Act establishes new health re-
search initiatives in health promotion and disease prevention and health services
research. While these are important, the Act omits a highly relevant and to date
largely ignored area of primary care research.

For the past 30 years, over 95 percent of all medical conditions have been evalu-
ated and treated outside of hospitals. However, the traditional focus of medical edu-
cation and research has been on medical problems in referred and hospitalized pa-
tients. Thus, the training of physicians and the research agenda have focused al-
most exclusively on inpatient rather than outpatient evaluation and treatment.

The National Institutes of Health and the Agency for Health Care Policy and Re-
search have given only the most limited attention to primary care research. A Sec-
tion 3203 should be added to specify a third focus for new funding for research in
primary care, which is defined as research related to better assisting the generalist
physician in diagnosis and treatment of the undifferentiated patient population
treated in the ambulatory care setting.

Priority areas for primary care research should include:

• Research to better understand the role of diagnosis in family practice and pri-
mary care so as to assist the generalist physician with evaluating the myriad
symptoms of the patient, differentiating self-limited diseases from those requir-
ing ongoing or intensive treatment and initiating effective treatment. The tan-
gible benefits of such research could streamline the diagnostic process, increase
accuracy, and reduce the use of expensive and potentially dangerous medical
tests.

• Research to improve the effectiveness of medical care as the physician, in col-
laboration with the patient, designs and implements an effective treatment that
reconciles the idiosyncrasies, preferences and the needs of the patient with the
realities of the illness.

• Research to improve access to health care and the cost-effectiveness of care fo-
cusing on the role of frontline, generalist physicians.

PHYSICIAN RETRAINING

There is a clear consensus on the need to train more generalist physicians as well
as to provide incentives for more medical students to choose generalist careers. We
believe that priority must be given to the support of generalist graduate medical
education programs and those elements of the undergraduate medical school envi-
ronment that influence student career choices. However, the large pool of excess
subspecialty physicians, if provided with appropriate training in the primary care
competencies, constitutes another potential short-term solution to the shortage of
generalist physicians.

Few models for physician "retraining" currently exist. Short, continuing medical
education programs provide little quality assurance and no generally accepted meas-
ures of competence. Longer, GME programs, at the other extreme, lead to board cer-
tification, but take a minimum of two to three years and are oriented toward recent
medical school graduates rather than to limited specialists who seek retraining.

A host of retraining issues remain unresolved. Are there alternative retraining
models shorter than full board certification, but with more assurance of competence
than continuing medical education courses? Can limited specialists be retrained into
generalists on a part-time basis in less than two years while maintaining an income
sufficient to meet personal financial obligations? What are the primary care com-
petencies that should be taught to such a group? How can appropriate candidates
for retraining be identified and how can their individual educational needs be ad-
dressed? How much demand will there be from limited subspecialists to undertake
retraining? Given the chronic shortage of family practice residency program faculty,
who will be available to teach retrainees? By what processes will the competency
of retrainees be evaluated? Will retrainees be eligible for board certification?

Based on the relatively limited data that exist on physician retraining, the Acad-
emy recently developed the following recommendations.

First, family practice residency training leading to board certification should be
promoted as the prototype model for training physicians seeking skills in primary
care. Second, flexible part-time models of residency training should be developed
and promoted. Third, new curricular models geared to meeting the individual train-
ing needs of physicians entering family practice residency education should be devel-
oped and encouraged. Fourth, managed care delivery systems should be encouraged
to develop flexible and part-time retraining models within family practice residency
programs.

Fifth, the capacities of family practice residencies should be expanded with added
resources to provide focused primary care educational opportunities for physicians
that do not lead to board certification. This model of "on-the-job" continuing medical
education may be through short courses (mini-residencies) or longer part-time pro-
grams.

Sixth, federal GME support should be available for all residents enrolled in family
practice residency programs, regardless of previous training. Seventh, the Public
Health Service should support demonstration projects in physician retraining with
funds in addition to those already committed to the training of physicians through
Title VII. e F J' e

DlJO I UN rUDLIl^ LIbMAHY

^^ 3 9999 05706 6720

Finally, HMOs and other managed care organizations should be encouraged to de-
velop family practice residency programs.

CONCLUSION

We appreciate the opportunity afforded us by the committee to comment on the
physician workforce issues in the Health Security Act. It is not possible for us to
emphasize strongly enough that workforce reforms are essential to the success of
health system reform, no matter what your vision of health reform might be. We
look forward to working with the Congress in addressing these and many other im-
portant health care issues.

ISBN 0-16-046649-0

9 780

60M66496

000

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Full text of "Medical education and the supply of health professionals : hearing before the Committee on Finance, United States Senate, One Hundred Third Congress, second session, March 8, 1994"

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