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Financing Academic HospitalsSelect:
Academic Hospitals are those hospitals that have education programs for training physicians. They receive reimbursement from the same sources as other hospitals, with some exceptions. Medicare Direct costs. A hospital receives a sum of money for each resident being trained in a program approved by the Accreditation Council for Graduate Medical Education (ACGME). That sum includes the salary and benefits for the resident, as well as the physician faculty that must be supported to educate that resident. Recent adjustments to the federal fee schedule have rewarded hospitals for training primary care physicians. Payments for specialty training have been discounted. Indirect costs. This is designed to offset the additional costs to a hospital from having physician trainees such as additional diagnostic tests, therapeutic procedures, and hospital days that characterize physician training. The actual amount an individual hospital receives is determined under a complex formula. That formula includes both the reported costs of education as well as historical precedent. The amount of money an academic hospital receives can also be adjusted for the severity of
illness and indigency of its patient populations.
Medicaid Commercial Insurers Managed Care Overall costs are higher at academic hospitals than at community hospitals. When managed care companies are negotiating contracts with hospitals, they are comparing academic hospitals with community hospitals on two criteria: cost per case and "quality". In addition, they are not paying for graduate medical education of resident physicians. Cost per case is calculated by dividing the total costs of the hospital by the total number of hospitalized patients. This number is generally available. For example, in Chicago in 1998, the average cost per case for an academic hospital was in the range of $10,000-$12,000. The average for community hospitals was in the range of $6,000 to $8,000. Quality is determined in a number of ways. It is a matter of intense argument as to which measure, if any, is valid. On most measures, academic hospitals would argue that their scores are inaccurate because their case mix is different from community hospitals. They would say they care for more complex cases. Therefore, measures of mortality or morbidity are likely to be inaccurate. In order to avoid this quagmire, quality is also measured by patient satisfaction. There are
national surveys that hospitals use to measure patient satisfaction. These scores are generally
available and permit managed care companies to compare hospitals.
Government (Veterans Affairs, Active Duty Military) Next, consider the financing of subacute or skilled care. CAPC Resources:
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