Transferring hospital sponsorship of a family practice residency: financial implications

Family practice residency programs close each year, many in which there is a perception by the sponsoring institution that the program was too costly. Upon the imminent closure of a program's sponsoring hospital, we analyzed and projected the residency's budget and revenues to convince another community hospital to accept transfer of the sponsorship of the program. Revenues directly attributable to the residency (family practice center, grants, Medicare graduate medical education reimbursement) were identified. In addition, we identified that portion of new inpatient revenues necessary to offset the balance of the residency budget. We found that the program could account for reimbursement of 51.8% of its budget through patient care services, requiring 5.2% to be subsidized through state grants and 43.1% through federal graduate medical education reimbursement. Consistent with studies by several authors, family practice residency programs continue to require financial subsidy to balance their budgets. The nation's need for family physicians can only be ensured if state and federal priorities for needed primary health manpower are translated into continued and enhanced financial support.