The impact of graduate medical education on teaching hospital efficiency

This quantitative research study assesses the efficiency of university teaching hospitals in providing hospital services and graduate medical education, identifying areas in which inefficient teaching hospitals differed from their efficient counterparts. The study analyzed American Hospital Association (AHA) data from 2002 in order to examine the efficiency of Council of Teaching Hospital (COTH) hospitals. An efficiency frontier was determined using Data Envelopment Analysis, an effective method of measuring efficiency widely accepted within the health care management literature. The study found that the performance of teaching hospitals increased approximately 6.6 percent when graduate medical education (GME) was included as a key measure of output. Additionally, average excess operating expenses per hospital went from $29,447,581 without residents to $8,321,407 with residents. The average excess full-time employees decreased by 24 percent from 187 without residents to 143 with residents. Conversely, the shortage of outpatient visits increased from an average of 29,461 per hospital without residents to 36,155 with residents. This study clearly documents the need to include GME when benchmarking teaching hospitals. It also shows inefficient COTH hospitals could save approximately $1.6 billion in excess overhead expenses if they emulate the practices of the most efficient members.