Education costs in two public teaching hospitals

Area of Science:

• Health Economics
• Medical Education Administration
• Hospital Financial Management

Background:

• The Minneapolis and St. Paul health care environment experienced rapid growth and change.
• Understanding the financial impact of educational programs on teaching hospitals is crucial.

Purpose of the Study:

• To examine the impact of education costs on the overall expenses of two major teaching hospitals.
• To compare allocated education costs with hospital operating expenses, inflation, and educational programs.

Main Methods:

• Retrospective faculty-time study.
• Estimation of hospital education costs.
• Comparison of unit costs for medical students and residents.

Main Results:

• Allocated education costs averaged 13-14% of hospital operating budgets.
• The mean allocated cost per medical student and resident was approximately $73,000 in 1983-84.
• Education costs were in line with medical inflation and did not drive hospital expense increases.

Conclusions:

• Education programs are not a primary driver of rising hospital costs.
• Policymakers seeking to control healthcare costs should focus on factors other than education programs.