One of the major issues that we face going forward is how to be true to our core educational mission while at the same time meeting the needs of Bennington Hospital, the Southwestern Healthcare Network, and the broader Abington community. This is becoming increasingly difficult with the rising number of indigent patients, our relatively recent integration into the Southwestern Network, and the constant struggle we face as a community-based program to recruit and maintain faculty. We also need to continue to enhance the partnership between Bennington and AMEP and to design systems that satisfy all the stakeholders involved.

Mary W. Bethridge, MD, residency Program Director for Internal Medicine at Bennington Hospital, was discussing some of the issues that faced her program and the Abington Medical Education Programs (AMEP), of which her program was a part. She continued:

One of the issues that we continue to analyze is how to distribute the various revenues streams that come into the network in a way that is fair to all parties. Between our unique relationship with the City of Abington and the evolving relationship between Bennington and ourselves, there is some confusion about the intent of some of the revenue that comes in and, just as importantly, some disagreements around who should bear the costs of the various activities that the money is meant to cover. Right now, we have a negative bottom line, but it may appear worse than it actually is. For example, we have a lot of costs in our budget that are related to indigent care. This is problematic because it makes it seem like education is very expensive, when in fact it may have more to do with the indigent care we provide. As a program director, I worry about this and the impact it might have on my program. I know that I have to have a really good understanding of the costs of my program, as well as the benefits that it brings to Bennington and to the Southwestern Network.

Henry Byron, MD, Medical Director of AMEP, echoed Dr. Bethridge’s concerns.

I have been focusing a lot of my efforts on the business aspects of AMEP. Obviously, we are always concerned with the quality of the educational program; that is a given. As far as things beyond that, our situation is a little unusual because we have only been a part of the Southwestern network for a relatively short time and because of that we are still in the stage of getting acquainted with one another. We need to improve the financials but also continue the educational mission. Everyone is challenged financially in undergraduate and graduate education. We need to have our financial ducks in a row, so to speak, so we can convince Southwestern that we add value to them and that they are getting their money’s worth.

A complication is that the education and the patient care are so inextricably linked that I find it difficult and somewhat artificial to separate the two. Nevertheless, one of the things we have been trying to do . . .

Assignment

1. Exhibit 2 shows $7 million on the line “Interns & Residents - Other Program.” What is the source of this figure? Is it appropriate that this cost center be treated as a service center? If so, why? If not, what rationale would you use for classifying it as a production (revenue) center? Are there other options for the treatment of GME on this report?
2. How do you think the faculty salaries and contract services amounts on Exhibit 5 were determined? What kinds of activities do you think are included in these amounts?
3. How closely do you think the DME and IME payments come to the cost of graduate medical education at Southwestern? Where, if at all, do you think there might be slippages between the “real cost” of GME and the payments that are made to cover it? In answering this question, please address the relationship between GME and indigent care. Is the funding for the two activities structured appropriately? If not, how would you change it?
4. Dr. Bethridge has indicated an interest in having a good understanding of the costs and benefits of her program. Does she have it? If not, what additional information would you recommend she obtain and from where?
5. Assuming she can obtain the information you recommend in your answer to Question 4, how should Dr. Bethridge use this information to “market” GME to its various constituencies?