The Economic Value of an On-Call Neurosurgical Resident Physician
Author: William Gordon, MD
Neurosurgical residency training is rigorous and provides a structured educational environment, which exposes trainees to broad clinical experiences in a setting of mentorship, continuous feedback, and graduated responsibilities. The United States Graduate Medical Education (GME) system continues to produce high quality physicians through its postgraduate training programs.
Currently, Medicare and Medicaid comprise the principal means of federal support for GME with total funding exceeding $15 billion per year.1 The landscape of GME funding is complex and the Institute of Medicine (IOM)1 and Medicare Payment Advisory Commission (MedPAC)2 have proposed significant changes to GME to improve financial transparency and accountability.
In an effort to curb increasing Medicare cost, Congress passed the Balanced Budget Act of 1997, which reduced GME funding by $9 billion and capped the number of Medicare funded GME residency positions at 1996 levels. Since that time, residency training programs have continued to expand in an effort to meet the public’s need for well-trained and qualified physicians. As a result, 65.6% of hospitals have exceeded the number of positions allocated by Medicare.3 Given the shortage of public funding and possible future cuts, programs should consider innovative adjuncts to bridge the gap between public funding and the actual cost to train residents.
When quantifying the overall financial effect GME has on a hospital system, one must consider direct and indirect benefits as well as costs. Support from GME includes funding to teaching hospitals via direct graduate medical education (DGME) payments and an indirect medical (IME) adjustment to Medicare prospective payment system (PPS) inpatient rates based on the hospitals’ volume of Medicare inpatients. DGME payments are intended to cover the salaries and benefits of residents, teaching faculty, program staff, administrative expenses, fees, etc. and can be explicitly measured. IME adjustments are focused on supporting the higher costs thought to be associated with providing patient care in a teaching hospital setting. These IME “costs” are more difficult to quantify, but may include increased ambulatory care costs,4-7 inpatient costs through increased operative times, increased length of stay,8-13 and increases in post operative infections.14
Indirect benefits to teaching hospitals include resident and academic faculty contributions to research, grants, publications, and innovative technologies. Also, the reputation of a teaching hospital system is generally elevated when coupled with residency training programs. A robust academic reputation can be financially beneficial to the medical center with regards to faculty recruitment and retention as well as the ability to generally offer lower compensation rates, which can represent significant cost savings to the hospital.
The educational experience provided by on-call duties during residency training is integral in the path to producing a fully independent and competent neurosurgeon. Activities performed by residents while on-call are financially quantifiable, but are not reimbursable under the current payment system.
In our paper, An Analysis of the On-Call Experience of a Junior Neurosurgical Resident, we found that a single junior neurosurgical resident at our institution saw 1,929 new patients in consultation and preformed 330 neurosurgical procedures and operations during 263 on-call experiences over the two-year study period.15 Using the data collected for our previous study, we recently published a follow-up article entitled, The Economic Value of an On-Call Neurosurgical Resident Physician, which quantifies the theoretical billing activity these encounters would produce.16
We found that a single on-call neurosurgical resident at our institution produced 8,172 work relative value units (wRVUs) over the two-year study period (4,086 annually), from indirectly and directly supervised activities.16 Indirectly supervised activities accounted for 7,052 wRVUs and included: consults, admissions, and placement of external ventricular drains (EVDs) and intracranial pressure monitors. Directly supervised procedures were defined as emergency operations occurring while on-call with the attending physician physically present. To provide a conservative estimate of the actual value of an on-call resident in these situations, we used only the primary Current Procedural Terminology (CPT) code and a modifier-80 (surgical assistant) to represent the resident’s contribution to the case, which allows an assistant surgeon to bill for 16% of the total billable amount of the operation. This resulted in an additional 1,120 wRVU for a single on-call resident over the study period (560 wRVU annually). Extrapolating these data to encompass all on-call neurosurgery residents in our program resulted in 39,550 wRVU produced over the two years from indirect and directly supervised activities, or 19,775 wRVU annually.16
Given the wide variation of reimbursement per wRVU and in order to assign a monetary value, we chose the 2014 Medical Group Management Association (MGMA) nationwide median reimbursement of $84.37 per wRVU for neurological surgery. This resulted in potential billing of $689,513 ($344,766 annually) for a single neurosurgery resident’s on-call duties and $3,336,772 ($1,668,386 annually) for our entire resident cohort.16
It is estimated that the direct cost to train a neurosurgical resident is $172,563 per year.17 As proposals for decreasing GME funding continue, along with increasing demand for competently trained physicians, the question becomes: can we afford to continue funding residency positions using the current model?
The resident training relationship is one that is mutually beneficial and the value of resident call coverage is different depending on the point of view. For the resident, on-call duties provide exposure to a broad range of neurologic pathologies15 and allow them to function with increasing levels of autonomy through direct and indirect supervision. It can also be financially valuable to hospitals and attending physicians.16 The value to a hospital can be estimated as the differential cost of hiring alternative coverage and the cost of resident coverage.3 Since non-physician providers typically earn a salary that is double that of residents18 while working approximately half the number of hours,19 a hospital may need to hire three or more non-physician practitioners to replace a single resident physician.3 Having on-call residents is also a benefit to the attending physician as it provides the convenience of not needing to be in-house during nonworking hours, as well as increasing operational efficiency by allowing him or her to be involved in higher- yield activities. Another, not so obvious beneficiary of resident work, are private insurance companies. Since attending physicians are prohibited from billing the Centers for Medicare and Medicaid Services (CMS) or private insurance companies for indirectly supervised procedures (performed by residents if the attending was not physically present), privately insured patients receive the benefit of care delivered by the resident physician at no cost to the insurance company.20,21
In our study, we found that neurosurgical residents could more than cover the estimated $172,563 in annual direct costs of their training from on-call activities alone if they were allowed to bill for these services. Also, insurance companies have demonstrated that they are willing to reimburse for operative assistants by paying an additional 16% and 13.6% of the surgical fee if the assistant is a physician or physician extender, respectively. If hospitals were allowed to bill insurance companies for resident physicians as assistants under the same modifier-80 guidelines as above, this would account for a significant source of funding to help cover the gap in current GME funding and the direct costs of training.
- Institute of Medicine. Graduate Medical Education That Meets the Nation’s Health Needs. National Academies Press; 2014.
- Medicare Payment Advisory Commission. Report to the Congress: Aligning Incentives in Medicare. Medicare Payment Advisory Commission; 2010.
- Wynn BO, Smalley R, Cordasco KM. Does it cost more to train residents or to replace them? A look at the costs and benefits of operating graduate medical education programs. RAND Corporation.
- Bowen JL, Irby DM. Assessing quality and costs of education in the ambulatory setting: a review of the literature. Acad Med. 2002;77(7):621–680.
- Charlson ME, Karnik J, Wong M, et al. Does experience matter? A comparison of the practice of attendings and residents. J Gen Intern Med. 2005;20(6):497–503.
- Jones TF, Culpepper L, Shea C. Analysis of the cost of training residents in a community health center. Acad Med. 1995; 70(6):523–531.
- Pauwels J, Oliveira A. Three-year trends in the costs of residency training in family medicine. Fam Med. 2006;38(6):
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- Bridges M, Diamond DL. The financial impact of teaching surgical residents in the operating room. Am J Surg. 1999; 177(1):28–32.
- Castillo A, Zarak A, Kozol RA. Does a new surgical residency program increase operating room times? J Surg Educ. 2013;70(6):700–702.
- Hwang CS, Pagano CR, Wichterman KA, et al. Resident versus no resident: a single institutional study on operative complications, mortality, and cost. Surgery. 2008;144(2): 339–344.
- Hwang CS, Wichterman KA, Alfrey EJ. The cost of resident education. J Surg Res. 2010;163(1):18–23.
- Reines HD, Robinson L, Duggan M, et al. Integrating mid- level practitioners into a teaching service. Am J Surg. 2006; 192(1):119–124.
- Uecker J, Luftman K, Ali S, Brown C. Comparable operative times with and without surgery resident participation. J Surg Educ. 2013;70(6):696–699.
- Seicean A, Kumar P, Seicean S, et al. Impact of resident involvement in neurosurgery: an American College of Surgeons’ National Surgical Quality Improvement Program database analysis of 33,977 patients. Neurospine. 2018;15(1): 54-65.
- Gordon WE, Gienapp AJ, Jones M, et al. An analysis of the on-call clinical experience of a junior neurosurgical resident. Neurosurgery. 2019;85(2):290–297.
- Gordon WE, Mangham WM, Michael LM II, Klimo P Jr. The economic value of an on-call neurosurgical resident physician. J Neurosurg. Published online Sept. 11, 2020. doi: 10.3171/2020.3.JNS193454
- Statement of the American Association of Neurological Surgeons, American Board of Neurological Surgery, Congress
of Neurological Surgeons, Society of Neurological Surgeons before the Institute of Medicine on the subject of ensuring an adequate neurosurgical workforce for the 21st century. American Association of Neurological Surgeons.
- Resnick AS, Corrigan D, Mullen JL, Kaiser LR. Surgeon contribution to hospital bottom line: not all are created equal. Ann Surg. 2005;242(4):530–539.
- Kenning TJ. Down the rabbit hole: attempting to decipher the value and salaries of neurosurgical residents. AANS Neurosurgeon. 2015;24(4).
- Feinstein AJ, Deckelbaum DL, Madan AK, McKenney MG. Unsupervised procedures by surgical trainees: a windfall for private insurance at the expense of graduate medical education. J Trauma. 2011;70(1):136–140.
- Stoller J, Pratt S, Stanek S, et al. Financial contribution of residents when billing as “junior associates” in the “surgical firm”. J Surg Educ. 2016;73(1):85–94.