Background: The system of paying for graduate medical education is undergoing reform. As financing changes, understanding the costs of training family practice residents in the outpatient setting will be critical.
Methods: A financial model was used to analyze retrospective data from an existing residency and community health center linkage in Utah. Data from 1994 were used to estimate fixed and variable costs and income associated with the training program. The net cost of training residents was determined, as well as the cost of replacing their services with staff physicians.
Results: This outpatient program generated an average of $1,933 per resident in annual revenues above expenses. If staff physicians replaced residents in providing the same services, the health center would have generated an additional $5,033 per resident in income. If precepting faculty were paid rather than volunteer, the program would cost $7,912 per resident per year. Under baseline assumptions, an educational supplement of $9.52 per patient would be required for the residents to break even relative to staff physicians.
Conclusions: Graduate medical education reform will need to include provisions for reimbursing host facilities for the increased cost of outpatient care provided by residents.