Medical schools fund medical education in different ways. Some medical schools are part of academic health centers with multiple missions and many sources of revenue. Other medical schools have a single mission (education) and fewer, perhaps only one, source of revenue.
The traditional allopathic medical school in the United States balances the missions of medical student and resident education, research, and patient care. Each mission requires funding, which is derived from various sources, none of which cover the total bill. The tuition paid by medical students generally does not cover the full cost of their education. The federal government provides funding for the majority of but not all residency positions. And research grants support about 70% of the research costs. Some medical schools make up part of the difference with money received from their state, but that funding has generally decreased over the last five to ten years. Fundraising initiatives and endowments fill in a bit more of the pie.
This funding model carries the advantage of diversification: having several funding streams provides peace of mind that at any given time, there will be a healthy pipeline to support medical education, despite ebbs and flows in any one stream’s health. This model also theoretically relieves tuition pressure from students, giving some schools the ability to provide essentially subsidized medical student education in the form of lower tuition.
But what if those funding streams are running dry? Traditional US allopathic medical schools have seen decreases in state funding (if it was available at all), and research funding has tightened and become more difficult to secure. At the same time, funding for residency programs has remained stagnant, despite calls from an alphabet soup of advocacy groups and industry organizations to increase it. And no surprise, fundraising initiatives and endowments have dropped during the recent economic depression.
Over the years the critical role of patient care in the funding of medical education has increased. How these dollars derived from patient care flow into medical education depends on the level of integration between the medical school and the clinical operation. If the clinical operation is part of the medical school, revenue is directly captured. If the medical school and the clinical operation are tightly affiliated, there may be a Dean’s tax or support payment from the clinical entity to the medical school. This can be quite complicated, but in its simplest form, in most medical schools that have multiple missions, education and research cost more than they generate. Clinical operations—put simply: patients—is designed to fill most of the remaining gap. No margin, no mission, or so the saying goes. Yet even clinical revenue—long the giant slice of the pie—has been challenged with decreasing reimbursements and changes in the payer-mix in many locations.
So now what’s filling in the rest of the pie? At most schools, tuition increases. According to AAMC, the median first-year cost of tuition and fees for in-state students at US public medical schools nearly tripled between 2000 and 2012; for in-state students at private US schools, the median cost for tuition and student fees has grown from about $28,000 in 2000 to over $48,000 in 2012. This trend is quite concerning. We can lay it at the feet of the economy and point our fingers at the government, but I think we have to consider looking at the traditional allopathic school model. What looked like diversification in healthier economic times now appears to be a dangerous interdependency, the worst case scenario of which is patients bear the brunt for educating tomorrow’s physicians. Is this sustainable? 
There is another model, less commonly employed, and full disclosure: American University of the Caribbean School of Medicine uses this model. This is the model predominantly used by private sector medical schools like ours: a single mission of education. At AUC there is one major source of revenue, student tuition, which at a non-subsidized level covers the cost of medical education while remaining in line with what students would expect to pay to attend private or out-of-state U.S. schools.
The advantages of this model are simplicity and sustainability. At AUC we can easily determine the cost of educating a medical student because all costs are devoted to medical student education. There are no margin/mission debates. There are no overlapping missions—“Am I being paid to treat this patient or teach these students?”—and therefore no challenges in deciding how to allot costs. Understanding the actual cost of educating a medical student is of critical importance in developing a working financial model. Just as important: our faculty are 100% certain of what they are on our campus to do: educate students.
In our model, student tuition covers the cost of their education. The model remains sustainable until the costs of medical education are so high that students cannot pay them. Because we understand the actual cost of medical education, we have great insight to determine how to look at lowering the costs of that education.
Although non-subsidized tuition is theoretically higher than subsidized tuition, it is important to consider who should actually bear the cost of a medical education. In a subsidized model, like that employed by traditional U.S. allopathic medical school, taxpayers and patients bear the additional cost. In our model—in which the cost of medical education is not subsidized by patient care or state funding—the student bears the cost. Our job—our responsibility to each student—is to deliver a medical education that is worth their burden. I believe there is a great benefit to them and to us in that being our only job: the teaching and mentoring of medical students.

Dr. Heidi Chumley

Posted March 20, 2014 02:14 PM

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