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Shrinking budgets, new ACGME rule changing stipends

The fallout could range from lower stipends for popular subspecialties to lum-sum lures

From the March 1997 ACP Observer, copyright 1997 by the American College of Physicians.

By Christine Wiebe

While stipends for residents rose slightly during the past year, a change in accreditation guidelines could change how—and how much—training programs pay their residents.

Despite continuing pressures on teaching hospitals to cut costs, first-year housestaff stipends in the last year rose 3.6%, bringing the national average to $32,789. The rise, documented in an annual survey by the Council of Teaching Hospitals (COTH), outpaced inflation and continues a recent upward trend in resident pay.

But that gradual earning trend may be a thing of the past for some residents. Beginning this fall, new accreditation guidelines will allow hospitals and other teaching institutions to offer different stipends to residents in different specialties by applying a differential to housestaff base stipends. The new rule, which was spurred by federal antitrust concerns over the way that training programs set resident stipends, comes from the Accreditation Council for Graduate Medical Education (ACGME) and affects training programs in all medical specialties.

The idea of paying residents in different specialties differently is not an entirely new one. In the past, primary care specialties have discussed offering higher stipends to attract more residents, and some programs already offer bonuses that effectively raise residents' pay. The COTH survey, for example, found that about 16% of teaching hospitals provide recruitment incentives, such as loan repayment assistance or simple bonuses. About half of those institutions said the incentives differed by specialty.

Training programs have also long found other ways to skirt ACGME's guidelines on housestaff pay. Some, for example, have paid their subspecialty fellows less than residents by defining them as staff members—and freeing them from ACGME's guidelines on stipends.

Assessing the impact

Nonetheless, experts fear that the new accreditation rule might change the way that training programs pay—and try to attract—housestaff. "This could open the door to differentials in a way that we haven't seen before," said Ingrid Philibert, author of the COTH survey.

Experts point out that to officially establish pay differentials in residents' base pay, teaching hospitals need to get approval from their graduate medical education committees. John Gienapp, PhD, executive secretary of the ACGME, expressed doubt that the new rule will prompt immediate changes. "There are lots of reasons for keeping stipends fairly much the same," he said, pointing to the ill will that can occur between departments as a primary reason.

However, some residency directors who already feel pressure from shrinking budgets worry that the new ACGME rule will increase the competition for residents. For instance, medical students who are interested in primary care might be swayed to choose family practice instead of internal medicine if those residency programs began paying more, suggested George Reisz, FACP, program director for internal medicine at the University of Missouri, Kansas City School of Medicine. "Medical students now come out with such incredible debts that I think stipend levels could influence them," he said.

The new rule highlights disagreement over the effect that stipends have on medical students. Conventional wisdom has long dictated that the quality of a program, not the amount of the stipend, is most important in choosing a training program. "For residents, salary is not as important as where they train," Dr. Gienapp explained. Because their training has such an impact on their careers, he said, "residents will still choose better places than those with more money."

But Paul Jung, MD, legislative affairs director for the American Medical Student Association, said that in situations in which programs offer similar training experiences, significant differences in stipends could be the deciding factor.

The very idea of comparing training programs on the basis of stipends may be a new experience for many medical students. Arash Naeim, ACP Associate, a second-year internal medicine resident at UCLA, said that most students do not even ask about stipends when interviewing for residency. Even if they were interested in comparing pay, he said, medical students would need to consider factors such as annual increases and benefits to get the whole picture, something that few residency applicants are willing to do.

Feeling the squeeze

But that relatively laid-back attitude about stipend levels may change as managed care shrinks not only the budgets of teaching hospitals, but the stipends of residents too. A significant portion of teaching hospitals have frozen or even cut their first-year stipends, many of them in areas with intense managed care competition, according to COTH researcher Ms. Philibert. (She noted that while there appears to be some correlation between cuts in stipends and the level of managed care in the area, more detailed studies are needed to draw a definite connection between the two.)

In Philadelphia, for example, where the average first-year stipend dropped to $32,906 during the last year, Pennsylvania Hospital froze stipends for all its residents, according to Louis Friedman, ACP Associate, chief resident in internal medicine. The stipend for first-year residents at the hospital is $33,780, higher than the city and national average, but residents were still upset to lose perks such as free parking privileges and health benefits like portable disability insurance.

Some program directors fear that this type of belt tightening will lead medical students to begin paying more attention to stipends. They note that pay levels and incentives may become even more influential factors for residents now that the deferment period for many federal loans has been reduced from two years to one year.

Some programs have already picked up on this sentiment; Dr. Friedman has heard of programs outside the city offering loan repayments to help fill empty slots. One program offered a lump payment of $ 6,500, Dr. Friedman said, a figure high enough to get many residents' attention, particularly those with high debts.

The good news for medical students going into internal medicine is that at most hospitals, internist trainees are essential—and may reap the benefits in the form of more pay. "The internal medicine residents at most hospitals will probably do OK," said Herbert J. Waxman, FACP, Senior Vice President for Education at the College. "No matter how tightfisted administrators may be, they aren't likely to do anything that will hurt recruitment of internal medicine residents. If you think of it from the hospital's perspective, internal medicine residents provide much of the care for really sick patients in the critical care units, something that the family practice residents aren't really trained to do."

Competing on the basis of stipends makes some educators nervous. At Thomas Jefferson University Hospital in Philadelphia, where stipends for some housestaff have been hit by budget-cutting efforts, some program officials fear that opening the door to pay differentials could tempt budget-conscious teaching hospitals to lower stipends in those programs that are most in demand, or even lead to accepting residents who were willing to work for free. "I think we're going to see those kinds of issues come to the fore," warned Thomas Nasca, ACP Member, vice chairman and program director for internal medicine at Jefferson.

The ACP's Dr. Waxman explained that such scenarios were common as recently as 10 years ago. Because of the laws of supply and demand, he said, subspecialties that could choose from a large pool of well qualified applicants routinely scaled back their pay for fellows. Residents looking for fellowships in subspecialties like cardiology and gastroenterology would sometimes offer to do their training for free so they could become eligible for the certifying exam. He predicted that some of the most popular surgical subspecialties—orthopedics and otolaryngology, for example—may soon encounter the same phenomenon.

Still, experts encourage residents to take a long view on their financial status, said COTH's Ms. Philibert. "Stipends seem relatively low based on how much [residents] work and how much they owe," she admitted. "On the other hand, they will recoup their investments," she added. "Doctors still have a higher earning potential than most people. " Christine Wiebe, of Providence, Utah, writes frequently on issues relating to medical residency.

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