[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]
EXAMINING THE CHILDREN'S
GRADUATE MEDICAL
EDUCATIONAL PROGRAM
_____________________________________________________________________
HEARING
BEFORE THE
SUBCOMMITTEE ON HEALTH
OF THE
COMMITTEE ON ENERGY AND
COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED NINTH CONGRESS
SECOND SESSION
___________
MAY 9, 2006
___________
Serial No. 109-87
Printed for the use of the Committee on Energy and Commerce
Available via the World Wide Web: http://www.access.gpo.gov/congress/house
___________
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28-657 PDF WASHINGTON : 2006
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COMMITTEE ON ENERGY AND COMMERCE
Joe Barton, Texas, Chairman
Ralph M. Hall, Texas John D. Dingell, Michigan
Michael Bilirakis, Florida Ranking Member
Vice Chairman Henry A. Waxman, California
Fred Upton, Michigan Edward J. Markey, Massachusetts
Cliff Stearns, Florida Rick Boucher, Virginia
Paul E. Gillmor, Ohio Edolphus Towns, New York
Nathan Deal, Georgia Frank Pallone, Jr., New Jersey
Ed Whitfield, Kentucky Sherrod Brown, Ohio
Charlie Norwood, Georgia Bart Gordon, Tennessee
Barbara Cubin, Wyoming Bobby L. Rush, Illinois
John Shimkus, Illinois Anna G. Eshoo, California
Heather Wilson, New Mexico Bart Stupak, Michigan
John B. Shadegg, Arizona Eliot L. Engel, New York
Charles W. "Chip" Pickering, Mississippi Albert R. Wynn, Maryland
Vice Chairman Gene Green, Texas
Vito Fossella, New York Ted Strickland, Ohio
Roy Blunt, Missouri Diana DeGette, Colorado
Steve Buyer, Indiana Lois Capps, California
George Radanovich, California Mike Doyle, Pennsylvania
Charles F. Bass, New Hampshire Tom Allen, Maine
Joseph R. Pitts, Pennsylvania Jim Davis, Florida
Mary Bono, California Jan Schakowsky, Illinois
Greg Walden, Oregon Hilda L. Solis, California
Lee Terry, Nebraska Charles A. Gonzalez, Texas
Mike Ferguson, New Jersey Jay Inslee, Washington
Mike Rogers, Michigan Tammy Baldwin, Wisconsin
C.L. "Butch" Otter, Idaho Mike Ross, Arkansas
Sue Myrick, North Carolina
John Sullivan, Oklahoma
Tim Murphy, Pennsylvania
Michael C. Burgess, Texas
Marsha Blackburn, Tennessee
Bud Albright, Staff Director
David Cavicke, General Counsel
Reid P. F. Stuntz, Minority Staff Director and Chief Counsel
________
SUBCOMMITTEE ON HEALTH
Nathan Deal, Georgia, Chairman
Ralph M. Hall, Texas Sherrod Brown, Ohio
Michael Bilirakis, Florida Ranking Member
Fred Upton, Michigan Henry A. Waxman, California
Paul E. Gillmor, Ohio Edolphus Towns, New York
Charlie Norwood, Georgia Frank Pallone, Jr., New Jersey
Barbara Cubin, Wyoming Bart Gordon, Tennessee
John Shimkus, Illinois Bobby L. Rush, Illinois
John B. Shadegg, Arizona Anna G. Eshoo, California
Charles W. "Chip" Pickering, Mississippi Gene Green, Texas
Steve Buyer, Indiana Ted Strickland, Ohio
Joseph R. Pitts, Pennsylvania Diana DeGette, Colorado
Mary Bono, California Lois Capps, California
Mike Ferguson, New Jersey Tom Allen, Maine
Mike Rogers, Michigan Jim Davis, Florida
Sue Myrick, North Carolina Tammy Baldwin, Wisconsin
Michael C. Burgess, Texas John D. Dingell, Michigan
Joe Barton, Texas (Ex Officio)
(Ex Officio)
CONTENTS
Page
Testimony of:
Nesseler, R.N., M.S., Kerry, Associate Administrator, Bureau
of Health Professions, Health Resources and Services
Administration, U.S. Department of Health and Human Services... 14
Magoon, Patrick, President and CEO, Children's Memorial
Hospital, Chicago, Illinois.................................... 32
Considine, Bill, President and CEO, Akron Children's Hospital,
Akron, OH...................................................... 38
EXAMINING THE CHILDREN'S
GRADUATE MEDICAL
EDUCATION PROGRAM
_________
TUESDAY, MAY 9, 2006
House of Representatives,
Committee on Energy and Commerce,
Subcommittee on Health,
Washington, DC.
The subcommittee met, pursuant to notice, at 3:00 p.m., in Room 2322
of the Rayburn House Office Building, Hon. Nathan Deal (chairman of
the subcommittee) presiding.
Present: Representatives Deal, Hall, Burgess, Brown, Waxman,
Pallone, Capps, and Baldwin.
Staff Present: Randy Pate, Counsel; Katherine Martin,
Professional Staff Member; Chad Grant, Legislative Clerk;
John Ford, Minority Counsel; and Jessica McNiece, Minority
Research Assistant.
Mr. Deal. The committee will come to order. The Chair recognizes
himself for an opening statement.
I'm proud to say that we have three expert witnesses who
are appearing before us this afternoon, who will help us
examine the issues related to the reauthorization of
enabling legislation for the Children's Hospital Graduate
Medical Education Program.
Children's hospitals are an important part of our country's healthcare
delivery system. They help improve by health outcomes by providing a
unique set of specialized healthcare services and treatment options
for children. As many of you know, this subcommittee has exclusive
jurisdiction over the CHGME program, and we are committed to being
good stewards of the program.
In all of my years of public service, I have never seen a
perfect government program, and the CHGME program is
certainly no exception to that rule. I firmly believe,
however, that it is possible to improve the efficiency and
the effectiveness of the program. To this end, I am
particularly interested to hear from our witness from the
Health Resources Service Administration about the
Administration's proposals to reform the way in which funding
is allocated under the program, and I am interested to hear
the reaction to those proposals from our two children's
hospital CEOs.
As we move forward with this reauthorization opportunity, it is my
sincere hope that we can improve the outcomes of the CHGME program
for the benefit of the children that these institutions serve.
At this time, I would like to ask unanimous consent that
all members be able to submit statements and questions for
the record, and without objection, it is so ordered.
[The prepared statement of Hon. Nathan Deal follows:]
Prepared Statement of the Hon. Nathan Deal, Chairman, Subcommittee
on Health
The Committee will come to order, and the Chair recognizes
himself for an opening statement.
I am proud to say that we have three expert witnesses
appearing before us this afternoon that will help us examine
the issues related to the reauthorization of enabling
legislation for the Children's Hospital Graduate Medical
Education Program.
Children's Hospitals are an important part of our country's
health care delivery system. They improve health outcomes
by providing a unique set of specialized health care services
and treatment options for children. As many of you know,
this Subcommittee has exclusive jurisdiction over the CHGME
program, and we are committed to being good stewards of this
program.
In all my years of public services, I have never seen a
perfect government program, and the CHGME program is no
exception. I firmly believe that it is possible to improve
the efficiency and effectiveness of this program. To this
end, I am particularly interested to hear from our witness
from the Health Resources Service Administration about the
Administration's proposals to reform the way in which funding
is allocated under this program. And I am interested to hear
the reaction to these proposals from our two Children's
Hospital CEO's.
As we move forward with this reauthorization opportunity, it
is my sincere hope that we can improve the outcomes of CHGME
program for the benefit of the children that these
institutions serve.
At this time, I would also like to ask for Unanimous Consent
that all Committee Members be able to submit statements and
questions for the record.
I now recognize the Ranking Member of the Subcommittee,
Mr. Brown from Ohio, for five minutes for his opening statement.
Mr. Deal. I am now pleased to recognize the Ranking Member of
the subcommittee, Mr. Brown from Ohio, for his opening statement.
Mr. Brown. Thank you, Mr. Chairman. Thank you to our witnesses,
all three of you, for joining us this afternoon.
I particularly want to thank Bill Considine, the CEO of Akron
Children's Hospital. I think he is the longest reigning CEO of
any children's hospital in the country now, despite his
youthful appearance. And Bill and several pediatricians at
Akron General taught me about this issue many years ago, before
anybody in this Congress knew about it, and talked about the
impending problem, as managed care squeezed children's hospitals
and all hospitals in their funding mechanisms, and what that
meant to GME, and the funding of pediatric training, especially
those pediatric specialists, many of whom are trained, some of
the best are trained in our freestanding children's hospitals
and other children's hospitals around the country.
In 1999, then Chairman Bilirakis and I introduced the
legislation that established this program. Last year,
Nancy Johnson and I introduced the pending reauthorization
program. Each year, many of us, including on this committee,
Mr. Waxman and Mr. Stupak, and I believe Ms. Capps and
Ms. Baldwin also, gathered signatures in support of an ample
appropriation for children's GME funding. This year, 218
members, a majority of this chamber, signed on.
Clearly, this program enjoys significant support in the
House. It is the same in the Senate. In fact, they have
already passed the reauthorization legislation. Now, it is
our turn. There is solid logic behind the support this
program enjoys. Historically, both Medicaid and most State
Medicaid programs have provided funding for graduate medical
education. Unfortunately, the Medicaid funding has never
been sufficient. It has never even been consistent across
different States, and now it is withering away as States
cut their Medicaid budgets and contract with managed care
plans unwilling to foot any of the GME bill.
Texas recently eliminated its Medicaid GME program. Other
States will likely follow suit. Medicare has always been
the larger of the two payers. It is a funding source upon
which hospitals depend, except that is, for children's
hospitals, especially those freestanding. My recollection
is that Akron Children's, for instance, they have a burn
unit which brings in some Medicare GME funding, and they get
in-stage rail funding, as other Medicare GME programs do
around the country, that brings money to children's
hospitals. But other than that, that is about it.
Children's hospitals can't rely on Medicare GME funding
because they don't have access to it. Under-investing in
pediatric medicine makes no sense. We protect our children.
We nurture our children. Why should we finance our way
toward a healthcare system that shortchanges them? The
answer is we shouldn't and we wouldn't.
The Children's GME program fills in the funding gap to
provide public financing of GME, regardless of whether a
hospital focuses on children or attends to the broader
population. OMB has raised some concerns about children's
GME, but it is almost as if they had a quota of concerns to
fill, so they filled them. They talk about program
accountability, but children's GME functions much the same
as the regular GME program. Why is the children's program
the target? Both programs could benefit from a better
auditing process, and that process is going into place for
the children's GME program. So, what is the problem again?
OMB also noted that children's hospitals receive
Medicare GME. So do other hospitals, to the extent
that--I am sorry, Medicaid GMEs. So do other
hospitals, to the extent that Medicaid GME funding
is still available. So, what actually is the point
of OMB's finding? And OMB discusses the financial
outlook for children's hospitals, both those
freestanding, like Children's in Akron, or like
Rainbow in Cleveland, it is affiliated with a larger
hospital. It doesn't, though, discuss the financial
outlook for other hospitals. That is because GME
funding isn't linked to hospital finances. It is
linked to the public's desire for well-trained
health professionals. If children's hospitals are
doing well, I would hope that is reflecting the
availability, the quality, and the sophistication of
the healthcare they provide. But GME is a public
priority. That is true regardless of a hospital's
year-to-year financial footing.
The President's budget proposes cutting the children's GME
program by 66 percent. I propose that we invest where we
need to invest before we drain the Federal budget into yet
another round of billionaire tax cuts, something that my
friends in this body want to do again. We want our children
to thrive. We want sick children to get well. We want
children with disabilities to fulfill their dreams. We can't
do something for nothing.
Let us reauthorize children's GME. Let us fund it
sufficiently, and let us resolve not to hurt kids as we
choose. Do we give tax cuts to the wealthiest people in
this country, or do we fund GME for children? It is a
pretty simple choice.
Thank you, Mr. Chairman.
Mr. Deal. I recognize my friend from Texas, Mr. Hall, for
an opening statement.
Mr. Hall. Mr. Chairman, thank you.
You and the Ranking Member have done a very good job of laying
it out, so I can be a little more brief. I am really pleased
that you are having this hearing today on an issue that is
very important, not just to any particular part of the Nation,
but to all parts of the Nation.
Since 1999, the Graduate Medical Education funding has helped
children's hospitals across the Nation reach a level of parity
with other teaching hospitals. This program was established
by Congress in recognition of an unfair disparity between
medical education funding in adult versus children's hospitals,
because children's hospitals do not treat Medicare patients
and receive a GME pass-through from that program.
We have all heard, and we are likely to hear more today,
about the growing shortage of qualified pediatric specialists,
whether training in the pediatric field or researchers or
whatever, the work of the children's hospitals in preparing
doctors to further qualify pediatric healthcare is
immeasurable.
So, I will just cut right through to it. Congress should
continue to adequately fund and not cut graduate programs at
these vital institutions, and I look forward to hearing from
our panelists today, and I yield back the balance of my time.
Mr. Deal. I thank the gentleman. Ms. Capps, you are
recognized for an opening statement.
Ms. Capps. Thank you, Mr. Chairman. I thank you for holding
this very important hearing today to highlight children's
hospitals graduate medical education.
Children's GME programs are the backbone of training
pediatricians, pediatric specialists, and pediatric
researchers, and in the State from which Mr. Waxman and I
come, California, we have seven children's hospitals that
receive children's GME, who alone train hundreds of residents,
nearly half of whom are trained in pediatric specialties.
This is very vital to the care of our sick children.
Today, our country is experiencing a shortage of pediatric
specialists. I think no one disagrees with that statement,
and it is our children's hospitals, where they receive the
training, the skill sets, to fill these positions. At the
same time they are devoting resources to training new
residents, they are also treating the Nation's sickest
children, who are more often than not being covered by
Medicaid. These are children suffering from cancer, children
needing organ transplants, children needing heart surgery.
The list goes on and on. Since the authorization of the
children's GME program through this committee in 1999, we
have enabled a response to the shortage of physicians able
to treat children with life-threatening, chronic, or rare
diseases.
Children's GME programs currently get less funding than other
GME programs, a disparity that is current, but there has been,
over the past few years, significant progress. It is,
therefore, very astounding to me that this Administration has
proposed such a severe reduction in funding, by two-thirds
for these programs, just in one year. I am sure we will hear
today the argument that it is due to budget constraints, but
I think we need to look at the facts, and look at the real
world. Training more doctors now, providing children's
hospitals with better resources to treat and early identify
their patients, many of whom are on Medicaid, is certainly
going to translate into cost savings later. We will be able
to better diagnose and better treat children early on, before
they become sicker, more disabled, more costly to treat.
So, I look forward to hearing from our witnesses today, who
represent two of our Nation's children's hospitals, about the
successes that children's GME has provided in the field.
More importantly, I want to learn why the Administration has
chosen to jeopardize, practically eliminate this program.
I yield back.
Mr. Deal. I thank the gentlelady. Mr. Waxman, you are
recognized for an opening statement.
Mr. Waxman. Mr. Chairman, I am pleased this subcommittee is
holding a hearing today to examine the success of the
children's hospital GME program, because a success it has been.
As you know, whether by design or accident, this country
supports its graduate medical education through payments made
as part of the Medicare program. Generally, that has worked
well and achieved its goal, but one critical set of hospitals
was essentially left out, and that was children's hospitals.
Yet these institutions have a critical role in training
physicians, particularly pediatric and pediatric specialty
residents in doing research and in serving as centers of
excellence for serving children.
We attempted to correct that problem when we passed a program
in the Public Health Service Act to provide critical GME
support to children's hospitals. That program has enjoyed
strong bipartisan support from the beginning, and has made a
critical contribution to the training of physicians, the care
of our children, and the financial health of children's
hospitals, and that is why it is particularly distressing to
me that the Administration has shown so little support for
this program, keeps trying to cut its funding, and now is
attempting to revise the legislative authority as well.
They want to impose a principle of directing funds only to
children's hospitals that are in critical financial
circumstances, yet I note that they are not similarly
concerned about how the Medicare program support operates.
They recognize that there, that the support must be provided
to all hospitals with GME costs. Why should children's
hospitals, which play such a critical role in our society, be
treated less generously?
I have a wonderful children's hospital that serves the
children in my district and greater Los Angeles. While
nearly half of its patients are Medicaid beneficiaries, it
is an important source of care for all children. It is a
valued resource in the community, and I think this is typical
of the view of children's hospitals around the Nation. I hope
that after this hearing today, we will reaffirm our support
for the children's hospitals GME program and for the wonderful
institutions that receive funding from it.
Thank you.
Mr. Deal. I thank the gentleman. Ms. Baldwin, you are
recognized for an opening statement.
Ms. Baldwin. Thank you, Mr. Chairman, and I also want to
thank the witnesses who are joining us today.
Like many of my colleagues, I am a proud supporter of the
Children's Hospital GME Program. Children's hospitals play a
vital role in training the doctors who will care for our
Nation's children in the future, and it is important that we
support them in this critical endeavor.
The program has had a remarkable success in both stemming
reductions in the number of pediatric residents, and also, in
helping to provide stability for children's hospitals. I
know that the Wisconsin Children's Hospital in Milwaukee has
directly benefited from the Children's Hospital GME program,
and that the University of Wisconsin's Children's Hospital
in my district, although not eligible for Children's Hospital
GME payments, has also benefited from the program, because
the program has helped to train pediatricians who bring their
expertise to the UW.
I am sorry to note that this program expired at the end of
fiscal year 2005. A program like this, that has such strong
bipartisan support deserves better. And we all know what
happens to programs when their authorizations are allowed to
lapse. Slowly, but surely, we see their appropriations
levels drop. In fiscal year 2005, the Children's Hospital
GME program received $300 million. That fell to $297 million
in fiscal year 2006, and the President, in his fiscal year
2007 budget, proposed drastically cutting the funding to
$99 million. Who knows what will happen if the House ever
passes a fiscal year 2007 budget resolution? But one thing
I do know is that this program provides valuable services,
and it deserves to be fully funded.
I would also like to spend a brief moment reflecting on the
environment in which children's hospitals operate. They are
major providers of services to low-income children. In fact,
more than 47 percent of their days of care, on average, are
for children covered by Medicaid. As we see pressure on the
Medicaid budget continue, and as the majority in Congress
weakens the program as was done recently during the last
year's budget reconciliation process, it becomes even more
vital that we support children's hospitals GME.
So, I am happy that the committee has decided to take up
this issue, and I look forward to working with my fellow
Members on moving forward with a reauthorization bill. And
thank you, Mr. Chairman. I yield back my remaining time.
Mr. Deal. I thank the gentlelady. Mr. Pallone, you are
recognized for an opening statement.
Mr. Pallone. Thank you, Mr. Chairman. I want to, in some
ways, repeat what some of my colleagues said, and also add
to it, if I can.
I do have a number of children's hospitals in my district,
and of course, the one that immediately comes to mind is
the one in New Brunswick, which is increasingly the health
center for the State of New Jersey. And listening to what
my colleague, Ms. Baldwin, said in particular applies to
New Brunswick, where we have a large Medicaid population.
Today, in fact, there was much made in the media in New
Jersey about the fact that the Governor, because of budget
shortfalls, is having a hard time even keeping up with the
family care program, because of the SCHIP program, I should
say, as we know it here, because of Federal budget cuts, as
well as the State budget crisis. So, all the things that
my colleague from Wisconsin mentioned about the impact on
children's healthcare is, I think, even more magnified in
my home State of New Jersey these days, and particularly,
in New Brunswick, which is a center, because of their
children's hospital.
The other thing I have to tell you is that you know, I
have a sort of special reason to be opposed to what the
President is proposing here with these cuts in the
children's hospital GME program. First of all, because my
next door neighbor is a pediatrician and has practically
raised my three children when I am not there, and he is
constantly pointing out to me, as my wife does constantly,
about how we neglect children that the Federal government
and the Congress, because they are not voters, essentially,
are neglected.
And it is pretty sad to think that, hospitals are able to
rely, because they have a large Medicare and senior
population, and because seniors vote, that we link formulas
to them, but then at the same time, because the children's
hospital doesn't have the Medicare population, that they,
you know, that they have a funding shortfall. So, this
GME program was designed essentially to make up for the
fact that there are a lot of children's hospitals that
don't have this Medicare population and therefore have the
funding shortfalls.
For us to now turn around and say, as the President does,
that we are going to change this, and make those cuts, I
think directly goes back to the fact that children are not
represented, that children are not viewed positively by
politicians, and I think that, you know, those of us who
feel strongly that it shouldn't be that way need to speak
out against these types of cuts.
The other thing I would point out is that this subcommittee
and this committee in general, has been very much trying to
promote research in children's diseases. I remember
Mr. Waxman, Mr. Brown, on many occasions pointing out that
a lot of times, when we come to drugs in particular, but
other things as well, that we need to do more research on
the impact on children, but that is not done, and I know
that that is, in fact, done in New Brunswick at the
children's hospital. I know that a lot of these hospitals
are doing a lot of research that directly relates to how
drugs and other things impact children.
So, this is not the time to cut this. We need these
residents. We need the research, and we certainly shouldn't
be discriminating against children, which this children's
hospital GME program was designed to overcome.
So, I think it is very important to have this hearing today,
and I appreciate the fact that we are paying attention to
it on both sides of the aisle.
Thank you, Mr. Chairman.
[Additional statements for the record follow:]
Prepared Statement of the Hon. Joe Barton, Chairman, Committee on
Energy and Commerce
Thank you Chairman Deal for holding this hearing on the Children's
Hospital Graduate Medical Education program, commonly referred to
as CHGME.
First established in 1999, the program was designed to better
balance the levels of federal funding for adult teaching hospitals
and children's teaching hospitals. The program helps children's
hospitals which do not receive a significant amount of federal
dollars for their residential training programs because of low
volumes of Medicare patients. The nation's sixty teaching
children's hospitals are responsible for the education of nearly
one out of three pediatricians and half of all pediatric
specialists.
The Administration has proposed several reforms to the program in
its FY 2007 Budget. Specifically, the President wants the program
to prioritize payments to hospitals that demonstrate the greatest
financial need; that treat the largest number of uninsured
patients; and that train the greatest number of physicians.
This Committee has been very active in looking at all programs
within our jurisdiction, with particular emphasis paid to those
with expiring authorizations. It is our responsibility to
recipients of federal dollars and, of course, to the taxpayers to
ensure each program is structured to achieve optimal efficiency
and effectiveness. We should examine proposed reforms with these
goals always in mind.
I hope this hearing provides an opportunity to examine issues
related to reauthorization of the program and the potential need
for structural reform. I expect this Committee to consider
reauthorization legislation in the near future. Thank you again
Chairman Deal for holding today's hearing and welcome to our
witnesses.
Prepared Statement of the Hon. Barbara Cubin, a Representative in
Congress from the State of Wyoming
Thank you Mr. Chairman.
Today we have an opportunity to take a close look at the impact of
Children's Hospitals Graduate Medical Education (GME) Program on
communities across the nation. First authorized in 1999, the
program has proved to be of tremendous help in supporting graduate
medical education training at Children's hospitals.
Congress again amended and reviewed this program in 2004, and over
the past three fiscal years has approved a level funding allocation
of $303 million. In Fiscal Year 2007, the Administration has
proposed to reduce the program to $99 million, a drastic reduction
that gives me pause considering the impact of the program on the
State of Wyoming.
While the State of Wyoming is without a children's hospital, the
Children's Hospital in Denver, CO serves thousands of Wyoming
patients in need of care. The facility is also a valuable training
resource in the region. There are at least sixteen physicians
currently practicing in Wyoming who trained at the hospital. Other
residents complete rural rotations, providing care to communities
throughout the state. We have a shortage of health professionals
in the state and we need all the providers that we can muster.
I hope our Health Resources and Services Administration panelist
will be able to shed some light on why the Administration feels
the GME Program cut is necessary. I understand the merits of
trying to improve accountability in the program and ensure that
federal aid is appropriately targeted, especially given the budget
crunch we are facing. Even as we tighten our fiscal belts, however,
we must be careful not to throw the baby out with the bath water.
Prepared Statement of the Hon. Anna Eshoo, a Representative in
Congress from the State of California
Thank you, Mr. Chairman for holding this important hearing.
As an original cosponsor of the Children's Hospitals Education
Equity and Research (CHEER) Act, I hope we can move on a
reauthorization of the Children's Hospital Graduate Medical
Education program soon.
I'm proud to represent one of the leading children's hospitals
in the country - Lucile Packard Children's Hospital.
The work that's been pioneered at Packard has benefited not
only patients from throughout the country, it has also benefited
patients at other hospitals through techniques which have been
developed at Packard by the personnel trained there.
I'm sure every children's hospital which receives funding under
the CHGME program can make a similar claim.
CHGME hospitals train 30% of all pediatricians, half of all
pediatric subspecialists, and the majority of pediatric
researchers in our country.
In California alone, CHGME program funds are used by 7 children's
hospitals to train 652 full-time residents annually, with 318
trained in a pediatric subspecialty.
These hospitals treat the most difficult cases, often children
from families who do not have the resources to pay for treatment
on their own. In California, more than half of the children
cared for are Medicaid eligible.
With such a record, it's difficult for me to comprehend why the
Administration proposes to cut the CHGME program from its
current appropriated level of $297 million to $99 million in
fiscal year 2007, and scale back the program in the next
reauthorization.
No one in the health care community supports this proposal, and
beyond the desire to cut spending, there can be no justifications
for such a draconian cut.
The Administration has made this proposal solely for the Children's
Hospital GME program, not for the Medicare GME program, even
though the Medicare GME program reimburses at a higher rate.
Mr. Chairman, I hope our Committee will recognize how shortsighted
the Administration's proposal is and then will move forward in a
bipartisan manner to reauthorize the CHGME program as the Senate
has already done.
Prepared Statement of the Hon. Gene Green, a Representative in
Congress from the State of Texas
Thank you, Mr. Chairman, for holding this hearing on the Children's
Hospital Graduate Medical Education Program (CHGME). We in Congress
established this program nearly seven years ago in recognition of
the federal support needed for training activities at our children's
teaching hospitals. In other hospital settings, training dollars
needed for residents are funded, in part, through Medicare's graduate
medical education program. With relatively few Medicare patients
being served at children's hospitals, however, children's teaching
hospitals cannot fully benefit from Medicare's graduate medical
education program. CHGME was established to help alleviate the
inequity faced by children's hospitals with respect to the training
of their residents.
Since its inception in 1999, the CHGME program has achieved
tremendous success and enabled our children's teaching hospitals to
address reductions in the number of pediatric residents. With this
funding, children's teaching hospitals - such as Texas Children's
Hospital in my hometown of Houston - have been able to keep their
residency programs alive and ensure that the pediatricians treating
our children and our grandchildren are trained at the best facilities
in the country.
It's no surprise that the same children's teaching hospitals
receiving CHGME funds provide the ideal training grounds for
pediatric residents. These hospitals house the nation's leading
pediatric research institutions and provide residents with experience
in treating the whole gamut of childhood health care problems, from
routine immunizations to pediatric trauma care and pediatric
oncology.
Continued CHGME funding is critical if our children's hospitals are
going to continue providing quality care to low-income children, as
well as children whose families have private health insurance.
Nearly fifty percent of care delivered at our children's hospitals
nationwide is provided to Medicaid beneficiaries, and CHGME payments
help cover the gap created by a Medicaid reimbursement policy that
covers only 80 percent of care delivered to Medicaid patients.
The CHGME program provides children's teaching hospitals with real
funding, without which their residency programs would face severe
financial strain. Texas Children's Hospital in Houston is one of
the top children's hospitals in the country and received nearly
$11 million last year in CHGME payments. Even with this funding,
Texas Children's absorbed an additional $11.5 million in
unreimbursed costs associated with their training of pediatric
residents.
We want our pediatricians trained at quality hospitals like Texas
Children's, where they can put their skills to use on a diverse set
of patients with varying diagnoses. Through this type of education
and training, pediatric residents can leave children's teaching
hospitals and travel to all corners of the country armed with the
experience to effectively treat the young patients in their
community. CHGME makes this possible, and I join my colleagues in
supporting the reauthorization of this important program.
Prepared Statement of the Hon. George Radanovich, a Representative
in Congress from the State of California
I would first like to thank the Chairman for his leadership
on this issue, and for calling this important hearing looking
into the reauthorization of the Children's Hospital Graduate
Medical Education Program. This is an extremely important
program that has consistently proven well worth the investment
we make, and I am very glad to see this committee addressing
the needs of Children's Graduate Hospital Medical Education.
When Congress first authorized $285 million in 1999 for this
program, we were addressing the unintended inequity created
by government financing of graduate medical education. Since
that time, children's hospitals have utilized these funds to
increase the numbers of residents they train, types of training
programs they provide, and quality of the training offered.
This has all been done without having to compromise clinical
care or research.
Children's hospitals continually strive to see that every
child has access to high quality, cost efficient care. In
doing so, they can save taxpayers money by providing the
preventive care necessary to ensure that many problems are
detected, addressed and treated before they become much more
expensive emergencies and chronic problems in the future. I
have had the pleasure of personally visiting some of the fine
safety net children's care providers around my district in
California, and I can assure you first hand that the work
done in these children's hospitals is literally saving lives.
Through the funds provided by the Children's Hospital Graduate
Medical Education Program, California hospitals have been
able to increase their quality and availability of care, even
at a time when the country is experiencing a shortage of
pediatric specialists.
However, to allow them to continue to do their work we must ensure
that there the funds are available to help cover the costs incurred
at children's hospitals for the training of pediatricians and
children's healthcare specialists.
Mr. Chairman, I am a proud cosponsor of HR 1246, the �Children's
Hospital Equity Education and Research�, also known as the �CHEER�,
Act. I thank the gentlelady from Connecticut, Mrs. Johnson, for
introducing this important legislation. I understand and agree with
the Administration that we need to try to reduce spending where
possible, but I do not think this is the appropriate area to do so
and that the funding request in the President's Budget Proposal of
$99 million for this year - a $198 million reduction from last
year - is inadequate.
The best way to utilize limited healthcare funds is to ensure that
we provide them to programs that will efficiently use the money to
produce results. I don't believe there is any question that
funding for children's graduate medical education produces results.
I thank the Chairman again for his leadership, thank our witnesses
for being here today to share their expertise, and look forward to
a productive and informative hearing on how we can best support
Children's Hospital Graduate Medical Education Programs.
Mr. Deal. Well, that will conclude our opening statements.
We are pleased to have our first panelist, Ms. Kerry
Nesseler, who is the Associate Administrator for Health
Professions of the Health Resources and Services
Administration of the U.S. Department of Health and Human
Services.
Ms. Nesseler, we are pleased to have you here. I would
remind you that your printed testimony is already a part of
the record, as I would advise the other witnesses. We
already have your printed testimony. It has been available
to the panel. We appreciate that.
Ms. Nesseler, we are pleased to have you here, and we will
recognize you for your opening statement.
Ms. Nesseler. Thank you, Mr. Chairman. I am pleased to be
here also. I request permission to submit to the record my
entire written statement.
Mr. Deal. Yes, it is already a part of the record.
STATEMENT OF KERRY NESSELER, ASSOCIATE ADMINISTRATOR, BUREAU OF
HEALTH PROFESSIONS, HEALTH RESOURCES AND SERVICES ADMINISTRATION,
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
Ms. Nesseler. Mr. Chairman, members of the subcommittee, thank you
for the opportunity to meet with you today on behalf of the Health
Resources Services Administration, HRSA, to discuss the Children's
Hospitals Graduate Medical Education Program.
The Children's Hospitals Graduate Medical Education Program
was authorized by the Healthcare Research and Quality Act of
1999. The program was amended by the Children's Healthcare
Act of 2000, and was further amended in 2004. Its purpose
is to support graduate medical education training in
freestanding children's teaching hospitals. And payments are
made to these hospitals to enhance their financial viability.
The Children's Hospitals Graduate Medical Education Program
addresses the need for funds beyond patient revenues to
support the broad teaching mission of freestanding children's
teaching hospitals, which includes conducting biomedical
research, training health professionals, providing rare and
highly specialized clinical services, innovative clinical
care, and providing care to the poor and the underserved.
Teaching hospitals have higher costs than other hospitals
because of the special services they provide.
The program currently disburses Direct Medical Education
and Indirect Medical Education payments to eligible and
participating children's hospitals. Based on Congressional
mandate, one third of the total appropriated funds are
disbursed for direct medical education, and the remaining
two thirds are disbursed for indirect medical education.
A Children's Hospital's GME Payment Program's DME allocation,
and those are costs associated with training the residents,
is based on the national updated per resident amounts, as
defined by Section 340E(c)(2) of the Public Health Service
Act, and the 3-years rolling average of weighted full-time
equivalent medical resident counts as determined under
Section 1886(h)(4) of the Social Security Act. A Children's
Hospitals GME Payment Program's IME, indirect medical
education, payments are the payments associated with
adjustments for the cost of direct patient care. Currently,
IME payments are determined by: one, participating children's
hospitals numbers of discharge; two, the severity of illness
of the patient population, using a case mix index; and three,
the teaching intensity factor, as captured by the
resident-to-bed ratio.
In fiscal year '05, the Children's Hospitals GME supported
61 freestanding children's hospitals and the training of
about 4,892 medical residents on and offsite. The program,
as currently implemented, is in need of change. The
President's fiscal year 2007 budget requests $99 million to
support the mission of children's teaching hospitals.
To support this budget request, the Administration is
proposing legislative reform of this program, specifically
with the IME payments. The DME, direct medical education
payments, which are associated with training of medical
residents, will remain the same. The President's budget
proposes ensuring access to care by supporting children's
hospitals based on: one, their financial status; and two,
the children's hospitals who continue to care for those
children who are underinsured or uninsured. Participating
children's hospitals would be required to account for the
use of these Federal funds, and have clear, standardized
performance requirements, such as the effect of program
funds on improvement in patient care.
Under this new proposal, we emphasize that payments will
focus on those children's hospitals with one, the greatest
financial need; two, that treat the largest number of
uninsured patients; and three, that train the greatest
number of physicians.
The proposed legislative reform is designed to better
target limited Federal resources where they are needed
most. Federal support would be provided to ensure that
the pediatricians first will continue to receive the best
training possible, with the objective of achieving
improvements in patient care outcomes. Reporting
requirements on the use of funds will demonstrate the
results achieved by freestanding children's hospitals in
performing their three-pronged mission, as teaching
hospitals, safety-net providers, and providers of quality
care for children.
Under this proposal, Federal support for direct medical
education, which is the training of physicians, will
continue to depend on the number of full-time equivalent
residents trained. The President's new formulation will
replace the current indirect medical education payment
formula, which currently accounts for the teaching intensity,
which is using residents-to-bed ratio; the number of
patient discharges; and the severity of illness of the
inpatient population. Federal support will be distributed
based again on the volume of uncompensated care provided by
the institution and two, the financial status of the
hospitals.
The impact of the proposal is to target the funds to help
children's hospitals caring for the poor and the underserved,
and help the children's hospitals that are in the greatest
financial need.
Thank you for this opportunity to discuss the Administration's
principles for the legislative reform of the Children's
Hospitals Graduate Medical Education Program. We look forward
to working with this subcommittee on this proposal.
[The prepared statement of Kerry Nesseler follows:]
Prepared Statement of Kerry Nesseler, R.N., M.S., Associate
Administrator, Bureau of Health Professions, Health Resources and
Services Administration, U.S. Department of Health and Human
Services
Mr. Chairman, Members of the Subcommittee, thank you for the
opportunity to meet with you today on behalf of the Health Resources
and Services Administration (HRSA) to discuss the Children's Hospitals
Graduate Medical Education Program.
Background
The Children's Hospitals Graduate Medical Education Program was
authorized by the Healthcare Research and Quality Act of 1999. The
program was amended by the Children's Health Act of 2000 and was
further amended in 2004. Its purpose is to support graduate
medical education (GME) training in freestanding children's
teaching hospitals. Payments are made to these hospitals to
enhance their financial viability.
The Children's Hospitals GME Program addresses the need for funds
beyond patient revenues to support the broad teaching mission of
freestanding children's teaching hospitals, which includes
conducting biomedical research, training health professionals,
providing rare and highly specialized clinical services and
innovative clinical care, and providing care to the poor and the
underserved. Teaching hospitals have higher costs than other
hospitals because of the special services they provide.
Implementation
The program currently disburses Direct Medical Education (DME) and
Indirect Medical Education (IME) payments to eligible and
participating children's hospitals. Based on Congressional mandate,
one-third of total appropriated funds are disbursed for DME and the
remaining two-thirds are disbursed for IME. A Children's Hospitals
GME Payment Program's participating hospital's DME payment
allocation is based on the national updated per-resident amounts
as defined by �340E(c)(2) of the Public Health Service Act and the
three years rolling average of weighted full time equivalent medical
resident counts as determined under �1886(h)(4) of the Social
Security Act. A Children's Hospitals GME Payment Program's IME
payments are determined by a participating children's hospital's
capacity to treat patients (number of discharges), severity of
illness of the patients population (using a case mix index), and
the teaching intensity factor as captured by the intern-resident
to bed ratio.
In fiscal year (FY) 2004, the Children's Hospitals GME supported 61
freestanding children's hospitals and the training of 4,892 medical
residents on and off site. The financial support for the training
of medical residents is based on a three-year rolling average of
weighted and unweighted full time equivalent residents, number of
discharges, number of available beds, and a case mix index. The
program as currently implemented is in need of change.
Proposal
The President's FY 2007 Budget requests $99 million to support the
mission of children's teaching hospitals, which includes training
medical residents, ensuring access to care by supporting children's
hospitals based on their financial status, and encouraging the
children's hospitals to continue caring for those children who
are underinsured or uninsured.
To support this Budget Request, the Administration is proposing
legislative reform of this program. The proposal will address
specific needs of children's hospitals in the nation. Under this
new program, funds will be distributed based on the financial
status of freestanding children's hospitals, their uncompensated
care caseload, and the number of full time equivalent medical
residents (including interns and fellows) in training. The payment
formula will weight financial status, uncompensated care, and
number of full time equivalent medical residents (interns and
fellows) in training. Participating children's hospitals would
be required to account for the use of these Federal funds, and have
clear, standardized performance requirements, such as the effect of
program funds on improvements in patient care. Under this new
proposal, we emphasize that payments will focus on those children's
hospitals with the greatest financial need that treat the largest
number of uninsured patients and train the greatest number of
physicians.
Rationale
The proposed legislative reform is designed to better target
limited Federal resources where they are needed most. Federal
support will be provided to ensure that the pediatric workforce
will continue to receive the best training possible with the
objective of achieving improvement in patient care outcomes.
Furthermore, Federal support will be provided to those freestanding
children's hospitals with the greatest financial need, and Federal
support will be provided to encourage teaching hospitals to
continue providing quality patient care to those children who are
without a source of payment or are underinsured. Reporting
requirements on the use of funds will demonstrate the results
achieved by freestanding children's hospitals in performing
their three-pronged mission as teaching hospitals, safety net
providers, and providers of quality care for children.
Impact
Under this proposal, Federal support for the training of physicians
will continue to depend on the number of full time equivalent
residents trained, the national average per resident amount adjusted
for labor and non-labor share and geographic distances.
The impact and reasoning of the proposal is to target the funds to
help children's hospitals caring for the poor and underserved, and
help children's hospitals that are in the greatest financial need.
This new formulation will replace the current Indirect Medical
Education payment formula which accounts for teaching intensity
(using the interns and residents to bed ratio), capacity for patient
care (number of inpatient discharges), and severity of illness (case
mix index) of the inpatient population. Federal support for
uncompensated care will be distributed based on the volume of
uncompensated care provided by the institution.
Conclusion
Thank you for the opportunity to discuss the Administration's
principles for the legislative reform of the Children's Hospitals
Graduate Medical Education Program. We look forward to working with
this Subcommittee on this proposal.
Mr. Deal. Well, thank you.
You have heard the concerns that have been expressed in the
opening statements on both sides here--
Ms. Nesseler. Yes, sir.
Mr. Deal. --about the proposed reductions in funding of the
payment program for graduate medical education--
Ms. Nesseler. Yes, sir.
Mr. Deal. --in children's hospitals. Would you comment on
what you think the impact of such a reduction in funding would
actually be?
Ms. Nesseler. Well, sir, currently the Administration is still
proposing Federal support for this graduate medical education
training at freestanding children's hospital.
The Administration is trying to align Federal support with the
mission of teaching hospitals. Federal graduate medical
education support for freestanding teaching hospitals comes
from appropriated funds which are limited, while support for
the adult teaching hospitals is provided through a Medicare
trust fund. We believe the FY 2007 budget request of $99
million is good, strong funding for children's hospitals, and
especially, if we focus on children's hospitals that need it
the most, and do provide care to the most underserved
populations.
Mr. Deal. You mentioned in your testimony that statute
currently sets the ratio between the IME and the DME.
Ms. Nesseler. Yes, sir.
Mr. Deal. Are you proposing that that formula be changed, as
to the proportion? As I see the proposal, the DME would
actually consume the entire $99 million, if we didn't do
anything to change the formula allocations. Are you proposing
changing the formula allocations?
Ms. Nesseler. Yes, sir. Currently, as it stands, one-third
goes to direct medical education, and two-thirds goes to
indirect medical education. And we are looking at keeping the
direct medical education formula mostly the same, but looking
at about 40 percent for DME. And then, this second piece,
which is about 60 percent, is again looking at the financial
status, and the number of uncompensated care patients that
they treat.
Mr. Deal. Being someone who comes from a rural area--
Ms. Nesseler. Yes, sir.
Mr. Deal. --I am concerned about the lack of children's
teaching hospitals in most rural areas. Does the
Administration
have any proposal with regard to children's hospitals in more
rural areas that may not quite have the caseload to qualify
for some of these funds?
Ms. Nesseler. Currently, we do not. It is under discussion
of how we will determine financial need, and how we will
determine uncompensated care and the increased numbers of
patients seen that are uninsured. That is under discussion
at this point, but I do not have a formula.
Mr. Deal. This is a little bit of a complicated question,
so I am going to read it, but--
Ms. Nesseler. Yes, sir.
Mr. Deal. --it is an important piece of information we need
to know. Medicare allows low Medicare utilization hospitals,
such as children's hospitals, to file low-volume reports that
do not contain all the cost information required for the
full-cost report.
Do you believe your agency has sufficient information regarding
the financial status of all the participating children's
hospitals, bed count, patient volume, and other such data
points, to effectively make changes to the program, or will
you require some additional information and reporting on those
items?
Ms. Nesseler. We currently believe we get sufficient
information. Yes, we do get cost reports from all of our
61 children's hospitals. Some are larger reports, depending
on how much Medicare dollars they get; depending on how much
chronic care that they provide, like dialysis; and that is
how they receive their additional extra Medicare payments.
But yes, we do feel we have sufficient cost reporting.
Mr. Deal. And from what other sources do children's
teaching hospitals receive funding, and does this other source
include GME funding?
Ms. Nesseler. Other sources of funding are, again, a bit of
Medicare dollars, if they are taking care of chronically ill
children, such as dialysis patients, or severe heart
problems. They receive funding from State Medicaid. They
receive a lot of private dollars also, sir, in addition to
the Federal dollars.
Mr. Deal. Many of them receive rather significant private
contributions, I believe, do they not?
Ms. Nesseler. Sir, I can get you an answer for the record.
I don't have that exact number.
Mr. Deal. All right. It appears that the direct medical
education dollars are allocated to hospitals on a per
resident formula, and IME dollars are determined by a
number of factors. Can you better explain to us how these
dollars are currently distributed? Maybe you have
already touched on that, but--
Ms. Nesseler. Yes, I can. Currently, I guess about
one-third of the dollars go for direct medical education,
and that is literally the training of the physicians,
which are mostly pediatricians and sub-specialists in
pediatrics. That is for their salaries, for their stipends,
so that goes for direct medical education, about a third
of the dollars. Two-thirds of the dollars goes for indirect
medical education. And that is a combination between the
children's hospital capacity to treat patients, which is
their number of discharges; the severity of the illnesses
of the patient population, if you have a NICU, neonatal
intensive care unit, or a burn center, there are more severe
patients at that hospital, and that uses a case mix index.
And also, the teaching intensity factor, as captured by the
resident-to-bed ratio, or how many physicians for how many
beds, if it is a higher or lower number. That is currently
how it is, and that is two-thirds.
Mr. Deal. Mr. Brown, you are recognized for questions.
Mr. Brown. Thank you, Mr. Chairman. Thank you,
Ms. Nesseler, for joining us.
Ms. Nesseler. Thank you, sir.
Mr. Brown. And I appreciate your testimony.
I am trying to understand why the Administration wants to cut
children's GME. I mean, this has been a battle really since
the early part of this century. I mean, for the last five
years, it has always been an issue with this Administration
on GME.
There were a couple of hints in the OMB that, looking at
this, there seemed to be a couple of hints in OMB's program
assessment. From my understanding, what they were able to,
and if you kind of read between the lines, they seem to say
that the money that went to GME, and Akron Children's or
Rainbow or Columbus Children's or whatever, that that money
could be used for other things, and they weren't so sure
the money was really going to what it was intended. But my
understanding is the larger GME program works the same way.
We don't tell the Boston and New York hospitals, or we don't
tell any of the hospitals that generally address illness for
the general population, we don't tell them specifically where
their GME money goes, either. Is that the right assessment,
generally?
Ms. Nesseler. Sir, I am not as familiar with the CMS adult
hospitals. I can tell you under the PART score, we did get
a rating of adequate. And we really look at $99 million as
a sufficient budget for children's hospitals GME. The PART
score of adequate gave us two recommendations: to look more
closely at auditing, and to do an objective evaluation study.
Those are two, so according to us, this program has been
very successful. We believe the $99 million is adequate if
we are looking at the hospitals with the highest need. With
the PART score of adequate, we have a little bit of work to
do, but we feel as though we have done well with the program,
sir.
Mr. Brown. But generally, GME to other hospitals goes
without strings attached, correct? When GME funding goes
to any large hospital that doesn't just focus on children,
the money is--
Ms. Nesseler. Correct, for adult hospitals.
Mr. Brown. Yeah, it is not connected to--we want to make
sure we know where every penny that we are giving you goes,
that this dollar goes to training of specialists, this dollar
goes to salaries and equipment and training of new doctors,
correct?
Ms. Nesseler. Sir, I am not a witness to testify for CMS
adult hospitals, and I could get some answers to the record
for you, but I don't feel--
Mr. Brown. If you would. Okay. Shift to Medicaid for a
minute. Medicaid provides funding in some States to
hospitals in other States, as in Texas, and in others to
follows. It doesn't. Children's hospitals, I believe,
discuss that with me for a moment, what you see for the
future, if these States, if States begin to cut back, as
Texas is, cuts back its Medicaid funding for GME, what
kind of impact will that have, in your mind?
Ms. Nesseler. Currently, we are looking at hospitals
with the greatest financial need, and that the $99 million
is a sufficient budget to keep their services. That is
all I can say, sir.
Mr. Brown. Okay. Thanks.
Ms. Nesseler. Thank you.
Mr. Deal. Mr. Hall, you are recognized for questions.
Mr. Hall. What is the source of a cut of that magnitude,
$297 million, down to $99 million? They are cutting out
$198 million.
Ms. Nesseler. Yes, sir.
Mr. Hall. What is the source of that? Whose decision was
that?
Ms. Nesseler. Sir, it is the President's '07 budget
proposal to Congress.
Mr. Hall. Well, who proposed that to him? Were you part
of the group that proposed that to him?
Ms. Nesseler. Sir, it comes from the President.
Mr. Hall. And you really don't agree with it, do you,
deep down in your heart?
Ms. Nesseler. Sir, I am a maternal child health nurse,
and I am very committed to maternal child health, which
includes children's, and the President is committed, also,
with $99 million, to treat children at children's hospitals,
yes, sir.
Mr. Hall. Well, I understand you almost have to be in that
position, don't you?.
Ms. Nesseler. Sir, I--
Mr. Hall. You are representing the President, and you are
doing the best you can do for the President. Right? And
his program. I understand that. I don't have any argument
with it. I am just trying to figure out how they came to
that type of a cut for children's hospitals. You know,
did you cut the program, was the program cut to lessen the
part of that $99 million to any particular part of the
country? You didn't do that.
Ms. Nesseler. Sir, I think we are looking at putting the
money to the highest priority needs, and there are other
priority needs in the Federal government.
Mr. Hall. What are those priority needs? Are you
talking about low income areas?
Ms. Nesseler. One could be the National Health Service
Corps. Money is being put into the National Health
Service Corps that provides money for pediatricians to
go out to work in underserved areas in the United States.
Mr. Hall. Working under what?
Ms. Nesseler. The National Health Service Corps, sir.
Or the Community Health Center program, which provides
more community health services in local communities and
rural communities. Those would be two programs I could
cite as programs that are high priority needs for the
President.
Mr. Hall. You take unmet needs into consideration,
you think, in arriving at that cut?
Ms. Nesseler. Yes, sir.
Mr. Hall. An unmet need's an unmet need, isn't it?
Ms. Nesseler. Yes, sir.
Mr. Hall. So, let us talk about that a little bit. Are
you trying to funnel the money into the most needy areas?
Is that what you are doing?
Ms. Nesseler. Into the most priority areas--
Mr. Hall. The most needy--
Ms. Nesseler. Yes, sir. Not necessarily needy areas, but
priority areas.
Mr. Hall. How did you calculate that cut? Was it done on a
percentage basis, a percentage of the needs, like some
Medicaid areas would have a greater percentage of low income
people?
Ms. Nesseler. We are looking at the hospitals that can train
the highest number of pediatricians or physicians, that can
show the greatest financial need, and can show that they
treat the largest number of uninsured. We are still under
discussion on how those calculations will be made.
Mr. Hall. Well, that would really not go to the rural
areas. If it is for the largest number, it would go to the
most densely populated areas, wouldn't it?
Ms. Nesseler. Sir, we are looking at how we will make that
calculation. That is under discussion.
Mr. Hall. Who is looking at it? You have already done it.
You have cut it from $299 million to $99 million, so nobody
is looking, apparently. And this Congress is going to look
at it.
Mr. Deal. The gentleman's time has expired.
Mr. Hall. In that case, I will yield back my time.
Mr. Deal. I felt sure you would. Ms. Capps, you are
recognized for your questions.
Ms. Capps. Thank you, Mr. Chairman. I want to thank my
colleague from Texas for setting this up, and acknowledging,
Ms. Nesseler, that you are a maternal child health nurse--
Ms. Nesseler. Yes.
Ms. Capps. --and I am a public health nurse.
Ms. Nesseler. Wonderful.
Ms. Capps. I worked in my career with schoolchildren, and
I don't know how anybody could say with a straight face
that $99 million is an adequate amount for the Federal
government to be putting into children's hospitals graduate
medical education.
And I am also taken aback a bit with our Chairman's comment
that there is a great deal of private money, and I am
thinking of the families I know and you worked with, where
the tragic situation of a serious, serious chronic health
condition and no resources of any kind of private money,
and these are the hospitals where our families go with our
children. And I want to ask you about something particular
to California and some other states.
Ms. Nesseler. Yes, ma'am.
Ms. Capps. The Administration's proposal would change the
funding formula to place greater weight on the number of
uninsured patients the hospital is treating. This kind of
formula is not a factor in determining funding, though, for
graduate medical education in adult hospitals, right?
Ms. Nesseler. I am not an expert on GRM in adult hospitals.
Ms. Capps. Okay. I am sorry. We--
Ms. Nesseler. I am really not an expert on this but we
could provide an answer for the record.
Ms. Capps. California, among other states, is on the
forefront, but not the only State, of expanding health
coverage for more and more children. Surely, that is a
commendable goal. Hopefully, we will be able, eventually,
to have all children covered. Children's hospitals
equally in California treat patients with or without
health insurance. Funding for training programs affects
the number of residents who can be trained. The changes to
the funding formula the Administration is proposing would,
in essence, punish children's hospitals in States that are
making strides toward covering more children, even though
the need to train more pediatric residents still exists, no
matter how many of the patients are insured or uninsured.
However, without full funding, children's hospitals will
have to cut their training programs, and still treat the
same number of patients. How do you reconcile this, and
why is there so much inequity when it comes to funding
graduate medical education at children's hospitals?
Ms. Nesseler. There is a limited source of Federal funding,
and we are looking at putting our money into other high
priority needs, ma'am.
Ms. Capps. Higher priority needs than children's hospitals
medical education?
Ms. Nesseler. We are trying to direct healthcare services
out to our populations, ma'am.
Ms. Capps. Would you tell me anything that is a higher
priority than that? You said direct medical service to
patients.
Ms. Nesseler. Through community health centers and the
National Health Service Corps, where we are getting
pediatricians out to the communities to provide direct
healthcare services. There are two examples--
Ms. Capps. But they are being trained at these hospitals
with 66 percent less funding, or 67 percent less funding.
Does that fit?
Ms. Nesseler. The President believes that it is sufficient
funding for children's hospitals graduate medical education,
with the limited source of Federal funding that we have and
our priorities. Yes, ma'am.
Ms. Capps. Okay. Let me try something else, for 16 seconds.
In your testimony--
Mr. Deal. That is over, not under.
Ms. Capps. All right. I will wait. Thank you very much.
Mr. Deal. The gentlelady misunderstood the Chairman's
question with regard to private funding. I was speaking
of private funding for the hospitals themselves, not the
families.
Ms. Capps. I totally understand.
Mr. Deal. My hospitals are very well supported in my State
with private funds that go along with the other funding
sources. That was the point I was making.
Ms. Capps. I guess I would beg to differ, that all
States maybe aren't as blessed as yours.
Mr. Deal. Well, we set a good example in Georgia. I
recognize Dr. Burgess for his questions.
Mr. Burgess. Thank you, Mr. Chairman. I apologize for
being out of the committee hearing while we heard testimony.
Just for my basic knowledge, forgive me if this is ground
that has already been covered. Mr. Chairman, do we just
get three minutes for questions?
Mr. Deal. You didn't give your opening statement.
Mr. Burgess. Are there other sources of graduate medical
education funding? The Chairman already referenced money
that may be available in the community. Are there other
sources for this funding, other than what is provided by
the Federal government?
Ms. Nesseler. From the Federal government for Children's
Hospitals Graduate Medical Education, there is a small
amount of Medicare dollars that goes to the children's
hospital if they are treating chronic diseases. And State
Medicaid dollars are a bit of a contribution also, in
addition to some private funding dollars.
Mr. Burgess. Since, what do we see in our packet, 75 to
80 percent of the graduates who graduate from training
programs in children's hospitals stay within a hundred
mile radius of that hospital for their practice, is it
appropriate for the communities that benefit from the
training program, do in fact contribute? They are
receiving something of value, which is a well trained
pediatrician or pediatric sub-specialist in their
community. Is it appropriate that we look to the
private sector for some of that funding, as the Chairman
has pointed out, that they do so well in Georgia.
Ms. Nesseler. Sir, I can get an answer to that question
for the record. I don't think I am prepared to discuss
if private funding is fair to the communities.
Mr. Burgess. All right. I think I understand this, but
just so that I get it for the record, is there a
difference in the way that funding for graduate medical
education primarily aimed at adult hospitals, is there
a difference between that and the graduate medical
education for children's hospitals?
Ms. Nesseler. Again, I am not as familiar with the
adult hospitals as I am with the children's hospitals
graduate medical education program, and I don't feel--
Mr. Burgess. Do you think there is a monetary--to the
amount that an adult hospital would receive, as opposed
to a children's hospital?
Ms. Nesseler. Well, a children's hospital is receiving
money to help to adjust for the higher cost of care of
severely ill children.
Mr. Burgess. As the program is currently run, do all
hospitals who apply for graduate medical education
receive that funding?
Ms. Nesseler. Yes, sir. All 61 that apply receive
funding.
Mr. Burgess. And then, is that allocation equal amongst
the 61, or are there other factors that enter into that?
Ms. Nesseler. There are other factors that enter into
that, the direct medical education and indirect medical
education. If you look at the number of residents, the
FTE counts of number of residents, and you look at their
case mix index, and the other factors I discussed.
Mr. Burgess. But you don't penalize the Chairman there
in Georgia, because they get so much private funding.
Let me ask you this. The gentlelady from California, they
have done a wonderful thing in California with the Medical
Injury Compensation Reform Act of 1975. We have done a
good thing down in Texas with the so-called stacked cap
that we passed in September 2003. Has liability reform in
these States made a difference in the money available for
children's hospitals? That would go off the expense side,
I guess, rather than the near side, but I just can't help
but feel that the money spent for providing for liability
protection--
Ms. Nesseler. I understand, yes.
Mr. Burgess. Is there any thought to providing any of the
protection under the Federal Tort Claims Act for children's
hospitals, especially those that are funded primarily from
governmental sources?
Ms. Nesseler. I believe not at this point.
Mr. Burgess. Mr. Chairman, I will yield back. You have
been very indulgent.
Mr. Deal. I thank the gentleman. Mr. Pallone, you are
recognized for questions.
Mr. Pallone. Thank you, Mr. Chairman.
I am getting a little upset here, from what I am hearing,
and I don't mean to, in any way be upset with you, but the
concern I have, as you know, when I did my opening statement,
I talked about how I feel that there is discrimination in
Federal programs against children. In other words, that
when we do funding, or when we prioritize, seniors always
seem to get the short end, and I am just concerned that
what I am hearing now from the President's proposed changes
here, simply aggravate that situation even more.
I mean, the way I see it, Ms. Nesseler, this program with
the children's hospitals GME, was set up because there was
a feeling that these children's hospitals weren't getting
enough money, because they didn't have the Medicare
patients, since they didn't have a large senior caseload
through Medicare.
Ms. Nesseler. That is correct.
Mr. Pallone. That we needed to do something to make up
for it. Well, if you then say okay, this is not a
priority for us any more, and we are just going to help
those hospitals that are in crisis because they have a
large number of uninsured or whatever, it just seems to
me you are magnifying that problem that I am citing, in
terms of a shortfall for children and children's hospitals,
all the more. I mean, what are the Administration's
priorities? I mean, would you advocate doing the same thing
for adult hospitals? Would you say, okay, let us do this
for adult hospitals. Let us just provide funding for
crisis hospitals? I mean, how can they justify doing this
for children's hospitals, knowing very well that this
program was set up because of a disparity?
Ms. Nesseler. That is correct. The program was for the
disparity, and we do believe, though, that $99 million
will help with that disparity gap, and we do believe that.
The CMS funding for the adult hospitals, I don't have that
program under my purview, so I can't comment on if I
believe that should be cut or not, sir.
Mr. Pallone. So, what has been changed? In other words,
what has changed? We know that this program was set up
because of the disparity. You admit that the disparity
existed. That is why we set up this--
Ms. Nesseler. Yes, sir.
Mr. Pallone. What has changed? I don't see, I am sorry.
I don't see the Administration proposing this for adult
hospitals, so why has this situation changed now? I mean,
what is your counterargument to the fact that--and
essentially, I see this change as making the disparity
even worse between children's hospitals and adult hospitals.
Ms. Nesseler. Sir, we are targeting the limited amount of
Federal dollars that there are, and we are targeting that
to our hospitals with the greatest financial need that
treat the most uncompensated care patients, to reach the
best outcomes.
Mr. Pallone. But I mean, that is not happening with the
adult hospitals that are linked to Medicare in their
funding formula. So, wouldn't you have to conclude
that this Administration is, again, aggravating this
disparity for children?
Ms. Nesseler. Sir, I don't run the CMS program. And I
don't--
Mr. Pallone. Well, I mean, I can say from what I know--
Ms. Nesseler. --know about adult healthcare.
Mr. Pallone. --that that is not happening with the adult
hospitals. We don't have that similar type of proposal here
in front of us. Our committee deals with adult hospitals.
That is not the case. So, it just seems to me that this is
just aggravating this disparity, making it worse, and making
it easier to argue that this Administration is not concerned
as much about children as they would be about adults. I
mean, I don't know what else to say. I don't want to be so
cruel, because I honestly feel that it is a problem that
isn't just this Administration, but exists in general.
Mr. Brown. Would the gentleman yield?
Mr. Pallone. Yeah.
Mr. Brown. I hear you come back to that $99 million figure.
The last two years, this Congress, bipartisanly, has
appropriated, I believe $298 and $302 for these programs.
Does that mean that these children's hospitals got overpaid
$199 million, or $201 million, or whatever the numbers are,
did we waste that money? Did Children's in Akron and
Cleveland and Chicago and all over the country get too much
money for graduate medical education, that they squandered?
You keep coming back to that $99 million. You have never
told us why it should be $99 million, other than the President
says it should be $99 million. Was that money just something
we wasted in this Congress, the extra $200 million the last
two years?
Ms. Nesseler. We are supportive of the Children's Hospitals
Graduate Medical Education Program. We are supportive of
children's care. We have a limited amount of Federal dollars,
and we are putting those into our high priority areas, sir.
Mr. Pallone. Well, I mean, I understand. I just say that I
think that what is happening here is increasing the disparity
for children's care, and again, shows discrimination against
children. I think that is clear. But I don't expect you to
keep commenting on it, but that is my opinion.
Thank you.
Mr. Deal. I have had a unanimous consent request from Mr. Hall
that he be allowed to ask an additional question, and I would
extend that request to Ms. Capps, in the event she returns
before we complete this witness. And without objection, it is
allowed. Mr. Hall.
Mr. Hall. Ms. Nesseler, I am sorry for you, to have to come
over here. And you are doing a great job. You are carrying
out your duties well, and I admire you for it. I just don't
agree with the things that you are having to testify to. You
talk about disparity. I live in the smallest county in Texas,
geographically, and we are experiencing a children's population
growth of about 8 percent. We are not experiencing any
population growth of senior citizens or adults. They are dying
off. They are going the other way.
I don't understand how, did you treat adult teaching hospitals
any different than you treated children's teaching hospitals?
Ms. Nesseler. Sir, I don't administer the adult hospitals, so
I cannot comment on that.
Mr. Hall. Would it surprise you that they were treated quite
differently?
Ms. Nesseler. I am not even sure if they were treated quite
differently, sir.
Mr. Hall. But it would or wouldn't surprise you if they were.
You don't have to answer that. I don't think you are prepared
to answer that one. I just wanted to get that into the record,
about the disparity position, and the population growth going
one way with children, and the other way with adults, and
children getting this treatment. I can't believe that the
adults got that treatment, this whole room would be full, and
crowded out into the streets with adults here complaining
about it. And we don't have that situation.
Mr. Chairman, thanks for letting me ask her that one question.
Mr. Deal. Ms. Capps, you are recognized for additional
questions.
Ms. Capps. I will pose this, but I have a feeling that it is
not going to be answered, but I want to get it out anyway,
Ms. Nesseler.
Ms. Nesseler. Yes, ma'am.
Ms. Capps. In your testimony, you stated that the President
requests $99 million to support the mission of children's
teaching hospitals. Children's hospitals already get 80 percent
of the funding that other GME hospitals receive, so I imagine
that percentage is going to be downsized a bit. But this amount
is a great improvement over the percentage that children's
hospitals received before children's GME was authorized, but it
is still a discrepancy that is now going to be going in the
wrong direction. We were hoping that we would be taking it
closer to parity with adults.
Given this discrepancy, well, first of all, I guess I would
like to ask you if there is a rationale for why we have a
disparity between funding for children's medical education and
adult, that somehow, it is of lesser, it is easier, or lesser
value, I don't know, whatever you could answer to that. But
given the discrepancy, I am wondering if you can give us some
basis on which to justify the decision to cut the funding now
by two thirds, and suggest that these funds would still
support the mission of the children's teaching hospitals. In
other words, why fund it at all, when we are going to be
cutting so dramatically the amount that the Federal government
has invested?
It is estimated that the cuts to children's GME funding would
lead to tremendous financial losses on the part of the teaching
hospitals. I mean for those that don't have enormous amounts
of private funding, they are going to be looking at solvency,
not even solvency, but being able to stay open and available.
And at the same time, we see the number of children losing
private insurance coverage rising, and also, we have
been asked in the very same budget to cut Medicaid
reimbursement. So, it looks to me like we are pointing
toward a perfect storm.
I am wondering, first of all, is there something within HRSA
that gives a rationale for a disparity, percentage-wise,
between funding for children's medical education and adult,
and from however you could do it, and secondly, is there any
awareness of what this could do to the presence of children's
hospitals throughout the country?
Ms. Nesseler. Ma'am, the first question, again, I have to
state that the adult hospital program is run through CMS,
not through HRSA, and I am not able to comment on that
program.
Ms. Capps. Well, let me ask is there conversation back and
forth between the two?
Ms. Nesseler. Yes, we have conversations with CMS regularly.
Ms. Capps. You never brought this up with anybody?
Ms. Nesseler. I have not personally, no. But we can get an
answer for the record for you.
Ms. Capps. I would really appreciate that.
Ms. Nesseler. Yes, ma'am.
Ms. Capps. I think it is important that we understand, I
guess, the philosophy behind it, whether or not this is
something that is intended, or is just because it has always
been that way, or something like that.
But let me ask you, because you don't just talk to CMS, you
must have some conservations with the teaching hospitals
throughout the country, as you are determining your budget
and your priorities.
Ms. Nesseler. Yes, we do. We work closely with the children's
hospitals, the 61 in the United States. We have a website.
We do technical assistance, conference calls, we do technical
assistance workshops, work closely with the children's
hospitals--
Ms. Capps. And we are going to hear from--
Ms. Nesseler. Yes.
Ms. Capps. --directly from them.
Ms. Nesseler. Yes, ma'am.
Ms. Capps. But I am wondering if you had gotten any feedback,
and this isn't a surprise today, what has the reaction been to
your office or to you, from some of the hospitals, in terms of
what this is going to do to their funding source? Or their
solvency, their ability to provide services, and to provide
training?
Ms. Nesseler. They understand that the Department has a
priority list of programs that are a high priority, and they
know that we have a good working relationship with them, and
that we will all do the best that we can with our $99 million,
and we believe we are supportive of the program with $99
million, ma'am.
Mr. Deal. Thank you, Ms. Nesseler. We appreciate your being
here today, and some of the areas that you alluded that you
would get further responses, we would encourage you to do that
as soon as possible.
Ms. Nesseler. Thank you, sir.
Mr. Deal. Thank you very much.
Ms. Nesseler. I appreciate it.
Mr. Deal. Now, our second panel, if you would come to the
table.
Welcome, gentlemen. We are pleased to have as our second
panel, Mr. Patrick Magoon, who is President and CEO of the
Children's Memorial Hospital in Chicago, Illinois; and
Mr. Bill Considine, who is President and CEO of the Akron
Children's Hospital in Akron, Ohio.
We are pleased to have both of you here. As I said earlier,
your written testimony has been made a part of the record,
and we would invite you to summarize in your opening statements.
Mr. Magoon.
STATEMENTS OF PATRICK MAGOON, PRESIDENT AND CEO, CHILDREN'S MEMORIAL
HOSPITAL, CHICAGO, ILLINOIS; AND WILLIAM H. CONSIDINE, PRESIDENT AND
CEO, AKRON CHILDREN'S HOSPITAL, AKRON, OHIO
Mr. Magoon. Thank you, sir. Mr. Chairman and subcommittee members,
it truly is a privilege to be here with you this morning.
A few points about Children's Memorial Hospital. We happen
to be the only full service children's hospital in the State
of Illinois, and have the privilege of serving about 102,000
individual children who come to us from every county in the
State of Illinois, from every area--urban, rural, and
suburban. We happen to train about 92 pediatric residents,
about 75 fellows, and about 100 medical students at our
institution.
We are home to one of five independent, freestanding research
centers which focus on providing research into the prevention
and cures for diseases of children, and we also happen to be
the single largest provider of pediatric Medicaid services in
the State of Illinois, a State which does not provide
Medicaid funding in support of the GME program.
I would like to make three points about the children's
hospitals GME program. First, the goal of equity. Second,
is its importance in terms of the training of the next
generation of pediatricians and specialists for this country,
and the importance of its investment in all children of our
country.
First, as you know, CHGME's goal is to provide equitable Federal GME
support to independent children's hospitals. Until GME financial
reform is achieved, it is an interim step for our hospitals to
receive Federal GME support comparable to what other teaching
hospitals receive, and it enables us to make that multiyear
commitment needed to train physicians.
Second, it has been a huge success in bolstering our ability
to turn around a decline in the size of our training programs,
and to strengthen them, at a time of a National pediatric
workforce shortage.
Third, CHGME is an essential and yet critical investment in the
future health of every child in the United States, because the
Nation's 60 independent children's teaching hospitals are the
backbone of healthcare for all.
But to start, I have to go back to the late 1990s.
Healthcare price competition was intense. Children's
hospitals faced enormous pressure because we do everything
an academic medical center does, but with no Federal GME
support, because we care for children, not the elderly. So
why should that matter? In 1998, Medicare paid a teaching
hospital, on average, more than $60,000 per full-time
resident FTE, but paid an independent children's hospital
less than $400. If there had been another major payer for
GME, it really wouldn't have mattered, but private payers
have stopped paying for the extra cost of teaching, and
Medicaid payment for GME, as you know, is well below cost.
The lack of equitable Federal GME support put our hospitals
truly at grave risk. By the late 1990s, children's
hospitals nationwide began to face serious budget shortfalls.
That, accompanied with the pressure mounting for the demand
for services for children, really has created significant
problems. In the case of the Children's Memorial Hospital,
at that time, we were losing about $12.5 million on our
operating performance at a very critical time. Our Medicaid
losses totaled more than $23 million.
We took a very aggressive look at the operating performance
for the institution. We reduced 400 positions, cut $25
million out of our operating budget, looked at every
opportunity for efficiencies, but chose cognitively not to
make a reduction in our training program because of its
importance to our mission to train physicians, to improve
research, and to really enable us to provide clinical care
to our population.
In 1998 and in 1999, Children's Hospital went to Congress.
We told our story. Few realized that independent children's
teaching hospitals were basically left out in the cold when
it came to Federal GME support. They clearly understood the
issue of equity. Congress responded overwhelmingly with
bipartisan support that led to CHGME's enactment in 1999
and reauthorization in 2000. We are deeply grateful to this
subcommittee and the full committee for your leadership.
Today, children's hospitals GME provides, on average, about
80 percent of the Federal GME support other teaching
hospitals receive through Medicare. It has made an enormous
difference. Over the past five years, Children's Hospital
has increased our training of pediatricians by 20 percent,
and our pediatric specialists by 47 percent. Without this
growth, the number of pediatricians would have continued to
decline, and our training accounted for more than 60 percent
of all new pediatric specialists, many who are in very, very
short supply.
There is no better proof of CHGME's importance to all of
pediatrics than the testimony of pediatric department chairs
of medical schools. This spring, 80 pediatric department
chairs asked the committee to continue CHGME. More than half
have hospitals that receive no CHGME, but they know that
independent children's hospitals are indispensable components
of the training program. Why? Why did they take this position?
We are only 1 percent of all of the hospitals in the Nation,
but we train nearly 30 percent of all of the pediatricians, and
half of the pediatric sub-specialists. We provide half of all
specialty care for the sickest children, such as cancer, birth
defects, and we are clearly the safety net to the poorest in
our community.
In short, we are only one percent, but we do what touches
children's lives each and every day. We train those
pediatricians, we help with breakthroughs in medicine, and
our
researchers do everything they can to help discover the
precursors to adult disease. That is why CHGME is an
investment in the healthcare of all of our citizens. It is
an investment in our teaching which translates into return
on investment with respect to improved clinical care,
research, and the ability to serve children.
We are grateful for the overwhelming support of the members
of the House that they have provided for this program, and
we respectfully ask that you continue this goal of equity,
its success for expanding the pediatric workforce, and its
investment in every child in our Nation.
Thank you very much, sir.
[The prepared statement of Patrick Magoon follows:]
Prepared Statement of Patrick Magoon, President and CEO, Children's
Memorial Hospital, Chicago, IL
MR. CHAIRMAN AND MEMBERS OF THE SUBCOMMITTEE, IT IS AN HONOR FOR ME
TO BE HERE TODAY. I AM PATRICK MAGOON, PRESIDENT AND CEO OF CHILDREN'S
MEMORIAL HOSPITAL IN CHICAGO, ILLINOIS. THANK YOU FOR THE OPPORTUNITY
TO TESTIFY ON BEHALF OF THE FEDERAL CHILDREN'S HOSPITALS GRADUATE
MEDICAL EDUCATION (CHGME) PROGRAM.
CHILDREN'S MEMORIAL WAS FOUNDED IN 1882 BY JULIA FOSTER PORTER WHO LOST
HER SON TO ILLNESS. THE HOSPITAL BEGAN AS AN EIGHT BED COTTAGE AND HAS
EVOLVED INTO A MAJOR MEDICAL CENTER THAT TODAY OWNS AND OPERATES 270
LICENSED BEDS AS WELL AS A FULL RANGE OF INPATIENT AND OUTPATIENT CARE
AND RELATED ANCILLARY SERVICES. CHILDREN'S MEMORIAL IS ILLINOIS' ONLY
INDEPENDENT, ACUTE CARE HOSPITAL DEDICATED EXCLUSIVLEY TO CHILDREN.
BECAUSE OF THE DEPTH AND BREADTH OF SERVICES WE OFFER, WE HAVE THE
PRIVILEGE OF SERVING CHILDREN FROM EVERY COUNTY IN THE STATE. FOR
EXAMPLE, FROM DURING FY 2002-2005, WE HAD 46,658 PATIENT ENCOUNTERS
FROM CONGRESSMAN RUSH'S CONGRESSIONAL DISTRICT LOCATED ON THE SOUTH
SIDE OF CHICAGO AND 384 PATIENT ENCOUNTERS WITH CHILDREN FROM
CONGRESSMAN SHIMKUS' DISTRICT LOCATED DOWNSTATE.
OUR HOSPITAL TRAINS MORE DOCTORS FOR CHILDREN, PROVIDES MORE HOSPITAL
CARE FOR CHILDREN, CONDUCTS MORE RESEARCH FOR CHILDREN, AND SERVES
MORE MEDICAID PATIENTS THAN ANY OTHER HOSPITAL IN ILLINOIS. MEDICAID
REPRESENTS 48% OF OUR INPATIENT CARE.
I WANT TO MAKE THREE POINTS ABOUT CHGME'S GOAL OF EQUITY, ITS SUCCESS
FOR PEDIATRIC TRAINING, AND ITS INVESTMENT IN THE HEALTH OF ALL
CHILDREN.
FIRST, CHGME'S GOAL IS TO PROVIDE EQUITABLE FEDERAL GME SUPPORT TO
INDEPENDENT CHILDREN'S HOSPITALS. UNTIL COMPREHENSIVE GME FINANCING
REFORM IS ACHIEVED, CHGME IS AN INTERIM STEP FOR CHILDREN'S HOSPITALS
TO RECEIVE NO MORE BUT NO LESS THAN THE FEDERAL GME SUPPORT THAT ALL
OTHER TEACHING HOSPITALS HAVE RECEIVED FOR DECADES.
SECOND, CHGME IS A SUCCESS IN BOOSTING OUR ABILITY TO BOTH TURN AROUND
A DECLINE IN THE SIZE OF OUR TRAINING PROGRAMS AND STRENGTHEN THEM AT
A TIME OF NATIONAL PEDIATRIC WORKFORCE SHORTAGES - WITHOUT HAVING TO
SACRIFICE CLINICAL CARE OR RESEARCH.
THIRD, CHGME IS AN INVESTMENT IN THE FUTURE HEALTH OF EVERY CHILD IN
THE U.S. BECAUSE THE NATION'S 60 INDEPENDENT CHILDREN'S TEACHING
HOSPITALS ARE THE BACKBONE OF HEALTH CARE FOR ALL CHILDREN.
BUT TO START, I HAVE TO GO BACK TO THE LATE 1990S. PRICE COMPETITION
THEN, AS NOW, WAS INTENSE IN THE HEALTH CARE MARKETPLACE. INDEPENDENT
CHILDREN'S HOSPITALS FACED ENORMOUS PRESSURES BECAUSE WE DO EVERYTING
ANY ACADEMIC MEDICAL CENTER DOES - BUT WITH NO FEDERAL GME SUPPORT,
BECAUSE WE CARED FOR VIRTUALLY NO MEDICARE PATIENTS.
WHY SHOULD THAT MATTER? IN 1998, MEDICARE PAID A TEACHING HOSPITAL,
ON AVERAGE MORE THAN $60,000 PER FULL TIME EQUIVALENT RESIDENT, DIRECT
AND INDIRECT MEDICAL EDUCATION FUNDING COMBINED. BUT, IT PAID AN
INDEPENDENT CHILDREN'S HOSPITAL LESS THAN $400 PER RESIDENT.
IF THERE HAD BEEN OTHER MAJOR PAYERS OF GME FOR CHILDREN'S HOSPITALS,
IT WOULD NOT HAVE MATTERED. BUT PRIVATE PAYERS STOPPED PAYING THE
EXTRA COSTS OF TEACHING AND MEDICAID PAYMENT FOR GME IS WELL BELOW ITS
COST. THE LACK OF EQUITABLE FEDERAL GME SUPPORT PUT OUR HOSPITALS AND
ALL OF OUR MISSIONS - CLINICAL CARE, TEACHING, AND RESEARCH - AT GRAVE
RISK.
IN 1999, RALPH MULLER WAS THE FORMER CEO OF THE UNIVERSITY OF CHILCAGO
HOSPITALS, WHICH HAS A NON-INDEPENDENT CHILDREN'S HOSPITAL THAT
RECEIVES MEDICARE GME. IN EXPLAINING HIS SUPPORT FOR CHGME, HE ONCE
SAID: �I DON'T KNOW HOW CHILDREN'S MEMORIAL CAN OPERATE WITHOUT
MEDICARE GME SUPPORT. OUR HOSPITAL COULD NOT.�
BY THE LATE 1990S, CHILDREN'S HOSPITALS NATIONWIDE FACED BUDGET
SHORTFALLS, PRESSURES TO EXPAND AND MOUNTING DEMAND FOR OUR SERVICES.
CONSIDER MY OWN HOSPITAL. CHILDREN'S MEMORIAL HAD MASSIVE BUDGET
LOSSES. IN FISCAL YEAR 1997, WE HAD A $12.5 MILLION OPERATING LOSS.
CHILDREN'S MEMORIAL'S MEDICAID OUTPTIENT LOSSES AGAINST OUR COSTS
AMOUNTED TO $23 MILLION.
EVERY PROGRAM WITHOUT VIABLE INCOME - INCLUDING GME - WAS UNDER
INTENSE PRESSURE TO CUT BACK. WE MADE PAINFUL DECISIONS SUCH AS
THE ELIMINATION OF 400 JOBS. WE STREAMLINED OUR OPERATIONS AND
CUT ALMOST $25 MILLION IN COSTS. BUT IF WE CUT TRAINING, IT
WOULD HAVE HAD SEISMIC RAMIFICATIONS FOR OUR CLINICAL OPERATIONS
AND RESEARCH ENTERPRISE, WHICH ARE INTEGRATED WITH OUR ACADEMIC
PROGRAM.
THE IMPORTANCE OF PEDIATRIC RESEARCH CANNOT BE UNDERESTIMATED.
THE ENTERPRISE OF SCIENTIFIC DISCOVERY IN HEALTH CARE DEPENDS ON
THE STRONG ACADEMIC PROGRAMS OF TEACHING HOSPITALS. BY COMBINING
RESEARCH AND TEACHING IN A SINGLE CLINICAL SETTING, TEACHING
HOSPITALS COMBINE THE TWO CRITICAL INGREDIENTS FOR SUCCESSFUL
SCIENTIFIC DISCOVERY IN MEDICINE - SCIENTIFIC BREAKTHROUGHS AND
RAPID TRANSLATIONS OF THEM INTO PATIENT CARE.
THE TEACHING ENVIRONMENT ATTRACTS THE ACADEMICIANS DEVOTED TO
RESEARCH AND DRAWS THE VOLUME AND SPECTRUM OF CASES UPON WHICH
CLINICAL RESEARCH RELIES. THE TEACHING ENVIRONMENT CREATES THE
INTELLECTUAL ATMOSPHERE THAT TESTS THE CONVENTIONAL WISDOM OF
DAY-TO-DAY HEALTH CARE AND FOSTERS QUESTIONS THAT LEAD TO
SCIENTIFIC BREAKTHROUGHS.
SIMPLY PUT, INDEPENDENT CHILDREN'S TEACHING HOSPITALS ARE PROOF
OF THE IMPORTANCE OF ACADEMIC MEDICINE TO SCIENTIFIC DISCOVERY
ESSENTIAL TO IMPROVING CHILDREN'S HEALTH CARE.
SCIENTIFIC ADVANCES OF CHILDREN'S TEACHING HOSPITALS HAVE HELPED
CHILDREN SURVIVE ONCE FATAL DISEASES SUCH AS POLIO, TO GROW AND
THRIVE WITH ONCE CRIPPLING DISABILITIES SUCH AS CEREBRAL PALSY,
AND TO BECOME ECONOMICALLY SELF-SUPPORTING ADULTS WITH CONDITIONS
SUCH AS JUVENILE DIABETES AND SPINA BIFIDA. THIS IS WHY OUR
HOSPITALS ARE CONSISTENTLY AMONG THE LEADING RECIPIENTS OF NIH
GRANTS FOR BIOMEDICAL RESEARCH.
CHGME FUNDING IS EXTREMELY IMPORTANT TO THE ABILITY OF CHILDREN'S
TEACHING HOSPITALS, INCLUDING OURS, TO FULFILL OUR MISSION OF
TRAINING THE NEXT GENERATION OF PHYSICIANS SPECIALIZED IN THE CARE
OF CHILDREN, IN ADDITION TO THE MISSIONS OF CLINICAL CARE, RESEARCH
AND ADVOCACY FOR CHILDREN. IF WE CRIPPLE OUR TRAINING PROGRAM, WE
CRIPPLE OUR RESEARCH PROGRAM.
IN 1998 AND 1999, CHILDREN'S HOSPITALS WENT TO CONGRESS. WE TOLD
OUR STORY. FEW REALIZED THAT INDEPENDENT CHILDREN'S TEACHING
HOSPITALS WERE BASICALLY LEFT OUT IN THE COLD WHEN IT CAME TO
FEDERAL GME SUPPORT.
CONGRESS RESPONDED OVERWHELMINGLY WITH BIPARTISAN SUPPORT THAT LED
TO THE ENACTMENT OF CHGME IN 1999 AND ITS REAUTHORIZATION IN 2000.
WE ARE DEEPLY GRATEFUL TO THIS SUBCOMIMTTEE AND THE FULL COMMITTEE
FOR THE LEADERSHIP YOU PROVIDED. TODAY, CHGME PROVIDES, ON AVERAGE,
TO OUR HOSPITALS ABOUT 80% OF THE FEDERAL GME SUPPORT OTHER TEACHING
HOSPITALS RECEIVE THROUGH MEDICARE. IT HAS MADE AN ENOMROUS
DIFFERENCE FOR OUR HOSPITALS AND FOR OUR TRAINING PROGRAMS.
OVER THE PAST FIVE YEARS, INDEPENDENT CHILDREN'S TEACHING HOSPITALS
HAVE INCREASED OUR TRAINING OF PEDIATRICIANS BY 20% AND OUR TRAINING
OF PEDIATRIC SPECIALISTS BY 47%. WITHOUT THIS GROWTH THE NUMBER OF
PEDIATRICIANS IN THIS COUNTRY WOULD HAVE CONTINUED THEIR DECLINE.
OUR TRAINING ACCOUNTED FOR MORE THAN 60 PERCENT OF ALL NEW
PEDIATRIC SPECIALISTS - SPECIALISTS SUCH AS GASTROENTEROLOGISTS THAT
ARE IN SUCH SHORT SUPPLY IT CAN TAKE A YEAR OR MORE TO FILL
VACANCIES.
CHILDREN'S MEMORIAL IS ONE OF THE MAJOR PEDIATRIC TEACHING HOSPITALS
IN THE COUNTRY. WE ARE AFFILIATED WITH NORTHWESERN UNIVERSITY'S
FEINBERG SCHOOL OF MEDICINE. OUR RESIDENCY PROGRAM IS CONSISTENTLY
ONE OF THE MOST SOUGHT AFTER NATIONALLY. IN 2004-2005, FOR EXAMPLE,
WE RECEIVED MORE THAN 820 APPLICATIONS FOR 31 OPENINGS.
BETWEEN 6 SPECIALTIES AND 26 SUBSPECIALTIES, EACH YEAR WE TRAIN
ABOUT 185 PHYSICIANS, ALMOST HALF -- CURRENTLY 84 -- ARE PEDATRIC
RESIDENTS. THE REMAINDER ARE FELLOWS IN SUCH AREAS AS INFECTIOUS
DISEASE, NEONATALOGY, CARDIOLOGY AND OTHER PEDIATRIC SUBSPECIALTIES.
MORE THAN 200 MEDICAL STUDENTS ROTATE THROUGH THE HOSPITAL FOR
CLINICAL CLERKSHIPS. IN FY 2005, WE TRAINED 200 FULL-TIME EQUIVALENT
RESIDENTS AT OUR INSTITUTION. THIS REPRESENTS A GROWTH OF 27%
(42.7 ADDITIONAL RESIDENTS) IN OUR TRAINING PROGRAM SINCE FY 2000.
THE CHGME PROGRAM HAS ALLOWED US TO IMPLEMENT CUTTING EDGE CLINICAL
PROGRAMS. FOR EXAMPLE, WE HAVE DEVELOPED A SMALL BOWEL AND SHORT
GUT TRANSPLANT PROGRAM. WE CANNOT OPERATE THESE TYPES OF INTENSIVE
CLINICAL PROGRAMS WITHOUT OUR REISDENCY TRAINING PROGAM.
THERE IS NO BETTER PROOF OF CHGME'S IMPORTANCE TO THE NATION'S
PEDIATRIC WORKFORCE THAN THE TESTIMONY OF PEDIATRIC DEPARTMENTS OF
MEDICAL SCHOOLS, MOST OF WHICH DO NOT HAVE AN INDEPENDENT CHILDREN'S
HOSPITAL. THIS SPRING, 80 PEDIATRIC CHAIRS ASKED THE COMMITTEE TO
CONTINUE CHGME. MORE THAN HALF REPRESENT HOSPITALS THAT RECEIVE NO
CHGME. THEY KNOW INDEPENDENT CHILDREN'S TEACHING HOSPITALS ARE
INDISPENSABLE.
WHY? WE ARE ONLY 1% OF ALL HOSPITALS. BUT, WE TRAIN 30% OF ALL
PEDIATRICIANS, HALF OF ALL PEDIATRIC SPECIALISTS, AND MOST PEDIATRIC
RESEARCHERS. WE PROVIDE HALF OF ALL SPECIALTY CARE FOR THE SICKEST
CHILDREN - WITH CANCER, BIRTH DEFECTS, TRAUMA. WE ARE THE SAFETY
NET TO THE POOREST CHILDREN. WE HOUSE THE ENGINES OF PEDIATRIC
RESEARCH.
IN SHORT, INDEPENDENT CHILDREN'S TEACHING HOSPITALS ARE ESSENTIAL TO
HEALTH CARE FOR EVERY CHILD IN THIS COUNTRY. WE'RE ONLY 1% BUT WHAT
WE DO TOUCHES EVERY CHILD'S LIFE - BY CARE WE GIVE, BY PHYSICIANS WE
TRAIN, BY BREAKTHROUGHS IN HEALTH CARE OUR RESEARCH DISCOVERS.
THAT'S WHY CHGME IS AN INVESTMENT IN THE HEALTH OF ALL CHILDREN.
IT IS AN INVESTMENT IN OUR TEACHING, WHICH TRANSLATES INTO AN
INVESTMENT IN OUR CLINICAL CARE, OUR RESEARCH, AND OUR ABILITY TO
SERVE ALL CHILDREN.
WE ARE GRATEFUL FOR THE OVERWHEMLING SUPPORT THAT THE MEMBERS OF
THE HOUSE HAVE PROVIDED FOR THE CHGME PROGORAM AND FOR THE SUPPORT
THAT OUR COLLEAGUES IN THE PEDIATRIC AND HOSPITAL COMMUNITIES HAVE
SHOWN, INCLUDING THE AMERCIAN ACADEMY OF PEDIATRICS, ASSOCIATION OF
MEDICAL SCHOOL PEDIATRIC DEPARTMENT CHAIRS, ASSOCIATION OF AMERICAN
MEDICAL COLLEGES, AND AMERICAN HOSPITAL ASSOCIATION.
WE RESPECTFULLY ASK YOU TO CONTINUE CHGME'S GOAL OF EQUITY, ITS
SUCCESS FOR THE PEDIATRIC WORFORCE, AND ITS INVESTMENT IN THE HEALTH
CARE OF EVERY CHILD AND EVERY GRANDCHILD. PLEASE REAUTHORIZE CHGME.
One Page Summary
Testimony of Patrick Magoon
Children's Memorial Hospital
May 9, 2006
I want to make three points about CHGME.
First, CHGME's goal is to provide equitable federal GME support to
independent children's hospitals. Until comprehensive GME financing
reform is achieved, CHGME is an interim step for children's hospitals
to receive no more but no less than the federal GME support that all
other teaching hospitals have received for decades.
In 1998, the federal government provided independent children's
hospitals with about 0.5% of the level of federal GME support that it
provided to all other teaching hospitals through Medicare. Today,
thanks to CHGME, it provides about 80%, and it makes it possible for us
to make the multi-year commitment we need to train residents.
Second, CHGME is a success in boosting our ability to both turn around
a decline in the size of our training programs and strengthen them at
a time of national pediatric workforce shortages - without having to
sacrifice clinical care or research.
Thanks to CHGME, independent children's hospitals have increased the
number of pediatric residents we train by 20 percent and the number of
pediatric specialty residents by more than 40%. Without the growth in
our training, the total number of pediatric residents nationwide would
have declined at a time of national shortages of pediatric specialists.
Third, CHGME is an investment in the future health of every child in
the U.S. because the nation's 60 independent children's teaching
hospitals are the backbone of health care for all children.
Through our clinical care, research, and training, children's hospitals
touch the lives of all children. CHGME funding is fundamental to our
ability to maintain and strengthen our training programs, which in turn
are fundamental to our clinical and research missions.
Children's Memorial is a perfect illustration. In the 1990s, we were
losing money, cutting staff, and facing pressures to curtail training.
Today, thanks to CHGME, we gave been able to increase our training by
more than 25%, implement cutting edge clinical programs, and undertake
new research.
Mr. Deal. Thank you. Mr. Considine.
Mr. Considine. Thank you, Mr. Chairman, and thank you, Mr. Brown,
and to all the committee members. My name is Bill Considine, and I
have had the privilege of serving as the President and Chief Executive
Officer of Akron Children's Hospital for 27 years, and it has truly
blessed my life. I really appreciate being here today, and being
given the opportunity to share with you the importance of the CHGME
program, not only on children's healthcare, but very definitely, on
the children's hospitals of our country.
Akron Children's Hospital has been part of our community for
116 years, and during that time, has developed a very rich
heritage and tradition. Last year alone, we served patients
from all the 51 counties in the State of Ohio, 22 States, as
well as other counties. In total, we saw 433,000 children
through all our programs, and 210,000 of those children were
served in our primary care offices in the rural areas of our
region.
We believe that our promise is to treat every child as if
that child was our own, and to make sure our doors stay open
to all children, regardless of their ability to pay. We are
the largest pediatric healthcare provider in our region, and
have relationships with literally dozens of other adult
hospitals. We know that it is our responsibility to be child
advocates and to speak up in public policy arenas such as these
on the needs of our children, and when you talk about medical
education, it very definitely is a key priority here in our
country, as well as our region.
When you talk about children's hospitals, too, and you look
at the five components of our mission, which are family-
centered patient care, training and education, research,
community service, and child advocacy, you can see that
training and education has been part of who we are for
literally over a century.
The first medical resident in the city of Akron was a
pediatric resident at Children's Hospital in the early 1900s,
and the first nursing student in the city of Akron was a
nursing student in 1905, at Akron Children's. We are one of
the founders of the Northeastern Ohio University College of
Medicine, very proud of that relationship, and we are the
only pediatric provider there.
When we look at the issue of graduate medical education, I
can assure you my 27 years has shown me the ups and downs of
dealing with the vagaries relative to payment for medical
education. When we talk about the medical education and the
graduate medical education fund that has been put together
for children's hospitals with our trustees, our medical staff,
parents, and the community leaders that we are involved with,
we discuss four items. One is equity. The whole premise of
this program, back in 1999, was to bring equity to the
responsibilities that children's hospitals have, as compared
to the adult hospitals.
Our partners in the medical school, as Mr. Magoon has already
pointed out, benefited from Medicare GME funding coming to
them. In our town, they were receiving approximately $65,000
per resident with the Medicare GME program. Since we couldn't
qualify for that, we were receiving under $400 per resident,
and then, in 1999, with some of the other cutbacks to
Medicaid in our State, that became a huge challenge for us
to maintain our promise to our community to be involved in
medical education. So, equity is what this program is about,
and the CHGME money has brought us up to about $55,000 a
resident, still not at that $65,000 level, but closer, and
I think we have heard the figure 80 percent.
The other component of the program we talk about is need.
There definitely is a need out there for the training of
pediatricians and sub-specialists in medicine. Prior to
this program, we had to curtail our training initiatives
because of funding issues, and we were capping the number of
residents we trained at about 50 a year. With the money that
has come to us through this graduate medical education funding,
we have been able to increase that to 87 full-time equivalents
per year, and we also have 380 residents from adult hospitals
rotating to us to get their pediatric experience.
Consequently, we have been able to reduce a decline, or turn
around a decline of 13 percent in young people going into the
pediatric sub-specialties and residencies to where we have
seen an 18 percent increase in that. That is good return on
the investment.
The other need we have is to be a financially viable
organization to bondholders and others that come to us for
care, and prior to this money coming to us, we were facing a
deficit on our margin. In 2005, our margin at our hospital
was 0.4 percent. If this graduate medical education money
would go away, we would have a negative margin, operating on
a margin of 1.1 percent, and this has helped us stabilize
that, and answer the tough questions that we need to answer
about being a viable institution that serves those 433,000
children.
The other component we talk about with our trustees, is this
program successful? And I would suggest, and respectfully to
this group, it has been very successful. The numbers I have
shared with you, in terms of what we have been able to do, in
terms of training more and more residents, is really
remarkable, and of the residents we train, 75 percent of them
do stay in Ohio, and 50 percent of them go into primary care,
pediatrics, and are placed in rural areas that really do
need service directed to those children. Enormous success.
The other thing we talk about is value, and we are always
looking for return on the investment, and again, I would
respectfully say there has been enormous return on this
investment. We have talked about the Medicare GME program,
and know that last year, $8 billion was directed to 1,000
teaching hospitals to train residents and adult physicians.
This CHGME program last year generated $300 million, not
$300 billion, but $300 million, compared to $8 billion, and
it went to the 61 hospitals, and we trained 5,000 residents.
There is a good comparison there, and you can see the return
on that $300 million is greater than that return on that
$8 billion.
I hate to compare ourselves with the adult hospital, but
what we are really trying to get to is a level playing field
with our colleagues that have the same kind of mission
statement that we do.
Thank you, Mr. Chairman, for the time. As you can see, I am
passionate about this program.
[The prepared statement of Bill Considine follows:]
Prepared Statement of Bill Considine, President and CEO, Akron
Children's Hospital, Akron, OH
Mr. Chairman, Congressman Brown, and members of the subcommittee, I am
Bill Considine, president of Akron Children's Hospital for more than
25 years.
Thank you for the opportunity to testify on the federal
Children's Hospitals Graduate Medical Education (CHGME)
Program. Akron Children's is one of the six hospitals in
Ohio and 60 nationwide that qualify for CHGME. We very much
appreciate the leadership of the Energy and Commerce
Committee and so many members of this Subcommittee in
authorizing the program in 1999 and reauthorizing it for
five years in 2000.
CHGME strives to give the nation's 60 independent children's
teaching hospitals a level of federal GME support comparable to
what all other teaching hospitals receive through Medicare. CHGME
has been a success for the children of Akron, the children of Ohio,
and the children in every state in the country. It has enabled our
hospitals to sustain and strengthen our training programs, which are
a vital part of our mission and the care we provide.
Akron Children's Hospital is a good illustration of the range of
services an independent children's hospital provides.
We provide nearly 43,700 days of inpatient care, as well as 433,000
outpatient visits in the hospital and in 14 neighborhood clinics and
other facilities throughout the region. They include 205,000
primary care visits, 108,000 specialty care visits, 62,000 emergency
care visits, and other care visits. We serve children from 51 Ohio
counties and 22 states each year. We devote 44% of our patient care
to children under Medicaid and that proportion is only growing.
Akron Children's is a major center of excellence for children with
cancer, heart defects and trauma. As a consequence, the severity of
care our hospital provides is nearly 70% greater than it is for
community hospitals nationwide. We also conduct research in areas
such as cancer, heart defects, emergency care, neonatal care,
emergency medicine, infectious disease, and more.
Akron Children's has a long-standing commitment to training
physicians. In the 1920s, our hospital was the first of any
hospital in Akron to train physicians. Today we play a unique role
in physician training in our region. We are part of an academic
medical enterprise that includes a medical school with three
university affiliations and eight teaching hospitals. Akron
Children's is the only major pediatric institution.
In addition to training more than 70 pediatric and pediatric
specialty residents annually, our hospital provides training to more
than 380 residents in other areas - such as internists, family
practice physicians, surgeons. They rotate from the other teaching
hospitals through our hospital for short periods of time to receive
exposure to pediatrics.
More than 75% of all of the pediatricians and pediatric specialists
we train go on to practice in Ohio. More than half of the
pediatricians we train provide care as part of our community based
primary care network after graduation. And most of the pediatric
subspecialists in our community are trained at the hospital. Our
training program benefits not only our patients but all children.
In the late 1990s and early years of this decade, as CHGME was
just starting, Akron Children's had major financial challenges.
We faced negative operating margins, pressures to curtail our
training, and pressures to curtail services for which little or no
income was available. One example was our regional poison control,
which we had to close for lack of funds. Another example was the
closure of our �continuity� clinic which moved patients from the
hospital to primary care clinics in the community.
While our adult teaching partners received more than $60,000 of
dollars in Medicare GME support per resident, we received only a
few hundred dollars per resident, with no comparable, alternative
source of GME support. We were dedicated to our historic mission
of physician education in our region, but it was becoming harder
and harder to continue to shoulder our responsibility for training
about 50 FTE residents at that time, much less strengthen that
commitment to meet growing need.
Today, the $4 million in annual CHGME funding that Akron Children's
receives has made a world of difference. We have increased the
total number of FTE residents we train by 21%, the number pediatric
FTE residents we train by 20%, and the number of pediatric
specialists we train by much more since 2000. This year, we will
train more than 87 FTE residents, including 71 pediatric residents
and fellows with specialty programs in clinical areas such as
emergency care, radiology, pathology, and sports medicine.
We have opened new training programs in pediatric oncology,
pediatric palliative care, and child psychiatry. We are applying
for approval to open programs in pediatric general surgery and burn
care. Those new programs and the residents we train will help us
to respond to serious physician shortages. For example, mental
health care for children has been in a crisis in our region for
many years. In the face of overwhelming need, Akron Children's
itself was forced to scale back its inpatient psychiatric service.
Thanks to CHGME funding, we are now able to train pediatric
psychiatrists with a good chance they will practice in our region.
That will help us to develop new services and meet the tremendous
unmet need that exists.
We have been able to improve the quality of the training we
provide in a number of ways. By employing hospitalists - full
time, senior physicians on staff in the hospital -- we enhance
the training experience of the residents. By being able to
increase the physicians we employ, it makes it possible for faculty
to devote more time to research, which enriches the research
experience of our residents. Research is a growing part of our
hospital's mission, and future pediatric researchers come
primarily from independent children's hospitals.
With the resources CHGME has given us, we have been able to
introduce new electronic technology - hand-held computers to aid
residents in treating complex patients. We have expanded training
to include new areas of focus on special dimensions of pediatric
care, such as palliative care, which is so important with the growing
numbers of children with cancer we treat.
And we have been able to do all of this without sacrificing our
clinical care or research efforts. In fact, with CHGME, we have been
able to strengthen both, as CHGME helped offset losses from the
uncovered costs of teaching.
If there were no CHGME funding tomorrow, Akron Children's would find
its operating margins in the red and its financial health at risk.
Our ability to open new fellowships in surgery and burn care, which
have been recommended by the American College of Surgeons, as well as
our ability to continue to provide pediatric rotational training to
hundreds of non-pediatric physicians would be in jeopardy. And our
loss of nearly $4 million would, once again, put pressure to cut back
on vital services for which there is little or no income, such as the
physicians we now pay for to deliver care to low-income children at
a community health center.
Our experience is reflected among the 60 independent children's
hospitals. In the late 1990s, many faced financial challenges, which
Moody's Investor Services and Standard and Poor's attributed in part
to the absence of public funding for our education programs. Many
of our hospitals had begun to curtail our training, limit services
that require hospital subsidy or not undertake needed service
expansions.
Since CHGME's enactment in 1999 and full funding for the first time
in 2002, the picture has changed significantly. Collectively, we
have increased the numbers of pediatric residents trained, the numbers
of pediatric specialists trained, and the numbers, and the number of
pediatric subspecialty training programs. Without our growth in
training due to CHGME, the number of pediatric residents trained
would have continued to decline.
Equitable GME support through CHGME helped offset our losses
on teaching and that has helped us weather many challenges --
children's growing loss of private insurance, rising numbers
of children covered by Medicaid for which payment is well
below cost, mounting costs for information technology, and
the ongoing capital needs of resource and service intensive
institutions like ours.
In conclusion, CHGME restores equitable federal GME support and
fair competition to children's hospitals. CHGME benefits all
children.
There is strong, bipartisan support for CHGME. Please continue the
strong, successful CHGME program that exists today by reauthorizing
it as quickly as possible.
One Page Summary
Testimony by WilliamConsidine
Akron Children's Hospital
Greetings
Appreciation for the broad, bipartisan support for enactment and
reauthorization of CHGME from Congress overall and the leadership
of full committee and subcommittee.
Authorization in 1999
Reauthorization for five years in 2000
Akron Children's Hospital's commitment to training pediatric and
specialty residents is historic.
The first teaching hospital in Akron
The single, major children's teaching hospital in our region,
caring for children from 50 counties in Ohio and 22 states
Today, train more than 80 FTE residents, including pediatric
residents and other residents receiving pediatric rotations
History of CHGME
Began in the late 1990's when Akron Children's faced financial
shortfalls: pressure to close poison control center, continuity
clinic; ability to train only 50 residents with pressure to cut
Financial impact of CHGME on Akron Children's
Offset the financial burden of training residents
Increased pediatric resident trained by 20%
Employment of new specialty physicians
Introduction of electronic technology
A future without CHGME
Financial losses
Curtailment of training
Limiting services
A request for reauthorization of GME funding
Mr. Deal. Well, thank you. Both of you made a very compelling
testimony for us in this consideration, and I would be remiss if
I didn't say thank you to both of you, and to you your institutions,
for what you do to train pediatricians and those in pediatric
specialties. As a grandfather, I am perhaps a little more acutely
aware of children's healthcare, maybe, than I was when I was a
father, but grandchildren seem to get your attention a little bit
more sometimes.
You have heard the comments with regard to what the proposal
is in the budget, to go to more of a needs basis assessment
of allocation of funding. How would each of you think your
institution would fare using that as almost the exclusive
criteria? Mr. Magoon, I will start with you.
Mr. Magoon. Thank you, sir. I would suggest if one were to
look at the industry, that is the children's hospitals, the 61
of us that are there, a change of this magnitude would reduce,
on average, operating margins by about 33 percent. Prior to
the program, the operating margins were somewhere in the range
of a negative 4 percent to about 1, 1.5, so it would take many
of our institutions, and put them in financial peril immediately.
And that really works against our objective of having strong
children's hospitals serve as the backbone of the healthcare
system for our community, and really, they are the safety net
provider. So, it puts our most vulnerable at risk, quite
frankly, for immediate care.
In the long run, I would also say that we make a commitment to
a resident for three years, and so, when you are done with
that three year commitment, that resident goes off, but there
is another resident right behind him, and behind her, and
behind me. And what we also need to recognize is many of them
go into sub-specialty areas of pediatric medicine, and I would
just like to highlight two facts.
We have a fellowship program in pediatric orthopedic surgery,
and we have not been able to fill that for the last 3 years.
This year, there will be five individuals finishing their
fellowship training in pediatric orthopedic surgery nationwide,
to meet the needs nationwide. The other example I would share
with you is pediatric endocrinology. Last year, there were
eight individuals across the country who finished their
fellowship training in pediatric endocrinology.
Contrast that to the challenge of obesity in America, the
expansion of endocrine problems, and the fact that there are
eight positions across the country, and it is no small wonder
why there are long waits to see pediatric specialists across
the Nation. You know, the challenge is significant.
Mr. Deal. Now, Mr. Considine, how would this kind of criteria
affect your institution?
Mr. Considine. Well, one of the questions I know that we would
have to deal with at our trustee level is why was there a change
in the premise of the initial program? When this program was
put in place in 1999, it was to bring equity to children's
hospitals that were involved in training at the graduate
medical educational level, and bring that equity up to what the
adult hospitals are.
And with this proposal, I see us now being pitted against our
fellow children's hospitals, and having to make choices, which
ones are more involved in serving the children of their region
versus others. The amount of money that is still not there, to
bring us up to that equity level. If there was a cutback at
our place, as Mr. Magoon was pointing out, areas where we have
been able to advance our fellowship training with these funds,
we have been able to start fellowship trainings in palliative
care, sports medicine, endocrinology, radiology, and we have
been just approved for a fellowship in pediatric oncology, and
also in pediatric psychiatry. And the American College of
Surgeons has asked us to bring on board a fellowship in
pediatric surgery and also burn care.
All of those areas are shortage areas, in terms of men and
women choosing those as their professions, and if we were
receiving a cutback, Mr. Chairman, we would have to think
twice about whether or not we could bring those programs
online.
Mr. Deal. Mr. Magoon, I believe you mentioned that your
State did not provide State-funded medical education dollars.
Is that what you said?
Mr. Magoon. Yes, sir.
Mr. Deal. What about Ohio, Mr. Considine?
Mr. Considine. One of the challenges we had in 1999 is Ohio
was moving to mandatory Medicaid managed care, and as they
did that, the patients who went into the Medicaid managed care
organizations, the dollars that used to follow them to us when
they were through the State program, for medical education,
those dollars disappeared. And the current program in Ohio is
moving more and more statewide to Medicaid managed care, and
the amount of money that we would receive through Medicaid
for GME will dry up. It has been reduced substantially.
Rainbow Babies and ourselves in Northeastern Ohio have been
in counties that have been mandatory, so for example, all
the patients that are Medicaid patients for our county,
Summit County, we have received no GME money through
Medicaid for them.
Mr. Deal. Thank you. Mr. Brown.
Mr. Brown. Thank you, Mr. Chairman. Mr. Magoon, thank you
for your comments. They were particularly illuminating about
pediatric endocrinology. I spoke just a few days ago with a
pediatric specialist in endocrinology in Miami. You know, we
talked about the higher rate of diabetes and obesity, and just
what you spoke about, and I think that really underscores the
importance of all of this.
Mr. Considine, talk for a moment, if you would, about other
sources of GME funding for Akron Children's.
Mr. Considine. Well, our main source right now is the
children's hospitals GME program that we were talking about.
There are funds, and they are dwindling, that come to us
through the Medicaid program, and--
Mr. Brown. Could you sort of give us rough ballpark figures?
You said you are up to $60,000, or up to $55,000 overall, so
can you break down roughly how much of it is GME, how much of
it is burn unit? Is there a way of doing that, roughly?
Mr. Considine. Well, our burn unit also cares for adults, as
you know. We are a regional burn center that cares for adults
as well as kids. There are two children's hospitals in the
country that do that, Arkansas Children's and ourselves. And
Congressman, I--
Mr. Brown. Okay.
Mr. Considine. --don't have that on the tip of my tongue, but
there is a breakout there, and we do get a little more funding
because of that to us, because of the adult component of that
care.
Mr. Brown. And you get other funding, Medicaid and in-State if
there are any significant dollars there?
Mr. Considine. Not significant dollars, sir.
Mr. Brown. Okay. What are your thoughts on the previous
witness', the Administration's proposal to target funding to, I
believe, as Mr. Hall and she were going back and forth, to the
neediest hospitals? What does that mean to Akron and to many
hospitals, many of the freestanding children's hospitals?
Mr. Considine. Well, during my 27 years, I have had the
privilege of visiting a lot of our children's hospitals in
this country, and the children that are served by those
hospitals, they deserve the very best in terms of the care.
There are needs for sub-specialists and primary care
pediatricians in all the areas that are represented by those
61 children's hospitals, and I don't know how we could go
through a process to determine which of those children's
hospitals, and which children served by those hospitals are
more needy than other children.
Mr. Brown. And $99 million just doesn't get there.
Mr. Considine. Well, if we are not quite at the equity level
with $300 million, you can run the math, $99 million would
bring us down. It wouldn't bring us closer to equity with
out adult counterparts.
Mr. Brown. Tell us about, you have mentioned that Akron
General serves, I believe you said 50plus counties.
Mr. Considine. Akron Children's.
Mr. Brown. I mean Akron Children's, I am sorry--50 plus
counties. And that you are in an urban area, generally, you
people, that Cleveland, Akron, that is a pretty populous area
of the State, but obviously, you reach way beyond into
Southeast Ohio, Eastern Ohio areas that are less populous.
Tell us about the rural GME program, what that means in those
communities, 50 miles, 75 miles, 100 miles south or west of
Akron.
Mr. Considine. Well, as you know, Congressman, we serve the
largest Amish population, at the Children's Hospital, in the
country, and we have established some primary care offices in
the counties where the Amish reside, and those 14 office sites
that I was speaking to, that are primary care office sites,
that saw this 210,000 children right now, are offices that are
based outside of Summit County. And one of the things the
graduate medical education funding has helped us do is make
sure that we have increased the number of residents so we can
extend resident education into those offices in those counties.
So, that definitely does enhance not only the training program
that those residents are in, but the services being provided
to the children of the folks that live in those communities.
Mr. Brown. Thank you, Mr. Chairman. Thank you.
Mr. Deal. Thank you. Mr. Hall, you are recognized for
questions.
Mr. Hall. I thank you, Mr. Chairman. I note that both of you
are Presidents and CEOs, so you know what you are doing, and I
referred to my own home county a moment ago, with the lady
from the Administration, and I noted also that our children's
population is growing ten times the national average there, and
I hate to think about how far we would be behind if we didn't
have this program. So, Mr. Considine, you are from Ohio, right?
Mr. Considine. Yes, sir.
Mr. Hall. Is that a similar situation in Ohio? You have that
type dramatic growth in your area?
Mr. Considine. We have some of our services that are seeing
growth, but we have other components of our service area,
quite honestly, that are not seeing that kind of growth. We
are not as robust in population growth as your area, and
that is one of the challenges of making sure we get a balance,
in terms of the coverage in all those areas. But at no time,
having children that aren't able to access the kind of care
we would want for our children.
Mr. Hall. I think they must have calculated their figures
on what were needy areas. I think they must have tied it,
probably, to Medicaid, and then done it on a percentage basis,
which could mean, there is a little town in my county that is
the fourth fastest growing city in the United States, and it
is growing about 100 or 150 people a month, because they
didn't start with much. But still, that statistic is there,
and that could be part of what they based that on. Do you
know she couldn't answer for us, the lady I was sorry for
her, being that had to send her over here today. I would
have hated to have been her. But do you know, what is the
difference in adult teaching hospitals, the way they are
treated with this budget than the children's teaching
hospitals? Do you have that information?
Mr. Magoon. It is my understanding that there is no change
in the Medicare program reimbursing the adult institutions,
the change is specifically to this program, and to this
population of institutions.
Mr. Hall. Okay. Does direct medical education funding,
when it is doled out on a per resident basis, a head count
basis, does that adequately cover the cost to train an
individual physician?
Mr. Considine. No, sir, not in our case, and--
Mr. Hall. How close does it come?
Mr. Considine. Well, with the program we are talking about
here, it has brought us to a more equitable level with our
adult counterparts. We are about 80 percent of that. And
we have discussions, too, about what we can include in the
Medicare cost report as allowable costs. Some of the services
that we extend with residents, out to our rural primary care
clinics, for example, oftentimes some of those expenses
cannot be included in those formulas.
Having said that, I think we are getting closer to equity
because of the children's hospital GME Program, and that is
why we are concerned about any cut in that program.
Mr. Hall. Mr. Magoon.
Mr. Magoon. From an accountability point of view, we are
required to report back in a very similar fashion to our adult
counterparts on the effective use of those dollars. It is not
without accountability. It is the very same accountability,
in fact, we are required to go through any other fiscal
intermediary on an annual basis, because the appropriation is
annual. So, if anything, there is greater scrutiny and review
of the appropriateness of the use of these funds in these 61
children's hospitals than across the country in general.
Mr. Hall. Well, I really thank you two for taking the time
from a very busy job to come here, and then to give us this
testimony, and we have a Chairman that is probably one of the
best subcommittee Chairman in this Congress, and I believe he
is going to correct some of the Administration's problems on
this. I am going to rely on him, too, and I am going to brag
on him until he does.
I yield back my time.
Mr. Deal. You get a lot of things if you give him extra time
for questions, you know.
Dr. Burgess, you are recognized for questions.
Mr. Burgess. Thank you, Mr. Chairman. I also want to thank
our two witnesses for taking time out of their schedules and
from their work to be here with us. I also want to acknowledge
that there is with us in the audience a representative from a
hospital down in Mr. Hall's and my neck of the woods, the
Children's Medical Center of Dallas, and Maisy James is with
us today, and we appreciate her being here in the committee.
Mr. Hall correctly pointed out that the Administration's
request for this year is far below what we should see in the
final appropriations bill, but what was the first year, under
this additional funding, what was the first year that the
children's hospitals received additional funding under the
children's graduate medical education?
Mr. Considine. My recollection, it was maybe in 1999 or the
year 2000, and I think the amount was $40 million, at a
national basis.
Mr. Burgess. Yeah, in fiscal year '01, according to the
figures I have, it was $235 million, a significant increase
the next year, fiscal year 2002, was $285 million. Fiscal
year '03, $290 million, fiscal year 2004, my first year here,
was $303 million. It did decline a little bit after that,
'05 was $301 million, and '06, with the across the board
1 percent cut that we did, was $297 million. So, although as
Mr. Hall correctly pointed out, I wouldn't have wanted to be
here arguing the Administration's position, I think we can see
that the funding has been there, and it is incumbent upon us
to make certain that that level stays.
I also feel obligated to point out for the committee that
this is important work that these gentlemen do, and the
pediatric specialists or the pediatric sub-specialist--
children are not just little adults. They require a
special expertise and a special gift to be able to provide
the highly specialized care that children need. A surgeon
who is trained in adult surgery cannot just overnight become
a children's surgeon. It requires special training and
special expertise, the management of fluids, everything
about their medical care is considerably different, and it
does require the application, the education of specialists.
One question I do have is has this funding allowed you to
increase the number of medical residents that you educate?
Mr. Considine. In our case, sir, it has dramatically
assisted us in increasing the number of residents. In 1999,
it was 50. Last year, it was 87 a year, and through our
program, and it has also helped us bring fellowships online,
and one of the other results of that is more patient activity
is coming in through our doors, because of the increase of
available manpower.
Mr. Burgess. Now, were children's hospitals affected in the
year 2000, 2001, I don't remember which it was, when across
the country, facilities that provided graduate medical
education were required to adhere that resident's work hours
be no more than 80 hours per week?
Mr. Considine. Yes.
Mr. Burgess. So you all follow to those guidelines?
Mr. Considine. Yes.
Mr. Burgess. Did that result in any requirement for
increasing the number of residents that you retain?
Mr. Considine. I think that is a critical factor driving--
Mr. Burgess. Because I remember they used to get 160 hours
of work a week out of us at Parkland Hospital.
Mr. Magoon. Things have changed.
Mr. Considine. It has, in fact, increased the demand for
residents, and I think it has also improved the quality of
education. Now, we have gone from roughly 62 to over
90 residents, because the funding is there, the patient
demand is there. It is critically important, in terms of
patient safety, and in particular, to meet the requirements
for the 8 and 80 work rules.
Mr. Burgess. Now, the comment was made that private
insurance no longer paid for education for graduate medical
education children's hospitals, but they still reimburse
you, you still get private insurance reimbursement for
children who are covered, who have insurance coverage,
correct?
Mr. Magoon. Yes, we do. In negotiations with commercial
payers, they make it very clear that that is one of the areas
they don't want to see loaded in their pricing.
Mr. Burgess. But that would be true for hospitals that train
residents who practice adult medicine as well.
Mr. Magoon. Yes.
Mr. Burgess. So, that is across the board.
Mr. Magoon. That is across the board negotiation we get
involved in.
Mr. Burgess. I do have to ask the question. I asked it of
the HRSA person, and it probably was inappropriate for me to
ask, but what have you noticed, has either of your States
one of the States that has undergone a significant change
in medical liability with passage of caps or any commitment
to non-economic damages?
Mr. Magoon. Let me, if I may, relate one story. In the
State of Illinois, there virtually is no professional
liability insurance, quite frankly, in Cook County, Illinois.
Our attachment point for our self-insurance program is
$15 million. Consider that your deductible on your
automobile insurance is $15 million. And there is no
aggregate cap, so you can have as many $15 million in claims
over the course of the year as they may arise. There is no
aggregate cap, so in our particular circumstance, there
virtually is no insurance, and while we buy about $80 million
of excess coverage, predominantly offshore, you rarely ever
penetrate any one of those layers. So, it is a huge issue
for us, and while cap professional liability reform was
passed last year, it still needs to be tested at the State
Supreme Court level before we ever see any relief with
respect to the insurance coverage. So, it is a huge burden
for places like ours.
Mr. Burgess. I would just point out that in Texas, where we
passed a constitutional amendment to allow that to happen,
our not-for-profit hospitals, I think, have seen a
significant benefit from having an aggregate cap on liability,
and the hospitals were actually, it was an unintended
consequence but a good consequence, that they received the
benefit from that.
Mr. Chairman, I hope we will see some additional activity on
that this year. With that, you have been very indulgent, and
I will yield back.
Mr. Deal. Well, thank you. And gentlemen, thank you again
for your presence and your testimony. It was excellent, and
with that, this hearing is adjourned.
[Whereupon, at 4:35 p.m., the subcommittee was adjourned.]