1) Why is economic evaluation in healthcare important?
2) Why has economic evaluation been slow to develop in the U.S?
3) Describe the different types of economic evaluation utilized in healthcare.
4) Describe in general the categories of common measurers and tools of economic evaluation in healthcare. (For this question just describe the categories. More detailed questions will follow)
5) Describe the step process of measuring costs.
6) Explain direct and indirect costs.
7) Describe the different types of effectiveness measures.
Sample Answer
This summary outlines the critical steps, obligations, and financial commitments required for a medium-sized rural hospital to successfully establish a Primary Care/Family Medicine Residency Program. Establishing a residency is a strategic initiative that addresses the critical shortage of primary care physicians in rural areas, aligns with the hospital's mission, and enhances the quality of care.
1. Rationale and Justification
The primary justification is addressing the rural physician workforce shortage. A residency program serves as a proven recruitment tool, as studies show that over 60% of physicians practice within 100 miles of where they complete their residency. Additionally, the program will improve the quality of care by embedding an academic culture, fostering the adoption of evidence-based medicine, and creating a robust internal continuing medical education system.
2. Sponsoring Institution Obligations
The hospital must assume all institutional responsibilities set forth by the Accreditation Council for Graduate Medical Education (ACGME). This includes:
Designating a Program Director and providing dedicated time and resources.
Ensuring an adequate learning and working environment (physical space, technology, patient volume).
Maintaining institutional oversight of all program operations, financing, and accreditation requirements through a Graduate Medical Education Committee (GMEC).
Federal Funding Process
The primary source of funding is Medicare Graduate Medical Education (GME). The hospital must apply to the Centers for Medicare & Medicaid Services (CMS) to establish its Full-Time Equivalent (FTE) caps. The initial process involves:
Obtaining ACGME Accreditation (required prerequisite).
Submitting a Cost Report to CMS to establish its Per-Resident Amount (PRA) and initial cap based on the first class of residents.
4. Financial Commitments
Startup Phase (Year 0-2): This phase is self-funded and includes costs for hiring a Program Director, hiring administrative staff (Coordinator), developing curricula, securing dedicated space, purchasing simulation equipment, and applying for accreditation.
Post-Funding Phase (Year 3+): Once Medicare GME funding is received (after the first class of residents), the funds cover the majority of direct costs (resident salaries, benefits) and indirect costs (overhead, teaching time). The hospital remains responsible for funding the difference between the GME payments and the total program operating cost.