Medical Education

Paying Doctors To Teach

I am on a committee to provide recommendations to our Dean on how to compensate physicians for teaching. This turns out to be a lot more complicated than it might first appear. One way of approaching it is to calculate the cost to a physician for teaching – from there you can work back to what the physician should be paid for teaching.

Where does the money come from for medical education?

Medical students. Money to teach students comes from the College of Medicine that in turn gets money from several sources: tuition, endowments, “Dean’s tax” on clinical revenues, and government subsidies. In nearly all medical schools, the money from all of these sources is insufficient to pay for all of the hours of teaching by the attending physicians, at least compared to what those physicians could make in their clinical practice for those same hours. Fortunately, the intangible rewards of teaching plus the prestige of being a professor are great enough for many physicians to accept a lower income in order to be a medical school educator… up to a point.

Residents. Money to pay residents’ salaries comes from the hospitals that in turn gets money from federal funds to support GME (graduate medical education) as well as from hospital clinical income and endowments. There are additionally funds from the federal government that come in to support the teaching of residents and these funds can be used to support the teaching efforts of the attending physicians.

Fellows. There is not enough federal GME money to pay the salaries for fellows nor to pay attending physicians to teach fellows. There are 2 types of fellowships: ACGME accredited and non-ACGME accredited. The ACGME accredited fellowships are the standard specialty fellowships, for example, pulmonary fellowship. The non-ACGME accredited fellowships are in highly specialized areas, for example, an interventional pulmonary fellowship (done after a physician has already completed a basic pulmonary fellowship). The funding for ACGME accredited fellowships varies from hospital to hospital – at our medical center, half of the fellows’ salaries for ACGME-accredited fellowships are paid by the hospital and half is paid by the attending physicians in that particular specialty. In turn, the attending physicians get their funding from their own clinical income. Fellows in non-ACGME accredited fellowships are paid entirely by the attending physicians’ clinical income. Fellows in ACGME accredited fellowships cannot bill patients but fellows in non-ACGME accredited fellowships can bill patients and generate at least some clinical income on their own to help support their salaries.

Continuing medical education (CME). This is education for attending physicians who have completed their training but need to stay current in their field. In the past, this was supported by grants and sponsorships from pharmaceutical companies, medical supply companies, and medical device companies. Conflict of interest regulations now limit how much these entities pay for CME. Now, CME is paid for primarily by the individual attending physician being educated or by the hospital. Most of the time, physicians do not get paid to be a CME educator except in situations when they are getting paid an honorarium to give a talk; even then the amount of the honorarium rarely covers all of the teaching physician’s time involved in preparation, travel, etc. The intangible reward for being a CME educator is prestige and local/regional recognition as well as building a referral base.

What is the cost of teaching?

There are 3 major costs to consider in medical education: salary costs of the trainee (for residents and fellows), time costs of the attending physician teaching those trainees, and infrastructure costs for the space and other hospital resources required for teaching trainees. Lets examine each of these further:

  1. Salary costs. Medical students do not cost anything since they are taking out loans in order to pay to be there. Residents make about $52,000 their first year and this increases by about $2,000 for each additional year of training. So if we assume a 3 year residency for salary plus 25% benefits, an average cost of a resident is about $67,500 per year. However, the resident’s salary is going to ultimately be supported by federal GME funds so the attending physicians do not have to cover it. The average ACGME fellow salary + benefits in a 3-year fellowship will be about $75,000 and half of that ($37,500) is paid by the attending physicians, at least at most academic medical centers. The average non-ACGME fellow salary + benefits will be about $80,000 and this will be paid entirely by the attending physicians (plus whatever the non-ACGME fellow can bill for independently).
  2. Time costs. To determine time costs, you have to look at what the physician could have done from a clinical billing standpoint if they were providing patient care by themselves rather than engaging in a particular teaching activity. The most expensive education time cost is in classroom teaching (e.g., pre-clinical medical student classes or resident didactic lectures) because the attending physician is removed entirely from billable patient care during the time that they are lecturing or preparing a lecture. CME education also falls into this category. For attending physicians who are doing clinical education (in the office, hospital, or OR), the time cost varies depending on the level of the trainee. A third year medical student will slow you down the most since the student will need to see the patient independently and then present his/her findings to you before you see the patient. The attending physician will then need to take some time to teach the student about the patient’s disease. Because of Medicare rules on what students are not allowed to document (for billing purposes), the attending physician must then see the patient and re-do most of the history, all of the physical exam, and most of the progress note documentation. Although Medicare does permit a medical student to document the past medical/social/family history, in an era of electronic medical records, this is usually already in the electronic note. A junior resident is generally a break-even as far as the attending physician’s time – they have more experience than a medical student and Medicare permits the attending physician to use most of their progress note documentation for billing purposes. A senior resident or fellow generally adds billing productivity to the attending physician since these trainees can function more independently and at the attending physician has to spend less time with the patient and preparing the progress note on a per billable patient standpoint.
  3. Infrastructure costs. There are two general types of infrastructure costs: office practice costs and hospital costs.
    1. In the office, a typical allocation of examination rooms per doctor is 2 per attending physician/provider. This allows the doctor to be seeing one patient while the nursing staff is rooming the next patient. In certain types of practice, this may increase to 3 or even 4 exam rooms per physician but for the purpose of this analysis, lets assume it is 2 rooms per physician. To maintain clinic efficiency, you have to have additional rooms for trainees since the patients will need to spend more time in each exam room so that the trainee can see the patient first, before the attending physician. Medical students increase the infrastructure cost since they are less efficient in history taking and spend more time with the patient; however, they see relatively few patients so the number of exam rooms taken out of commission by the medical student is relatively few – usually 1. A senior resident or fellow is more efficient but also sees more patients per day and so they may need 2 additional exam rooms. If the physician owns or leases the office, this infrastructure cost goes to the physician; if the hospital owns and operates the office, then the hospital bears the infrastructure cost.
    2. In the hospital, you don’t need to have extra exam rooms or nurses for trainees since each inpatient already has their own room. However, trainees can have addition infrastructure costs in certain areas, particularly the operating room and to a lesser extent, the emergency department. In these areas, trainees add extra time to patient encounters and that extra time adds additional costs. For example, in the operating room, an experienced surgeon may be able to do a cholecystectomy in 30 minutes if he/she is doing it solo with an experienced surgical assistant. But if that surgeon is teaching a resident to do the same procedure, it might take 40 minutes. This adds 10 minutes to the surgeon’s per case time and 10 minutes to the operating room cost (including the cost of the nursing and OR personnel plus the cost of not being able to start another case in that operating room earlier). The surgeon may be able to make that time up by stepping out of the OR while the resident closes the wound and does the operative note dictation but the cost to the hospital of having a teaching OR (as opposed to a non-teaching OR) remains. ACGME fellows are a break-even for the hospital because they have less effect on operative time and permit the attending surgeon to start a second case in a second room sooner. Non-ACGME fellows may actually improve the hospital margin by permitting the attending surgeon to operate in 2 rooms simultaneously, thus increasing the surgical volume.

So, lets put all of this together to see what the net cost of various trainees is to the physician and to the hospital. In the table below, attending physician productivity (RVUs per hour) are reduced with classroom teaching and medical students but increased with residents and fellows. On the other hand, fellows have a cost to the attending physician since the attending physician has to pay part or all of the fellow’s salary. All trainees add additional outpatient infrastructure cost and the more experienced the trainee, the greater the cost because of the number of exam rooms they can cover (thus requiring both more rooms and more office staff). For hospitalized patients, there is no significant infrastructure cost except in the operating room, where these costs are largely borne by the hospital and not the physician.




So, if we look at the net costs of being an educator, we see that it varies depending on whether the trainees are in the physician’s office or in the hospital. Classroom teaching and medical student clinical teaching are the most expensive overall with resident and fellow clinical teaching being close to break-even in the outpatient setting but a net benefit to the attending physician in the inpatient setting.

Obviously, these are generalities and each specialty and each clinical setting will be a little different. Nevertheless, this analysis does demonstrate that there are both productivity costs and productivity gains in medical education.

March 9, 2017


By James Allen, MD

I am a Professor Emeritus of Internal Medicine at the Ohio State University and former Medical Director of Ohio State University East Hospital