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The University of Vermont Medical Center in Burlington in Nov. 2020. File photo by Glenn Russell\/VTDigger<\/p>\nThe University of Vermont Medical Center in Burlington in Nov. 2020. File photo by Glenn Russell\/VTDigger<\/p>\n
Teaching and training the next generation of physicians is expensive work. And commercial insurers are footing more than half that bill in Vermont through their payments for care, according to an independent analysis.\u00a0<\/p>\n
Nearly $82 million of commercial insurance dollars went toward the $161 million cost for UVM Medical Center to run its medical education programs last year, analysts said in a recent memo<\/a>. That number is on track to reach $88 million for 2026, the memo estimates.\u00a0<\/p>\n The question of how Vermont pays for medical education is a complicated one with few clear answers. With one medical school in the state, the cash flow from Vermonters to the state\u2019s student doctors is more pronounced here than in many states, though the way commercial payers support medical education is not unique to Vermont.\u00a0<\/p>\n Still, it is difficult for insurers and the insured to know just how much they are paying for medical education. With renewed attention to this relationship recently, regulators, independent analysts and the medical school itself agree this financial relationship should be more transparent and more responsive to the needs of Vermont\u2019s physician workforce.<\/p>\n The problem is one of a balance Vermont has long struggled to strike: Vermont needs to recruit clinicians, especially for primary care<\/a>, but it also wants to curb commercial insurance premiums, which are some of the highest in the nation.<\/p>\n \u201cMedical education is incredibly important. We need doctors,\u201d said Rep. Alyssa Black, D-Essex Town, who chairs the House\u2019s healthcare committee, in an interview with VTDigger. \u201cI just wonder: Do Vermonters know that when they pay their insurance premium that a part of that is paying for medical education \u2026 of someone who probably will never practice here?\u201d<\/p>\n \u2018Black box\u2019<\/p>\n Medicare, Medicaid and other federal sources cover a big portion of medical education, but payments from commercial insurers make up most of the difference. This support is not in explicit line-item sums passing from insurers to an academic medical center; rather it is built into the charges an insurer pays for clinical care \u2014 a small fraction of the amount that the hospital charges an insurer for, say, a CT scan.<\/p>\n \u201cIt\u2019s not specified that you\u2019re paying for medical education as well as clinical care,\u201d Nancy Kane, a health policy professor at the Harvard T.H. Chan School of Public Health, told VTDigger.\u00a0<\/p>\n Kane is a member of the three-person independent liaison group that wrote the memo detailing how much commercial money goes toward medical education, as part of the team\u2019s assignment to oversee the UVM Health network\u2019s budget-setting process. Kane specifically dug into the medical education issue.\u00a0\u00a0<\/p>\n \u201cI\u2019m kind of obsessed with how we\u2019re funding academic medicine, because I actually think the model we\u2019ve used in the past is about to implode,\u201d she told the Green Mountain Care Board, which regulates hospital spending, during an early August hearing.<\/p>\n Kane expects the costs to fall more heavily on commercial insurers in coming years, because Medicaid matching funds for medical education are predicted to decline for 2027. Unless the cut in Medicaid funds is matched with a decline in academic expenses, she estimates that commercial insurers\u2019 support to UVM Medical Center\u2019s medical education could rise to $92 million for 2027.<\/p>\n Medical education at UVM encompasses the training at the Larner College of Medicine; the residency and fellowship programs at the University of Vermont Medical Center; and education\u00a0 for nurses and other clinicians. Part of this broad umbrella \u2014\u00a0and the distinction between the medical center and the medical college \u2014\u00a0is what makes the movement of money so murky.\u00a0<\/p>\n Kane said she spent nearly six months determining how UVMMC subsidizes medical education.<\/p>\n Even after running the numbers, the process that UVM Medical Center and the medical school take to decide how money moves from the hospital to the school is still a bit unclear to her. She told regulators, in an Aug. 3 care board hearing<\/a>, that ultimately it seems to come down to private conversations among the leaders of each of those related entities: Dr. Steven\u00a0Leffler as president of UVMMC, Dr. Ramsey Herrington as president of UVM Health\u2019s physician group and Dr. Richard Page at the head of Larner.<\/p>\n \u201cThese aren\u2019t numbers they keep track of,\u201d Kane told VTDigger. \u201cNot because they\u2019re derelict, but because people don\u2019t think of them that way.\u201d<\/p>\n In 2022, the university and the health network renewed a 10-year affiliation agreement, updating a relationship that has been in place since 1995, Herrington told VTDigger.<\/p>\n In that most recent agreement, the two bodies established a flow of money from the medical center to the college of medicine, increasing 2% every year or at the rate of the consumer price index, whichever is higher, Herrington said, but he didn\u2019t provide dollar figures.\u00a0<\/p>\n The costs of providing medical education include payments for faculty to supervise; resident and intern stipends; the \u201coversight infrastructure\u201d required for teaching doctors; and indirect costs that can come from more novice patient care \u2014\u00a0such as if a doctor in training orders a more expensive test than necessary.<\/p>\n Tuition to the medical school covers a slew of classroom costs separate from the medical center\u2019s. But the medical center needs to come up with the funds to cover its costs, Kane said. Medicare and Medicaid pay a portion through federal earmarks for graduate medical education. Last year, Medicare paid $13 million and Medicaid paid $66 million toward graduate medical education at UVM Medical Center and Larner College of Medicine, Kane found.\u00a0<\/p>\n \u201cAnd then \u2014 you have the rest,\u201d she said in an interview with VTDigger. \u201cAnd where does that come from? That\u2019s the black box. The only major other source that\u2019s coming from is commercial payers.\u201d<\/p>\n Those payments, embedded in the costs of patient care, make up the $82 million figure Kane found for 2025. Still, it\u2019s a small fraction of what commercial insurance pays overall: The medical center\u2019s current commercial revenue, according to its presentation to the care board,<\/a> is nearly $1.07 billion.<\/p>\n Herrington told VTDigger that he and his colleagues collaborated closely with Kane and the liaison group. Although he couldn\u2019t say the team\u2019s numbers were \u201cexactly right,\u201d they were \u201cdirectionally pretty close to right,\u201d he said.\u00a0\u00a0<\/p>\n \u2018Vermonters are healthier\u2019<\/p>\n Herrington emphasized how important it is that the medical school and the medical center are training physicians who can fill gaps in Vermont\u2019s healthcare ecosystem. He said it\u2019s something he did when he led UVMMC\u2019s emergency department and established its residency program in 2019, which has yielded a fresh crop of Vermont-grown emergency doctor hires. He wants to replicate that in gastroenterology, obstetrics\/gynecology, psychiatry and oncology, he said.\u00a0<\/p>\n \u201cOur educational training strategy should match what it is that we\u2019re looking to do for the state of Vermont as we look forward, and I\u2019m here to put those things together,\u201d he said.<\/p>\n About one-third of physicians currently practicing in Vermont graduated from Larner College of Medicine or did their residency at UVM Medical Center, according to a report from the Department of Health<\/a>. Each year, the medical school graduates about 120 doctors and trains more than 320 residents and fellows. Over the past five years, nearly half of UVM Medical Center\u2019s residents and fellows have stayed to practice in Vermont, the school says.<\/p>\n Beyond its ability to produce local doctors, the academic medical center has a value to Vermonters simply because it is an academic setting. Its teaching mission attracts specialists and highly regarded clinicians to the state, Leffler told regulators recently.<\/p>\n \u201cWe do believe strongly that Vermonters are healthier and have greater access to specialty care due to our (graduate medical education) programs,\u201d he said. \u201cYou would not be able to have specialties and subspecialties available in Vermont without being an academic medical center.\u201d\u00a0<\/p>\n Basil Waugh, a spokesperson for the University of Vermont, echoed the importance of being able to combine the missions of the medical center and the college of medicine.\u00a0<\/p>\n \u201cThe opportunity to combine clinical practice with teaching, research and training future physicians helps Vermont attract physicians and sustain a breadth of specialty care that would otherwise be very difficult for a state our size to support,\u201d Waugh wrote in a statement to VTDigger.<\/p>\n \u2018Don\u2019t squander this asset\u2019\u00a0<\/p>\n