Estimating the patient care costs of teaching in a teaching hospital

Purpose Because leaders at medical schools and teaching hospitals need current data to estimate the clinical costs of graduate medical education, the authors developed a new methodology to estimate the hospital costs associated with the presence of teaching physicians for the year 2002. Method A hospital accounting system was used to determine the case mix-adjusted direct variable costs for 41 522 inpatient admissions associated with or without a teaching physician. Results Prior to adjustment, teaching cases had greater median costs than non-teaching cases. After severity adjustment, teaching cases in aggregate were associated with an additional 4.4% of the total direct variable cost of inpatient admissions, or $3.6 million. The size of the teaching effect varied by service, ranging from −5.7% for medical services to 13 percent for behavioral services. The effect of teaching on cost centers such as laboratory, pharmacy, and radiology varied by specialty service. Teaching was associated with a negligible 0.7% relative difference in length of stay. Conclusion The incremental effects of teaching on hospital patient care costs are modest. These analyses can be repeated annually to detect changes in teaching costs and to target areas of excessive cost for interventions that improve efficiency. Our results and methods for identifying hospital costs associated with teaching services may prove useful in negotiations between academic health centers and affiliated teaching hospitals.