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Offshore Medical Schools Are Buying Clinical Clerkships in U.S. Hospitals: The Problem and Potential Solutions

Halperin, Edward C. MD, MA; Goldberg, Robert B. DO

doi: 10.1097/ACM.0000000000001128
Perspectives
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SDC

U.S. medical education faces a threat from for-profit Caribbean medical schools which purchase clinical rotation slots for their students at U.S. hospitals. These offshore schools are monetizing a system that was previously characterized as a duty—the duty of the current generation of physicians to educate their successors. Offshore schools purchase clinical rotation slots using funds largely derived from federally subsidized student loans. This leads to pressure on U.S. schools to pay for clinical clerkships and is forcing some of them to find new clinical training sites.

For-profit Caribbean schools largely escape the type of scrutiny that U.S. schools face from U.S. national accreditation organizations. They also enroll large classes of students with lower undergraduate GPAs and Medical College Admission Test scores than those of students at U.S. medical schools; their students take and pass Step 1 of the United States Medical Licensing Examination at a substantially lower rate than that of U.S. medical students; and their students match for residencies at a fraction of the rate of U.S. medical school graduates.

Among the potential solutions proposed by the authors are passing laws to hold for-profit Caribbean schools to standards for board passage rates, placing restrictions on federal student loans, monitoring attrition rates, and denying offshore schools access to U.S. clinical training sites unless they meet accreditation standards equivalent to those of U.S. medical schools.

E.C. Halperin is chancellor and chief executive officer, New York Medical College, Valhalla, New York, and provost for biomedical affairs, Touro College and University System, New York, New York.

R.B. Goldberg is executive dean, Touro College of Osteopathic Medicine, New York, New York.

Editor’s Note: A Commentary by W.P. Burdick, M. van Zanten, and J.R. Boulet appears on pages 615–617.

Funding/Support: None reported.

Other disclosures: None reported.

Ethical approval: Reported as not applicable.

Correspondence should be addressed to Edward C. Halperin, New York Medical College, 40 Sunshine Cottage Rd., Valhalla, NY 10595; telephone: (914) 594-4900; e-mail: Edward_halperin@nymc.edu.

Abraham Flexner’s 1910 Report on Medical Education in the United States and Canada was a trenchant and withering assessment of medical education that attacked for-profit medical schools and called for elevated admission standards, scientifically based curricula, full-time faculty, and the association of medical schools with universities and teaching hospitals.1 Americans in the midst of the Progressive Era recognized that quality medical education was a societal imperative. Proprietary medical education collapsed. For the next century, the standard for medical education reflected Flexner’s recommendations.

For-profit medical education has reemerged, however, in the form of offshore medical schools, largely on Caribbean islands. The offshore schools, which enroll U.S. citizens, operate outside of U.S. oversight but send their students to U.S. hospitals for clinical rotations.2–12

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The Economic Model of For-Profit Offshore Medical Education

U.S. medical schools admit approximately 40 to 250 students per class per year. For those students not enrolled in dual-degree programs (i.e., earning an MD or DO and a PhD, JD, MPH, MBA, or other degree), the four-year graduation rates are 90% to 95% or greater. By contrast, for-profit Caribbean schools often admit two to three entering classes per year, with as many as 300 students per class, and have four-year graduation rates of 50% to 80%.5,7–9,13,14 Even for the Caribbean schools with the best outcomes, graduation statistics are poor by U.S. medical school standards: 34% of Ross University School of Medicine (RUSM) students, 33% of American University of the Caribbean School of Medicine (AUC) students, and 20% of St. George’s University School of Medicine (SGU) students fail to graduate on time.15–17 Students at Caribbean schools have significantly lower undergraduate GPAs and Medical College Admission Test (MCAT) scores, on average, than students at U.S. medical schools.2,7,9,11,12 It has been asserted that some offshore schools require students to pay the entire four-year tuition cost “up front,” upon admission.18 In addition, offshore schools engage in minimal clinical or scientific research, in contrast to U.S. medical schools, which have missions of research, education, and clinical care and serve as repositories of information. As a result, the Caribbean proprietary schools have a profitable business model.2,4,5,7–9,18,19

The offshore schools use their revenue to pay U.S. hospitals to have their third- and fourth-year medical students take clinical rotations there. For example, at Kern Medical Center in Bakersfield, California, after a bidding war between SGU and RUSM, the latter paid $35,000,000 over 10 years for approximately 100 slots for medical student rotations per year.20,21 In another instance, SGU and New York City’s Health and Hospitals Corporation (HHC) signed an agreement for $100 million over 10 years to purchase slots for up to 600 SGU students per year for clinical rotations at HHC’s 11 public hospitals. This approximates $400 per week per medical student.10,22,23 If U.S. medical schools were to pay a similar amount for clerkship spots, medical school tuition in the United States would need to increase considerably.7 The HHC board member who initially proposed the arrangement with SGU resigned from HHC a few months later, after the New York Times reported that he was not only an SGU graduate but also a newly appointed dean at the school.11,23–26

In New York, Nassau University Medical Center signed an agreement with the AUC for $19 million over 10 years for clinical rotation spots for 64 students per year.5,7 Since then, Stony Brook University School of Medicine and the New York Institute of Technology College of Osteopathic Medicine have lost training slots for third- and fourth-year medical students to AUC in pediatrics and obstetrics–gynecology.4 In some cases the U.S. physicians who facilitated the entrance of an offshore school’s students into clerkships have received a faculty appointment at the Caribbean school or a full-time job.25,26 In 2014 SGU announced a $750,000,000 investment from a Canadian private-equity firm that “will also help grow [its] network of clinical rotation partners. The school pays about 70 affiliate hospitals to take students for third- and fourth-year clinical rotations.”27

Proprietary Caribbean schools do not have to show cash flow to allow one to determine if the fees paid redound to the hospital operations, individual physicians, or other parties. In many states, the state board of education or its equivalent exercises little or no control over offshore schools’ clinical rotations. Although the New York State Education Department sought to limit the number of clinical rotation weeks offshore students can perform in New York, there are currently about 3,600 offshore students on rotation compared with 2,200 students from 16 New York medical schools.5,7–11,28–30 Medical school deans throughout the United States are finding that hospitals are denying clerkships to their students unless these schools can match or exceed the fees being paid by the Caribbean schools.2–5,7–11,28–32 U.S. medical schools are finding themselves in a laissez-faire marketplace.

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Following the Money

U.S. citizens enrolled in one of five “grandfathered” offshore medical schools are almost always eligible for federal-government-supported Title IV student loans. From 1998 to 2008, students borrowed $1.3 billion through the Federal Family Education Loan (FFEL) program to attend RUSM, SGU, and AUC—representing 90% of all the FFEL money borrowed for overseas freestanding medical schools.8,9,11,33,34 This loaned money provides the income stream used for the purchase of clinical clerkships.2,5,7,11,12,18,31–36 Indeed, 81% of RUSM’s revenue comes from the U.S. government’s student financial assistance programs.33,37 Other for-profit Caribbean medical schools that do not have access to U.S. federal loans use a loophole to get around the rules: They encourage some students to simultaneously enroll in an online master’s degree program at a U.S. university and apply for federal loans.8,9

Median student loan debt amassed for medical school alone is $253,072 for AUC students, $220,000 for SGU students, and $191,500 for RUSM students; in contrast, U.S. medical school graduates’ median indebtedness is $170,000 for college and medical school combined.4,9 The press recently reported the case of a 2010 graduate of SGU who twice failed to match for a U.S. residency and has almost $400,000 in medical school loans.4

The DeVry Corporation is the owner of RUSM and AUC. From 2010 to 2011, DeVry’s total income rose by 18% to $1.9 billion.37 Its operating income from for-profit health care education rose by 21% to $111 million. “Increases in student enrollments and tuition produced higher revenues and operating income,” DeVry informed its stockholders.37

DeVry has a full-time vice president for “strategic alliances” to identify sites for student clinical rotations.37 AUC has 1,000 medical students enrolled, and RUSM’s enrollment is approximately 3,500.4,5,7,8,11,15,17,35–38 DeVry reports that “a large segment of prospective students” are medical school applicants who “were denied admission or wait-listed for U.S. schools.”37 About 70% of SGU students are from the United States, as are 91% of RUSM students and 86% of AUC’s students.2,7,35 These prospective customers, according to company documents, are targeted by “direct mail campaigns … radio advertisements … and print ads in major magazines and newspapers” combined with employed “admissions advisors.” Investors are advised that “management believes that [tuition] rates will continue to increase” and that “Ross University faculty members are not tenured.”37

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Accreditation and Oversight

The accreditation organizations for undergraduate medical education in the United States are the Liaison Committee on Medical Education (LCME) and the Commission on Osteopathic College Accreditation (COCA). A medical school must be accredited by one of these national accreditation agencies or by its state’s medical boards for its students to take and pass the U.S. Medical Licensing Examination (USMLE) or the Comprehensive Osteopathic Medical Licensure Examination of the United States (COMLEX-USA) and obtain a license to practice. The LCME and COCA perform periodic site visits to schools to ensure that they meet published standards. Both accreditation agencies require that clinical experiences be supervised by faculty members and disallow financial incentives in the consideration of admission.

Offshore medical schools do not meet equivalent standards. The U.S. Department of Education and the National Committee on Foreign Medical Education and Accreditation (NCFMEA) decide whether offshore medical schools are eligible for the FFEL program, but the NCFMEA does not accredit individual foreign medical schools. Rather, it identifies countries which “use standards to accredit their medical schools that are comparable to the standards used to accredit medical schools in the United States.”39 DeVry touts the statement that the U.S. Department of Education “affirms” that the Dominica Medical Board “enforces standards of educational accreditation that are comparable to those promulgated” by the LCME.37 NCFMEA guidelines, however, use only a portion of the procedures and standards of the LCME or COCA.39 There is, of course, a considerable difference between accrediting individual schools and deciding whether a country’s medical school accreditation standards are comparable to those of the United States. The NCFMEA asserts that equivalency with the LCME or COCA accreditation is not required of foreign schools because those schools must also produce physicians that meet the needs of their own populations.33,36,39,40

In our view, this argument does not apply for an offshore medical school whose raison d’être is to cater to U.S. citizens aspiring to practice in the United States. Most offshore medical schools are located on small Caribbean islands, which have limited, if any, suitable clinical training sites. For example, the island of Curacao is approximately 38 miles long and 9 miles wide. It has a population of about 154,000 and one general hospital. When one of the authors visited the island in May 2015, he found four for-profit medical schools catering to U.S. citizens.

State medical boards are, for the most part, left to decide how to determine eligibility for clinical clerkships, residencies, and licensure in their state. Few states have the resources to investigate foreign medical schools individually, so state boards often refer to the lists of nonapproved and approved schools used by California or New York. A few states have begun nascent attempts to directly accredit offshore medical schools by visiting them and/or requiring them to comply with their regulations.11,14,40

Further, the admission standards and processes of many Caribbean schools do not equal those of LCME- or COCA-accredited schools.8 One student stated his reason for attending AUC clearly: “I couldn’t get into a U.S. school.”35 This reason for attending offshore schools was confirmed in focus groups convened by the U.S. Government Accountability Office (GAO).34 In 2012, students at U.S. medical schools scored an average of 31 on the MCAT while students at Devry’s two schools scored an average of 25 and SGU students averaged 27.7–9,36–38 Some Caribbean schools advertise “MCAT not required for admission,” some do not require a bachelor’s degree, and some have questionable business practices.41–48 One advertises that it will take “5–10 minutes to fill out the short application form. Once you complete your form an admission advisor … will guide you through the rest of the process.”45–47 Other schools describe plans for future growth that include significantly expanding the number of medical students.4,37,38,49

To increase their reported board examination pass rates, the Caribbean schools do not grant all students who have matriculated permission to sit for the USMLE. As one AUC medical student said in an interview with a U.S. newspaper, “They won’t let you take [the USMLE] unless you’re going to pass it.”4,35

In 2013, the USMLE Step 1 pass rate for first-time examinees from MD-granting U.S. and Canadian schools was 95%. It was 79% for examinees from non-U.S./Canadian schools. These data, however, are only partially instructive. First, the GAO has reported that there is a difference between the Step 1 pass rates of U.S. citizens educated in the United States versus foreign citizens educated abroad versus U.S. citizens educated abroad (for 2008, these rates were 97% vs. 71% vs. 64%).34,50 Secondly, as noted above, there is culling of potential USMLE examinees by the Caribbean schools prior to the examination.2,18,29 Third, the on-time completion rate for an MD or DO degree in the United States is 90% to 95% or greater, whereas RUSM, AUC, and SGU have on-time degree completion rates of 52% to 83%.14–17,28–30 Many offshore students drop out, flunk out, or are in a state of limbo of extended probation or of repeated taking of the USMLE.11,12 The ratio of offshore students to onshore students needing to repeat Step 1 of the USMLE exceeds 4 to 1.30,34,50

The 2015 Main Residency Match of the National Resident Matching Program continued a well-established pattern: U.S. citizen international medical graduates matched to a residency at a rate of 53%, as compared with U.S. medical students, who matched at rates of 94% for MDs and 79% for DOs (the latter does not include DO students who elected to enter the American Osteopathic Association Match).2,7,51–53 Since, for example, about 66% of AUC students and 52% of RUSM students graduate, the probability of an entering student at a Caribbean school matching for a residency in the United States is approximately 35% (50% of 70%).4,7,8,10–12,18,19,30,50–53 U.S. citizens studying in offshore medical schools also perform far less well on specialty board examinations.54

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The Veil of Silence

Both of us have observed U.S. medical students being excluded from clinical education opportunities at U.S. hospitals because of the actions of “pay-for-play” offshore schools. One of us has been pressured by three different hospital administrators to provide payments for medical student rotations or else they would instruct him to remove his students and would “sell the slots to Caribbean schools.” Why are other medical educators who have had similar experiences reluctant to talk publicly about this issue?

It is common for medical schools to have third- and fourth-year students taking multiple clinical rotations at one hospital. Students may do a four- to six-week rotation, for example, in obstetrics–gynecology at Hospital A, followed by a four- to six-week rotation in general surgery there. When an offshore medical school buys rotation slots in obstetrics–gynecology at this hospital, the U.S. medical students must be redeployed at another hospital. It is getting harder and harder to find “another hospital,” as a result of both the pressure of offshore medical schools and the shifting alliances of hospitals resulting from mergers and acquisitions.

Approximately 80% of U.S. MD- and DO-granting medical schools report significant concern about the adequacy of clinical training sites for students.55 In addition to vying with each other and with physician assistant and advanced nursing practice programs for clinical training slots, medical education leaders at 52% of DO-granting and 30% of MD-granting U.S. medical schools report offshore medical schools as a source of competition for clinical training sites.2,3,11,55

Directors of medical education are reluctant to talk more freely about what is happening because, continuing the example described above, there are still students of U.S. medical schools doing general surgery rotations at Hospital A. The medical education directors of those schools are fearful that if they create a public discussion or talk to reporters about what has happened with the obstetrics–gynecology rotation, then the hospital administrator will become angry, sell the general surgery slots to a willing Caribbean buyer, and, as one educator put it, “toss our students out of the surgery rotation too, and my job will be even harder than it already has become.”

This is creating a chilling conspiracy of silence. As money from Caribbean schools flows into and disrupts our system of medical education, the people charged with administering the education of U.S. students in U.S. medical schools have become afraid to speak out, lest a bad situation become even worse. By being silent, however, they are reinforcing the behavior they abhor.

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Monetization of a Duty

The first of the promises of the Hippocratic Oath is:

To hold him who has taught me this art as equal to my parents and to live my life in partnership with him … and to teach them this Art—if they desire to learn it—without fee and covenant….56

This promise sets the tone for one of the most powerful traditions in medical education: The training of the next generation of physicians is the duty of the current generation. Being a teacher of medicine is an honor and a privilege. No one of our generation would have ever thought that a medical school would need to purchase for its students the opportunity to undertake a clinical clerkship in a hospital. This process was one freely entered and freely given.

For-profit Caribbean schools are converting an educational duty into a marketplace. The system is being monetized through the conversion of an educational asset into a money-making industry. Now, SGU plans to take for-profit medical education into Africa and Asia.27

Yet, who owns the asset? Teaching on the wards is done by the attending medical staff, not by the hospital administration. The right to learn on the wards is being sold by the hospital administration, not by the attending medical staff. By what authority does a hospital “own” the opportunity for students to learn by participating in the care of patients and then, in turn, sell it to a corporation? By what authority does a hospital assume that it “owns” the instructional aspects of a patient’s illness and treatment and then sell the observation of it to a third party?

Confounding this debate is the rapid disappearance of the independent medical practitioner. When most teaching physicians were members of a medical school’s faculty and derived their clinical income from a faculty practice plan or were voluntary faculty in private practice, they possessed considerable independence of action. Now, though, increasing numbers of physicians are employees of hospitals. Employed physicians are in no position to debate who controls the hospital teaching service with their employer.

A recent survey of U.S. medical schools found that 67% of MD programs report experiencing “moderate/high/extremely high … pressure to provide financial compensation incentives for new clinical training sites in community-based settings,” as do 93% of DO programs.55

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What Should Be Done?

First, restrictions should be placed on federal student loans. The federal government invests in the education and training of the U.S. physician workforce through the Stafford Direct Student Loan Program.4,8,12,18,31 A grandfathering clause in federal law for five offshore medical schools—SGU, AUC, RUSM, Our Lady of Fatima (Philippines), and Sackler School of Medicine (Israel)—excludes them from having to meet the 75% pass rate threshold for USMLE exams to be eligible for federal student loans.9 The GAO has reported that at least two of these schools would be unable to meet this standard.34

We supported a bill to eliminate the grandfathering clause that was introduced in 2013 in the U.S. Senate (S. 1822) by Sen. Dick Durbin and in 2014 in the U.S. House of Representatives (H.R. 3903) by Rep. Michael Burgess.57 Under the bill, only foreign medical schools that maintain a 75% pass rate on the USMLE and whose student bodies are ≥ 60% non-U.S. citizens would be eligible for federal student loans.9,14,57 In 2014 Sen. Tom Harkin introduced a bill reauthorizing the Higher Education Affordability Act (S. 2954) with nearly identical language,58 and in 2015 Sens. Durbin and Bill Cassidy and Reps. Burgess, Elijah Cummings, Charles Boustany, and Marsha Blackburn reintroduced the legislation as the Foreign Medical School Accountability Fairness Act (S. 1374, H.R. 2417).14 We invite our colleagues in academic medicine to encourage their elected federal representatives to support this legislation.

Second, offshore medical schools should be required to report the fraction of matriculating students who take Step 1 of the USMLE within a defined time frame from matriculation as well as the pass rate for first-time and repeat test takers. A U.S. medical school will generally require all of its students to take the USMLE or COMLEX-USA, and if 95 of 100 students pass, then the pass rate is 95%. Presently, Caribbean schools typically only allow a subset of prescreened students—believed to be about 60%—to take the USMLE Step 1 exam. Their pass rates are 60% to 95% of those taking the test.2,7,8,11,12,51 These schools typically report pass rates of 60% to 95% when, in fact, their pass rates are 60% to 95% of 60% of their student body, or approximately 36% to 57%.

Third, only medical schools that meet LCME or COCA standards should be approved for federal loans. There should also be vigorous enforcement of U.S. Department of Education standards regarding compliance with the rules of the FFEL program.34

Fourth, state higher education boards should deny students of proprietary offshore schools access to clinical education in U.S. teaching hospitals unless these schools meet accreditation standards equivalent to those expected of U.S. medical schools. The offshore schools should bear the costs of this accreditation process.

Fifth, offshore medical schools assert that their graduates are filling a need for primary care in the medical profession59,60 and that there is a surplus of resident positions. These assertions should be refuted because neither is correct. There are U.S. citizens graduating from U.S. medical schools unable to find a residency slot either in the Match or the Supplemental Offer and Acceptance Program. Workforce data are inconsistent with Caribbean schools’ claims that they train primary care doctors who care for poor patients: Seventeen percent of U.S. graduates of offshore medical schools practicing in New York report case loads of at least 50% Medicaid patients, which is no different from the 18% of U.S. medical school graduates reporting such case loads.61

Sixth, we support legislation at the state level, such as the Texas law that prohibits the Texas Higher Education Coordinating Board from issuing a certificate of authority for a private postsecondary institution to grant an MD or DO degree or to represent that credits earned in Texas are applicable toward a degree if the institution is chartered in or has its principal office or primary educational program in a foreign country.62 Texas’s public medical schools have opposed AUC’s efforts to obtain clinical clerkships in the state. With new medical schools planned for Texas, there were concerns that there would not be enough room to accommodate in-state students.31,63–65 In 2014, the Texas Medical Board advised RUSM that the number of their students “determined ineligible for physician licensure due to failure to meet eligibility requirements as regards clinical clerkships is disproportionately high.”41,65

Seventh, there should be monitoring of the attrition rate of foreign medical schools with a student body of > 30% U.S. citizens. Schools that exceed a defined maximum attrition rate should not be eligible for Title IV funding. High attrition rates imply that schools are admitting students who have no possibility of graduating.

Finally, foreign medical schools should demonstrate accountability for graduate medical education (GME). There is widespread concern regarding the lack of residency slots to meet the number needed for U.S. medical school graduates. Foreign medical schools should develop retrospective GME accountability reports demonstrating the initial class size, attrition rates, the number of their graduates entering GME, the residency positions available at their affiliated clinical sites, and the historic percentages of participation, final placement, unsuccessful students in the Match, and residency choices of their graduates.8,9,14,17,28,30,57,66

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Conclusion

We are imposing increasing requirements for medical student competencies upon U.S. medical schools, but no such standards are required for offshore institutions whose graduates enter the U.S. physician pipeline. We should strengthen the standards for offshore schools training students who aim to practice in the United States. U.S. medical education today faces a threat similar to that leading up to the Flexner Report, although this time the schools that do not meet the training standards necessary to ensure public health are outside U.S. borders.1 A dire emergency is approaching that could compromise American medical education.

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