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Invited Commentaries

The Graduate Medical Education (GME) Gold Rush: GME Slots and Funding as a Financial Asset

Aizenberg, David Jacob MD; Logio, Lia Suzanne MD

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doi: 10.1097/ACM.0000000000003133
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On June 26, 2019, it was announced that Hahnemann University Hospital (HUH), a historic safety-net hospital that had served Philadelphians since 1848, was to close in less than 3 months.1,2 By August 6, all training programs were formally closed, and more than 550 trainees (residents and fellows) had been displaced to other programs. The Department of Internal Medicine alone scrambled to find receiving programs for 148 residents and 80 fellows.

The abrupt and rapid closing of the hospital identified a blind spot in the protection of a most precious public good, graduate medical education (GME). Through the Centers for Medicare and Medicaid Services (CMS), the federal government supports the salaries and other costs of training doctors in the United States.3 CMS makes these financial arrangements directly with the individual teaching hospitals that sponsor residency and fellowship programs. Since the Balanced Budget Act of 1997, hospitals with existing training programs have had a cap on the number of CMS training slots that are supported by taxpayer dollars.4 There has been little to no adjustment to this cap since 1997 because of efforts to control government spending. There is also significant variation in the amount of funding (called the per resident amount) hospitals receive for each trainee. A large proportion of teaching hospitals, out of necessity, now self-fund strategic expansion of GME above the CMS cap. Consequently, CMS-funded GME positions are a valued resource to every teaching hospital.

As mentioned above, the HUH bankruptcy displaced an unprecedented number (more than 550) of residents and fellows. Displaced, also called “orphaned,” trainees, through a specific CMS policy and procedure, are eligible to relocate to another program to continue their training with the CMS funding following the individual until the completion of the training program.5 The funding provided by CMS is then calculated using the receiving hospital’s per resident amount. This can be likened to a gold rush for teaching hospitals—additional manpower at no additional cost, something precious and rare and aggressively fought for. Furthermore, hospitals that receive orphaned residents and fellows are given priority by CMS for permanent expansion of their cap when the orphaned slots are redistributed (after the current individuals complete their training) using an established process.6

This summer in Philadelphia, the behavior of teaching hospitals and their systems seemed to harken back to our collective image of lawless California goldfields during the Gold Rush. The frenzy of opportunistic activity was breathtaking as programs around the country applied for temporary increases in their assigned Accreditation Council for Graduate Medical Education (ACGME) complement (their maximum number of enrollees). Calls and emails from hospitals across the country inundated HUH program directors’ and chairs’ offices. Some programs likely requested increases in their complement for altruistic reasons, such as to help residents and fellows complete their training without interruption, while many likely saw this as an opportunity for financial profit. Instead of hiring 2 advanced practice providers who work 40 hours per week at a high cost, a hospital could absorb a displaced trainee who will work up to 80 hours per week and come with CMS funding.

Equally extraordinary was how uncoordinated and chaotic the process was as it unfolded, adding to the confusion and uneasiness for the trainees, an already vulnerable population with considerable debt, limited choice and control over where they would end up next, and filled with concern that their long-term goals were in jeopardy. The accelerated and compressed timeline created a free-market environment with few protections for the individual orphaned resident or fellow. Potential receiving programs directly contacted trainees, some on the same day as the hospital’s closure was announced. Many institutions set up websites and fast-paced “recruitment” days for displaced residents and fellows. The process lacked coordination around the timing of offers or deadlines for responding to offers. One resident was given only 15 hours to decide whether she would accept an offer. For those of us in the center of the maelstrom, we sought to protect our defenseless trainees, who, in the midst of their training, found themselves rudderless and frantically grasping at whatever offers were extended to minimize the disruption to their lives. Despite our best efforts, it was impossible to completely shield our trainees from the aggressive and stressful chaos that was created by this gold rush.

None of the behavior mentioned above broke any rules because there are no rules to break. One can clearly delineate each stakeholder’s incentive. Receiving programs want to secure the very best trainee; thus, they are incentivized to have aggressive timelines for offers. Residents and fellows want to secure the very best programs; thus, they are incentivized to delay decisions and ask for offer extensions. The closing programs want to ensure that all trainees continue their education without interruption and with the fewest possible needing to relocate; thus, they are incentivized to ensure a good fit between each trainee and their landing program and to advocate for top trainees to get offers from “top programs” in the area to preserve local capacity. Unfortunately, these various incentives are misaligned, creating competing demands that, without a computer match algorithm, can lead to significant psychological turmoil for trainees. They, as innocent bystanders, experienced tremendous uncertainty from HUH’s closing, which was compounded by coercion and undue duress from potentially receiving hospitals’ short deadlines for responding to offers.

The residents and fellows faced significant challenges and remain in some jeopardy. The average debt after medical school is nearly $200,000,7 and displacement has added unexpected costs for trainees who have had to break leases and relocate. We estimate that for our internal medicine residents alone, the average additional cost to them was over $4,000 each (with some reporting $16,000 in relocating costs). Additionally, approximately a third of these individuals are in their last year of training, nearly ready for unsupervised practice or seeking additional expertise within a specialty, but they will now be in a new environment without local knowledge of how to get things done, missing their established mentors, and needing to reinvent their scholarly projects.

Clearly, the monetary value of the GME slots was not lost on the for-profit owners of HUH. Senior administration was slow to put anything in writing, especially attestations to reassign funding to receiving programs. Two weeks into the process of frantically securing training positions for our trainees, we were informed that HUH had initiated an auction of its CMS provider number (to which each hospital’s GME slots and their funding are linked), which would transfer HUH’s entire GME footprint, including its cap and budget, to the auction winner in perpetuity.8 Furthermore, although the ACGME declared current HUH residents and fellows to be orphans, the organization made it clear that they did not have a role in deciding funding issues. The uncertainty regarding funding led many programs, especially those outside of the Philadelphia region, to delay any engagement with our trainees. To our knowledge, the attempt to sell the CMS provider number in order to use GME funding to offset debt is another unprecedented event, further adding to the confusion about who has final authority over the placement of displaced trainees. If successful, the auction would circumvent an already established and deliberate process detailed by the Patient Protection and Affordable Care Act (2010) that outlines how permanent GME slots are redistributed in these types of situations.9

By mid-July, it was clear that it would be impossible to maintain a valuable educational experience for programs at HUH and their affiliated sites. All of the programs voluntarily withdrew their accreditation by the end of the first week in August, before the finalization of the CMS provider number auction. This allowed trainees to transfer to other programs, but it remains unclear what would have happened if the auction was completed before the official program or hospital closure. If an institution had obtained the CMS provider number while the programs were still accredited and the ACGME had approved complement increases, it is possible that all trainees would have been required to continue their training at that institution. The legality of holding a CMS provider number auction is currently being litigated in the courts.10

A final example of the monetization of this GME displacement showed up at the eleventh hour. In late July, hospitals that agreed to receive trainees were informed that only 80% of an orphaned trainee’s CMS funding would be paid to them for the remainder of that individual’s training.11 The full amount was no longer available since the administration of HUH pursued Medicare affiliation agreements with regional hospitals to “lease” some of its CMS cap (and alleviate some of its financial duress), effectively reducing the amount of funding available. It should be noted that many of these cap deals were finalized after the announced closure of the hospital and that the hospital has refused to make these agreements available for review. Such actions demonstrate how, as health care is corporatized via for-profit hospitals, some stakeholders see GME funding as a financial asset available to sell as part of a liquidation process.

Inevitably, other hospitals will close in the future. We hope that an orphaning of trainees of this magnitude never happens again. But if it does, the medical education community needs to be better prepared. In the aftermath of this tumultuous event, the medical education community, government leaders, and CMS need to better define the entire displacement process and the owners of each step, including considering whether to have a Supplemental Offer and Acceptance Program for the displaced trainees, assigning authority over the flow of funding for the displaced residents and fellows to CMS, and passing laws that eliminate the possibility of including permanent GME slots as assets that can be auctioned off to the highest bidder. Additionally, CMS must maintain their commitment to already established processes that aid in the thoughtful redistribution of GME funds to best serve the nation and its people.


The authors would like to acknowledge all of the trainees and faculty in the Department of Medicine who were displaced following Hahnemann University Hospital’s closure and who persevered through this crisis with poise and professionalism. The authors are also grateful to the multitude of people across the country who reached out to offer support to them and their trainees.


1. Brubaker H. Hahnemann University Hospital to close. The Philadelphia Inquirer. Updated June 26, 2019. Accessed November 27, 2019.
2. Boyer WC. chief academic officer and designated institutional official, Hahnemann University Hospital. June 26, 2019.Personal communication with department chairs and program directors of Hahnemann University Hospital.
3. Eden J, Berwick DM, Wilensky GR. Institute of Medicine. Graduate Medical Education That Meets the Nation’s Health Needs. 2014.Washington, DC: National Academies Press.
4. Balanced Budget Act of 1997, Pub. L. No. 105-33, § 4623, 111 Stat. 251. Accessed November 27, 2019.
5. Centers for Medicare and Medicaid Services. Medicare fact sheet on displaced residents due to program or hospital closure. Published July 2019. Accessed November 27, 2019.
6. Centers for Medicare and Medicaid Services. Miscellaneous guidelines regarding the Section 5506 application process. Updated August 2016. Accessed November 27, 2019.
7. Association of American Medical Colleges. Student debt: Ensuring medical school remains affordable. Accessed November 27, 2019.
8. Brubaker H. Hahnemann residency slots auction: Main Line Health, Cooper join Temple and Jefferson in bid. The Philadelphia Inquirer. Updated August 8, 2019. Accessed December 5, 2019.
9. Patient Protection and Affordable Care Act, Pub. L. No. 111-148, § 5506, 124 Stat. 119. 2010. Accessed November 27, 2019.
10. Brubaker H. Federal judge stays Hahnemann residency sale; St. Chris auction pushed to Thursday. Updated September 16, 2019. Accessed December 5, 2019.
11. Boyer WC; chief academic officer and designated institutional official, Hahnemann University Hospital. Personal communication with D. Aizenberg, July 26, 2019.
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