Financial Contribution of Residents When Billing as “Junior Associates” in the “Surgical Firm”

Abstract

There is an increasing number of proposals to change the way Graduate Medical Education is funded. This study attempts to estimate the potential financial contribution of surgical residents using an alternative funding mechanism similar to that used by law firms, which would allow surgery departments to bill for resident activity as "junior associates." Following 24 residents over a period of 12 weeks, we were able to estimate the annual revenue that they generated from operating room procedures, independent consultations, patient management, and minor procedures using Medicare reimbursement rates. The appropriate first assistant modifier was used to calculate the operating room procedure fees, but full price was used to calculate the revenue for minor procedures, patient management, and consultations done independently. We adjusted for vacation time and academic activities. Including postgraduate year 1 residents, the estimated yearly revenue generated per resident in first assistant operative services was $33,305.67. For minor procedures, patient management, and independent consultations, the estimated yearly revenue per resident was $37,350.66. The total estimated financial contribution per resident per year was $70,656.33. Excluding postgraduate year 1 residents, as most states require completion of the intern year before full licensure, the estimated yearly revenue generated per resident in first assistant operative services was $38,914.56. For minor procedures, patient management, and independent consultations, the estimated yearly revenue per resident was $55,957.33. The total estimated financial contribution per resident per year was $94,871.89. Residents provide a significant service to hospitals. If resident activity was compensated at the level of supervised "junior associates" of a surgery department, more than 75% of the direct educational costs of training could be offset. Furthermore, we believe this value is underestimated. Given the foreseeable changes in Graduate Medical Education funding, it is imperative that alternative approaches for funding be explored.