Factors contributing to the variability of direct costs for graduate medical education in teaching hospitals.

Medicare's support of graduate medical education includes funds allocated to the direct costs of graduate medical education: housestaff stipends and benefits, faculty costs, and related educational costs such as classroom space. As reimbursed through the mechanism called the direct graduate medical education (DGME) pass-through, these direct costs have been reported to vary widely from one teaching hospital to another, with little explanation for this variation being available. Based on a national survey of 69 teaching hospitals--principally affiliated community teaching hospitals--the author suggests that a major cause for the variation in these costs might be found in their faculty-expenses component. It is further suggested that economies of scale may provide some clue as to the variability of these costs. The author also reports lower DGME costs for the survey sample than for the national sample, and suggests that the fact that community teaching hospital faculties include a significant volunteer component may account for some of these savings.