Using Logic and Simple Math to Estimate the Worth of a Resident Physician

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Southpaw

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Lately, I often hear a cry from the nurses that it's cheaper to educate a PA/NP/SRNA than it is to educate a physician resident. Much cheaper in fact! I've even read it in the articles they've paid for! I'm going to use simple logic to educate everyone on exactly how much money a resident physician saves a hospital, and I'd like the readers to correct me where I'm wrong.

On any given day in my hospital you'll find a resident physician in my program (Anesthesiology) in the following hospital units:

OR
Outpatient Surgery Center
OB Anesthesia
off-site Anesthesia (ERCP, GI, EP lab, cardiac cath, CT, MRI)
PACU
Pre-op assessment clinic
General medicine service
GI medical unit/Renal/Heme-Onc/other medicine service
Cardiology Consult Service
Pulmonology Consult Service
Nephrology Consult Service
Medical ICU
Neuro ICU
Cardiac ICU
Surgical ICU
Pediatric ICU
Neonatal ICU
Emergency Department
Pain Management Clinic
Acute Pain Consult Service
Chronic Pain Consult Service

There may be others that slip my mind right now, but for the sake of argument let's say that's it.

1st year of training
Let's say you replace me on a medical service with an NP. I work 80 hours a week, they work 40. I make 45k/year, they make 90k/year (using round numbers b/c they're just easier to work with). Let's make the assumption that we receive the same benefits also (a false assumption since their retirement plan options are MUCH better than mine, including an employer benefit which I am not eligible for).

Okay, so in one year of work I've make 45k. It takes two NPs to do the work of me, so that's 180k of salary cost to the hospital if I'm not there. I've saved the hospital 135k in year one. But, I've saved them even more! Because with two NPs making up for my work, you have a second NP getting benefits so my hospital is now paying the benefits of two vs the benefits of just me. I have no clue how much a benefit package would be for an NP, so I'll just say 35k. If I'm way off someone correct me. So I've saved the hospital another 35k.

Year One Savings: (180,000 - 45,000) +35,000 = $170,000 of savings

You could make the argument that I save even more because I work nights, weekends, take 24-30 hour call at a time, and work holidays. Those two NPs will likely not make up all the work I've done, but I'm being as simplistic as possible here.

2nd year of training

I'm in an anesthesiology program now. Let's say I'm in the OR for 10 months this year, the ICU for 1 month, and the pre-anesthesia clinic for 1 month. Again, I'm making some simple assumptions.

Again, I make 45k for my 80 hours of labor, but let's say I only average 70 hours/week. To replace me, my department would have to hire another CRNA. They cost roughly 150k base salary, plus 1.5x hourly for every hour after 40. Let's estimate that overtime pay is $100/hour, and they have to work 30 hours a week at $100/hour to make up the difference, or an extra $3000/week. So now, let's make an assumption based on good business. My department realizes how expensive it'd be to pay one CRNA that much (and also, they'd never work that much!) so my department hires two CRNAs. They pay me 45k, two CRNAs 300k, and an extra benefit package of 35k.

The months I'm in the pre-anesthesia clinic and ICU they'll have to hire a PA/NP to replace me.

I've saved the following:

my 10 months in OR: 45,000 * (10/12) = 37,500
Cost of 2 CRNAs in 10 months of OR: 300,000 * (10/12) = 250,000
Extra benefit package for 10 months: 35,000 * (10/12) = 29,167

In 10 months I've saved my department $241,667

While I'm in the ICU/Pre-op clinic for 2 months I save the following:

my 2 months in ICU/Pre-op clinic: 45,000 * (2/12) = 7,500
Cost of 2 NPs in ICU/Pre-op clinic: 90,000 * (2/12) = 15,000
Extra benefit package for 2 months: 35,000 * (2/12) = 5,833

In 2 months I've saved my department $13,333

Year Two Savings: $241,667 + $13,333 = $255,000

Third Year of Training

Same assumptions as above, but let's say I spend 3 months off-service this year (ICU, Pain clinic, acute pain consult, chronic pain consult, etc.). Cost savings as follows:

my 9 months in OR: 45,000 * (10/12) = 33,750
Cost of 2 CRNAs in 9 months of OR: 300,000 * (10/12) = 225,000
Extra benefit package for 9 months: 35,000 * (10/12) = 26250

In 9 months I've saved my department $217,500

While I'm off-service for 3 months I save the following:

my 3 months off-service: 45,000 * (3/12) = 11,250
Cost of 2 NPs for 3 months: 90,000 * (3/12) = 22,500
Extra benefit package for 3 months: 35,000 * (3/12) = 8,750

In 3 months I've saved my department $20,000

Year 3 Savings: $217,500 + $20,000 = $237,500

Fourth Year of Training

Let's say I spend 2 months off-service this year (ICU, pain, etc.). My savings are as follows:

my 10 months in OR: 45,000 * (10/12) = 37,500
Cost of 2 CRNAs in 10 months of OR: 300,000 * (10/12) = 250,000
Extra benefit package for 10 months: 35,000 * (10/12) = 29,167

In 10 months I've saved my department $241,667

While I'm off-service for 2 months I save the following:

my 2 months off-service: 45,000 * (2/12) = 7,500
Cost of 2 NPs for 2 months: 90,000 * (2/12) = 15,000
Extra benefit package for 2 months: 35,000 * (2/12) = 5,833

In 2 months I've saved my department $13,333

Year Four Savings: $241,667 + $13,333 = $255,000

Total savings over 4 years of Training = $917,500


Finally, multiply this number by the number of residents in your program. If your residency has 10 residents/year, your program saves $9,175,000 over 4 years by hiring residents instead of CRNAs and NPs/PAs. If your program has 20 residents/year, your program saves $18,350,000.

Also, consider the fact that during year 4 of training the resident physician is doing things that only an attending physician can do. By year 4 of training most resident physicians should be able to do just about any anesthesiology case on their own. They should be proficient in TEE, regional, pain, ICU. They're studying for their oral/written boards. In short, they're at the top of their game. If you were to replace them, it'd need to be with another attending physician. This creates even more savings. Not as much as people think as in academics the attendings don't make that much more than the CRNAs, and oftentimes less than the rural, independent CRNAs! But, you get my point.

So let's have this discussion. How exactly does it cost so much to train a resident physician? As I believe I've proven here, resident physicians save the hospital and their department extremely large amounts of money.
 
Don't forget on the plus side (at least from the hospital's perspective) there are Medicare's Direct Graduate Medical Education Payments (DGME) and Indirect Medical Education payments (IME).

There is an interesting article in Health Care Financing Review BBA Impacts on Hospital Residents, Finances, and Medicare Subsidies that discusses some of the history and changes of medicare DGME and IME payments to hospitals and had this to say.

In addition, the low annual stipends and long work hours make residents an extremely cost effective input to patient care. Even before subtracting the Medicare subsidy, the first-year resident costs only about $13 per hour (assuming an 80-hour week, 48 weeks per year, and a $50,000 stipend including fringes).


with no overtime for nights, weekends, or holidays.


Based on Knickman's (1992) replacement model, Green and Johnson (1995) estimated the average staff replacement cost per resident to be about $105,000 in 1995 dollars. This is well more than double the resident's fringe-loaded stipend and before netting out any subsidies.


AAMC has a brochure on DGME and IME payments that is worth a read for residents. IMHO it can be valuable to know where the money is coming from to pay for your training.


On the negative side, anesthesia residents must be supervised 2/1 for OR months so you have to include the additional cost of supervising attendings. Obviously this is not the case for out of OR months, or for other specialties. (Consider the paradox that our job is so simple and safe that it can be done by a nurse, but so complicated that it requires more direct supervision than most other areas of medicine during the training years.)


- pod
 
This very question was examined in a recent article

The conclusion of linked article

The cost of replacing one anesthesiology resident with a CRNA for the same number of OR hours ranged from $9,940.32 to $43,300 per month ($106,241.68 to $432,937.50 per yr). Numbers varied depending on the CRNA pay scale and whether the calculations were based on the number of OR hours worked at our residency program or OR hours worked in a maximum duty hour model.

- pod
 
you're grossly underestimating the cost saved during the OR months. CRNAs are far more costly, won't work those hours, and won't work nights like you do, especially at a q3-5 schedule.

Lately, I often hear a cry from the nurses that it's cheaper to educate a PA/NP/SRNA than it is to educate a physician resident. Much cheaper in fact! I've even read it in the articles they've paid for! I'm going to use simple logic to educate everyone on exactly how much money a resident physician saves a hospital, and I'd like the readers to correct me where I'm wrong.

On any given day in my hospital you'll find a resident physician in my program (Anesthesiology) in the following hospital units:

OR
Outpatient Surgery Center
OB Anesthesia
off-site Anesthesia (ERCP, GI, EP lab, cardiac cath, CT, MRI)
PACU
Pre-op assessment clinic
General medicine service
GI medical unit/Renal/Heme-Onc/other medicine service
Cardiology Consult Service
Pulmonology Consult Service
Nephrology Consult Service
Medical ICU
Neuro ICU
Cardiac ICU
Surgical ICU
Pediatric ICU
Neonatal ICU
Emergency Department
Pain Management Clinic
Acute Pain Consult Service
Chronic Pain Consult Service

There may be others that slip my mind right now, but for the sake of argument let's say that's it.

1st year of training
Let's say you replace me on a medical service with an NP. I work 80 hours a week, they work 40. I make 45k/year, they make 90k/year (using round numbers b/c they're just easier to work with). Let's make the assumption that we receive the same benefits also (a false assumption since their retirement plan options are MUCH better than mine, including an employer benefit which I am not eligible for).

Okay, so in one year of work I've make 45k. It takes two NPs to do the work of me, so that's 180k of salary cost to the hospital if I'm not there. I've saved the hospital 135k in year one. But, I've saved them even more! Because with two NPs making up for my work, you have a second NP getting benefits so my hospital is now paying the benefits of two vs the benefits of just me. I have no clue how much a benefit package would be for an NP, so I'll just say 35k. If I'm way off someone correct me. So I've saved the hospital another 35k.

Year One Savings: (180,000 - 45,000) +35,000 = $170,000 of savings

You could make the argument that I save even more because I work nights, weekends, take 24-30 hour call at a time, and work holidays. Those two NPs will likely not make up all the work I've done, but I'm being as simplistic as possible here.

2nd year of training

I'm in an anesthesiology program now. Let's say I'm in the OR for 10 months this year, the ICU for 1 month, and the pre-anesthesia clinic for 1 month. Again, I'm making some simple assumptions.

Again, I make 45k for my 80 hours of labor, but let's say I only average 70 hours/week. To replace me, my department would have to hire another CRNA. They cost roughly 150k base salary, plus 1.5x hourly for every hour after 40. Let's estimate that overtime pay is $100/hour, and they have to work 30 hours a week at $100/hour to make up the difference, or an extra $3000/week. So now, let's make an assumption based on good business. My department realizes how expensive it'd be to pay one CRNA that much (and also, they'd never work that much!) so my department hires two CRNAs. They pay me 45k, two CRNAs 300k, and an extra benefit package of 35k.

The months I'm in the pre-anesthesia clinic and ICU they'll have to hire a PA/NP to replace me.

I've saved the following:

my 10 months in OR: 45,000 * (10/12) = 37,500
Cost of 2 CRNAs in 10 months of OR: 300,000 * (10/12) = 250,000
Extra benefit package for 10 months: 35,000 * (10/12) = 29,167

In 10 months I've saved my department $241,667

While I'm in the ICU/Pre-op clinic for 2 months I save the following:

my 2 months in ICU/Pre-op clinic: 45,000 * (2/12) = 7,500
Cost of 2 NPs in ICU/Pre-op clinic: 90,000 * (2/12) = 15,000
Extra benefit package for 2 months: 35,000 * (2/12) = 5,833

In 2 months I've saved my department $13,333

Year Two Savings: $241,667 + $13,333 = $255,000

Third Year of Training

Same assumptions as above, but let's say I spend 3 months off-service this year (ICU, Pain clinic, acute pain consult, chronic pain consult, etc.). Cost savings as follows:

my 9 months in OR: 45,000 * (10/12) = 33,750
Cost of 2 CRNAs in 9 months of OR: 300,000 * (10/12) = 225,000
Extra benefit package for 9 months: 35,000 * (10/12) = 26250

In 9 months I've saved my department $217,500

While I'm off-service for 3 months I save the following:

my 3 months off-service: 45,000 * (3/12) = 11,250
Cost of 2 NPs for 3 months: 90,000 * (3/12) = 22,500
Extra benefit package for 3 months: 35,000 * (3/12) = 8,750

In 3 months I've saved my department $20,000

Year 3 Savings: $217,500 + $20,000 = $237,500

Fourth Year of Training

Let's say I spend 2 months off-service this year (ICU, pain, etc.). My savings are as follows:

my 10 months in OR: 45,000 * (10/12) = 37,500
Cost of 2 CRNAs in 10 months of OR: 300,000 * (10/12) = 250,000
Extra benefit package for 10 months: 35,000 * (10/12) = 29,167

In 10 months I've saved my department $241,667

While I'm off-service for 2 months I save the following:

my 2 months off-service: 45,000 * (2/12) = 7,500
Cost of 2 NPs for 2 months: 90,000 * (2/12) = 15,000
Extra benefit package for 2 months: 35,000 * (2/12) = 5,833

In 2 months I've saved my department $13,333

Year Four Savings: $241,667 + $13,333 = $255,000

Total savings over 4 years of Training = $917,500


Finally, multiply this number by the number of residents in your program. If your residency has 10 residents/year, your program saves $9,175,000 over 4 years by hiring residents instead of CRNAs and NPs/PAs. If your program has 20 residents/year, your program saves $18,350,000.

Also, consider the fact that during year 4 of training the resident physician is doing things that only an attending physician can do. By year 4 of training most resident physicians should be able to do just about any anesthesiology case on their own. They should be proficient in TEE, regional, pain, ICU. They're studying for their oral/written boards. In short, they're at the top of their game. If you were to replace them, it'd need to be with another attending physician. This creates even more savings. Not as much as people think as in academics the attendings don't make that much more than the CRNAs, and oftentimes less than the rural, independent CRNAs! But, you get my point.

So let's have this discussion. How exactly does it cost so much to train a resident physician? As I believe I've proven here, resident physicians save the hospital and their department extremely large amounts of money.
 
Interesting, I glad my estimates are on the low side of things. It's amazing to me that just one resident likely saves hospitals and departments over $1 million dollars in comparative costs.

The ASA should run with this. That article should be broadcast widely by the ASA. The NY Times, the Washington Post, and Health Affairs (heh), in their vastly and assuredly unbiased opinion, would be willing to print the story I'm sure!
 
To say it's expensive to train a physician is a lie. A flat-out lie. Don't accept anything different. To say resident physicians don't earn their keep, make money for the hospital or make money for their departments is nothing more than a farce, a fairy tale, a lie.
 
In the long run, there also could be savings to the health care system if nurses delivered more of the care. It costs more than six times as much to train an anesthesiologist as a nurse anesthetist


This assumes that you only look at the cost of the training and don't look at the savings to Medicare or Medicaid as the article by lushMD pointed out.

The statement should be that if the CRNA works for $40-50k for the first four years of practice then it costs six times as much to train an anesthesiologist as a CRNA.

David Carpenter, PA-C
 
It is surprising that the people who complain of cost never question the utility of giving a 96 y/o a valve replacement or hip replacement. Nor do they question the cost effectiveness of paying for the ICU care of a elderly pt with metastatic inoperable CA. And what about the cost effectiveness of treating cancers with close to 100 percent mortality at five years. If we stopped all of that we'd save billions. And we wouldn't need all these nurses to check vitals, lie about respiratory rate and play farmville.

Good healthcare is not cheap, even if we accept the lie that these pseudo doctors are saying idk of any patient who would like third world cheap healthcare.

And if they are really serious about cutting costs, how about comparing their jobs to that of a third year medical student. The MS-3 pays 50k to do everything they do. They get paid upwards of 50k. So essentially, their "skills" can be done by a doctor in training who pays for the privilege. I think a salary adjustment is in need.
 
The statement should be that if the CRNA works for $40-50k for the first four years of practice then it costs six times as much to train an anesthesiologist as a CRNA.

David Carpenter, PA-C

I know it wasn't your intent, but this is an incomplete statement. I've seen comments on the costs to educate a medical student, and yet the average debt of medical student graduates with today is > $150,000. Multiple that by the number of students in a graduating class and this number grows to easily > $10 million in debt for an entire class. There are a lot of people making a lot of money these days off of medical students.

Nurses, and biased authors who are either nurses themselves or paid by nurses, make blanket statements about the cost to educate a physician. But it's just a blanket statement, it's never backed by numbers.

I've provided the numbers. LushMD has provided some real research. The numbers are staggering. A resident physician in anesthesiology is the best deal in the hospital, and it's not even close. Wanna know why? B/c CRNAs make so damn much! Internal medicine residents and other specialties save their hospitals and departments a boatload also, but because NPs and PAs don't make as much as CRNAs, the resident in anesthesiology is a steal for hospitals! We save somewhere around 1 million per resident for our departments and hospitals over the course of our 4-year training. These numbers are staggering.
 
I know it wasn't your intent, but this is an incomplete statement. I've seen comments on the costs to educate a medical student, and yet the average debt of medical student graduates with today is > $150,000. Multiple that by the number of students in a graduating class and this number grows to easily > $10 million in debt for an entire class. There are a lot of people making a lot of money these days off of medical students.

Nurses, and biased authors who are either nurses themselves or paid by nurses, make blanket statements about the cost to educate a physician. But it's just a blanket statement, it's never backed by numbers.

I've provided the numbers. LushMD has provided some real research. The numbers are staggering. A resident physician in anesthesiology is the best deal in the hospital, and it's not even close. Wanna know why? B/c CRNAs make so damn much! Internal medicine residents and other specialties save their hospitals and departments a boatload also, but because NPs and PAs don't make as much as CRNAs, the resident in anesthesiology is a steal for hospitals! We save somewhere around 1 million per resident for our departments and hospitals over the course of our 4-year training. These numbers are staggering.
Its not an incomplete statement, its a reply to Blade's incomplete statement. Look at this in CRNAmath terms:
I'm just going to make up some numbers to illustrate a point. Assume a CRNA and an anesthesiologist both attend a state school costing $12k per year. Then the Anesthesiologist does a residency where they are paid $40k per year.

CRNAmath says that the cost to train the CRNA is $12k x 2 = $24k.
CRNAmath says the cost to train the anesthesiologist is $12k x 4 (med school) = $48k + $40k x 4 (residency) = $160k for a total of $208k. So in this math exercise it costs roughly 8x as much to train the anesthesiologist as the CRNA (for the exact same scope of practice according to the AANA).

From Medicares standpoint over an eight year period they are paying:
CRNA nothing for the first two years + (made up number) $120/hr x 2000 hrs or $240k x 6 years or roughly $2.5 million dollars.

Anesthesiologist nothing for the first four years then $100k per year (made up number including direct and indirect GME costs). = $400k. So under this scenario it costs six times as much to care for Medicare patients with CRNAs than residents (conveniently ignoring the fact that residents work up to 80 hours per week for their money).

So I could easily say that the AANA statement is diametrically opposite from a Medicare standpoint. Of course the real math is more difficult but Medicare gets their value out of residents Critical care, pain and other rotations.

I also agree that anesthesia residents are cash cows for teaching hospitals although the reason has more to do with anesthesia reimbursement than CRNA salaries. Depending on the payor mix far more so than for other specialties.

David Carpenter, PA-C
 
CRNAmath says that the cost to train the CRNA is $12k x 2 = $24k.
CRNAmath says the cost to train the anesthesiologist is $12k x 4 (med school) = $48k + $40k x 4 (residency) = $160k for a total of $208k. So in this math exercise it costs roughly 8x as much to train the anesthesiologist as the CRNA (for the exact same scope of practice according to the AANA).

To put it simply, CRNAmath doesn't add up. :laugh:

In discussing anesthesia reimbursement, keep in mind that Medicare reimburses anesthesia 33% that of private insurance. From my knowledge, all other specialties are >80%. Also, keep in mind, anesthesiology residents predominate in tertiary care centers, where the patient population has a high % of Medicare patients.
 
In the spirit of keeping things honest, The comparison is not completely apples to apples. Learning takes time. Teaching takes time. Rooms using experienced CRNAs will have faster turnovers and require less of an attending's time than rooms using junior residents. Quicker and slicker wakeups, less time for the attending to do the block or line than the resident learner. I still think that resident are far cheaper than crnas, but the difference is not as great as some of the posts suggest.
 
In the spirit of keeping things honest, The comparison is not completely apples to apples. Learning takes time. Teaching takes time. Rooms using experienced CRNAs will have faster turnovers and require less of an attending's time than rooms using junior residents. Quicker and slicker wakeups, less time for the attending to do the block or line than the resident learner. I still think that resident are far cheaper than crnas, but the difference is not as great as some of the posts suggest.

Not all CRNAs are experienced, and not all experienced CRNAs can be left alone. I saw some scary stuff come through as PACU resident.

As for turnover time, I'd be interested to hear how it is at other hospitals, but at my tertiary care center residents try to stay on their game only to be held up by nurses who have no motivation to speed turnover. I've witnessed CRNA room turnover, and I'm not impressed.

Do cases not get done because junior anesthesiology residents move slower and wake up patients slower? Of course not. Yes, they do tend to take longer to get out of the room once we're ready to wake up, but the cases are getting done regardless. The CRNAs are out the door at 5PM. Boom, bam, seeya, bye bye, gone! POOF! Up and vanished like a fart in the wind! I like it like that too. Senior residents taking call for that evening are left to pick up the pieces. We're getting the cases done regardless of what the hold up was earlier that day.

Lastly, you take away a resident (80 hours), you have to replace them with 2 CRNAs (40 hours). Yes, if you take away a junior resident and replace them with a great CRNA you'll get a few more cases done. How about if you take away a senior resident and replace them with an inexperienced, or inefficient CRNA? In the end, I think all of that is a wash.
 
Rooms using experienced CRNAs will have faster turnovers and require less of an attending's time than rooms using junior residents. Quicker and slicker wakeups, less time for the attending to do the block or line than the resident learner.

Not where I trained. Wakeups were fastest for senior residents (after the first 6 months to 1 year of training). The CRNA's and junior residents were pretty similar in terms of wakeup early in the day. As we approached the witching hour things slowed down remarkably in the CRNA rooms. CRNAs were much more demanding of breaks from their attendings, so much so that we had to add an extra break CRNA.

Turnovers were a function of the circulating nurses and scrubs. There was rarely a true anesthesia delay in turnover except for the occasional sick a** patient that showed up without appropriate workup. The CRNAs seemed to be much faster than the residents at getting the patients back to the OR. :eyebrow:


- pod
 
In the spirit of keeping things honest, The comparison is not completely apples to apples. Learning takes time. Teaching takes time. Rooms using experienced CRNAs will have faster turnovers and require less of an attending's time than rooms using junior residents. Quicker and slicker wakeups, less time for the attending to do the block or line than the resident learner. I still think that resident are far cheaper than crnas, but the difference is not as great as some of the posts suggest.


In every academic hospital I've seen, the rate limiting step in OR room turnover is not the anesthesia provider, but the OR staff. Getting the room cleaned and opening/counting for the next case usually takes 30-45 minutes or so.

Two minutes faster on the extubation never makes a difference.
 
In every academic hospital I've seen, the rate limiting step in OR room turnover is not the anesthesia provider, but the OR staff. Getting the room cleaned and opening/counting for the next case usually takes 30-45 minutes or so.

Two minutes faster on the extubation never makes a difference.

:scared:

We give out a 10% tiered bonus for a 15 minute turn over. 20 minutes for robotic cases and backs. Seems to do the trick. I know academics is different.
 
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