Providing Primary General Medical Care in University Hospitals

Efficiency and Cost

Published In: Annals of Internal Medicine, v. 107, no. 3, Sep. 1987, p. 399-405

Posted on RAND.org on January 01, 1987

by Jacqueline Kosecoff, Robert H. Brook, Arlene Fink, Caren Kamberg, Carol P. Roth, George A. Goldberg, Lawrence S. Linn, Virginia Clark, Joseph P. Newhouse, Thomas L. Delbanco

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Data on efficiency, costs, and profits of 15 internal medicine outpatient group practices in university hospitals were collected for 9 months from interviews, a time-motion study, observations, and reviews of bills. Charges for a follow-up visit were about 25% higher than Medicare's allowable charges, but differed threefold across practices. Physicians spent more than half their allocated patient care or supervision time in other activities and 14% of nursing time was used for direct patient care. Visits to second- and third-year residents cost one half of those to faculty. Faculty supervision of second- and third-year residents was limited; it was, on average, 2 minutes per follow-up visit. Despite these inefficiencies, bad debts, and educational costs, practices appeared to break even financially. We conclude it is financially feasible for university hospitals to provide primary care to disadvantaged populations.

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