financial implications of increasing class size marc j kahn, md, mba tulane
TRANSCRIPT
Financial Implications of Increasing Class Size
Marc J Kahn, MD, MBATulane
How much does it cost to educate a medical student?
Henry’s Hotdogs
Parable
Henry’s Hotdogs is a small business that sells hotdogs by the road. Henry borrowed money from the local bank to fund this business venture. During the first week, Henry spent $50 to sell 25 hotdogs. Over the next several weeks, Henry had the following expenses:
Week Cost Hotdogs sold
2 $57 32
3 $42 17
4 $64 39
5 $86 61
How to figure out costs:
10 20 30 40 50 60 700
10
20
30
40
50
60
70
80
90
100
Number sold
Cost
Y-intercept = fixed costs
Slope= variable costs
Lets do the same for medical schools
MSPS Database from the AAMC gives 7 sources of revenue for each medical school
Assume only three streams part of medical education:
Total Tuition and Fees
Total Government and Parent Support
Total Revenue from Gifts and Endowment
Methods (cont.) Categories of revenue not used:
Total Federal Research and Grants
Other Grants and Contracts
Hospital Transfers
Other Revenues
RevenueCosts Allocate 60% of revenue to cost (Ridley et
al, Academic Med 2002)
Sensitivity analysis using 50% and 40%
Results
Sensitivity Analysis
a As published in Ridley GT, Skockelak SE, Farrell PM. Mission aligned management and allocation: successfully implemented model of mission-based budgeting. Acad Med. 2002;77(2):124-9.b All 28 are Private Schools
Results
Covering Costs*33%
Not Covering Costs*
67%Private
9%
Public91%
Private,
100%
0
2
4
6
8
10
12
14
16
18
$10 $12.5 $15 $17.5 $20 $22.5 $25 $27.5 $30 $32.5 $35 $37.5 $40 $42.5 $45 $47.5 $50 $52.5 $55 $57.5 $60 $62.5
Nu
mb
er
of
US
Sch
oo
ls
How much schools charge each student, in thousands
Averagecost of
educating one medical student for
one year($62,877)
Low end of 95% CI for avg. cost to educate one
med student($38,226)
* “Schools covering costs” charge their students more than $38,226—the low end of the 95% confidence interval for cost-per-student (no schools charged as much as the mean cost-per-student of $62,877). Calculations for public schools and private schools are based on in-state and out -of-state tuition and fees, respectively, reported in the AAMC Tuition and Student Fees Survey.
Figure 2: What percentage of US schools are covering the costs of medical education at $38,226 (lower 95%CI)?
Conclusions Based on our cost analysis, medical schools
are not covering costs with tuition revenue
Our best point estimate of the cost required to educate a medical student in the US is $62,877
Increasing class sizes by 30% will cost an average of at least $5 million per school
Investigators Danny A. Schieffler, PhD
Benjamin Azevedo, BA
Richard A. Culbertson, PhD
Marc J. Kahn, MD, MBA
Tulane University School of Medicine and School of Public Health and Tropical Medicine