This analysis examines the cost implications of changes to resident physicians’ duty hours and the training environment that ACGME started requiring in July 2011. Relative to its 2003 policies, the 2011 policies could have a total annualized direct cost of about $398 million nationwide if implemented in the manner that ACGME anticipates. However, alternative implementation approaches could raise this to $1.3 billion or higher. Major teaching hospitals are likely to experience financial losses unless PAEs fall substantially. If direct costs are at the lower end of the range and PAEs decline by at least 2-3%, the policies could be cost-saving to society. They are less likely to be cost-effective if direct costs are higher and cannot be cost-effective if PAEs rise.
How do the 2011 requirements compare with alternative policies? Focusing on duty-hour limits, we previously estimated the cost of the IOM policies at $1.7 billion annually nationwide (inflated to 2008) 5
. In comparison, the 2011 duty-hour requirements would cost $177 million to $982 million. The 2011 policies cost less mainly because extended shifts will change substantially for PGY1s rather than for all residents.
Although the ACGME requirements have now been implemented, duty-hour policies seem far from settled. In September 2010, the Occupational Health and Safety Administration (OSHA) received a petition arguing for even stricter limits. The agency announced, in surprisingly strong language, its intention to investigate 39,40
. Then in October, the U.S. Supreme Court ruled, in an unrelated case, that residents are employees rather than students, eliminating long-standing uncertainty 41
. This seemingly clarifies that OSHA has the authority to regulate resident duty hours. Should OSHA favor the limits advocated in the recent petition (Table ), costs would be even higher than for the IOM duty-hour limits, possibly much higher, because all residents would have 16-hour shifts.
Although the 2011 duty-hour limits would cost less than alternative policies, the total burden to teaching hospitals could be substantial, depending on programs’ implementation decisions. While costs would be much lower if interns maintain their current productivity under modified schedules, educational opportunities may decline because optimal schedules could differ between learning and service objectives. After 2003, operative experience fell for some surgical residents, and elective rotations and teaching conference attendance declined at some Internal Medicine programs 8,20
If educational or logistical concerns induce programs to hire additional providers, the next question is which providers to choose. Expanding the population of residents would be the least costly approach if the expenditures were limited to stipends and benefits. The Council for Graduate Medical Education has recommended increasing residency positions 42
. However, residents need educational opportunities in diverse settings, not only on inpatient rotations, so adding positions can create sizeable indirect costs as well logistical concerns. Consequently, without changes to public financing policies, programs seem more likely to hire more nurse practitioners, physician assistants, and faculty. The Medicare Payment Advisory Commission (MedPAC) recently recommended exploring whether Medicare should vary for support residency positions across specialties, or base some payments to teaching institutions on the attainment of performance standards 43
Implementation and financing issues will be heightened for small programs in community hospitals. Given class sizes, these programs will almost surely shift work to other providers. Minor teaching hospitals treat more Medicare patients and, therefore, may be disproportionately affected by financing policies 26
. Finally, because residents care for only a fraction of the hospitals’ patients, reducing resident fatigue will not have a large effect on PAEs in these hospitals.
While reducing medical errors is one of the motivations for limiting duty hours, it is possible that errors could rise, even at major teaching hospitals. On the one hand, sleep deprivation impairs residents’ clinical performance. Shorter shifts have been associated with fewer medical errors in five out of five studies 8,44,45
. On the other hand, patient handovers generally increase as duty-hours decline and the risk of PAEs is five-fold higher when interns are cross-covering 46
. However, systematizing handover procedures can mitigate the risks associated with discontinuities of care 47
. Also, the 2003 duty-hour limits did not appear to worsen patient outcomes 8
. Thus, the requirement addressing patient handovers, together with the supervision and patient-safety education ones, increases the likelihood that the ACGME’s 2011 policies will have neutral or possibly favorable clinical effects.
If PAEs decline even modestly, this could make the ACGME policies cost-saving or cost-effective from the societal perspective. A 3% decline (5.7 fewer PAEs per 10,000 admissions) would be associated with cost-effectiveness ratios of –$520,000 to $2.4 million dollars per PAE-related death averted, for example. Regulatory agencies have generally considered $2.1 million to $7.9 million per statistical life to be cost-effective (inflated to 2008) 48
. However, PAEs generally affect older and sicker individuals 36
, whereas statistical lives are based on young healthy adults. Our 95%-confidence limits encompass this difference in life expectancy. For a 3% decline in PAEs, the upper 95%-confidence limit is $685,000 to $6.9 million per death averted, which still puts the 2011 policies within the potentially cost-effective range.
Our analysis has several limitations. The long-term cost-effectiveness of the 2011 policies could also be affected by physicians’ competence after completing training. Modeled costs may differ from future expenditures by residency programs. Transferring work on an hour-for-hour basis does not equate with hiring full-time-equivalent staff members at the program level. However, modeling can estimate costs when programs are still deciding how to implement the changes. We included opportunity costs, which do not represent actual expenditures but acknowledge that residents give up alternative uses of their time. Model parameters were based on disparate sources, each with its own limitations; however, probabilistic analyses addressed these uncertainties. We did not include some costs, such as recruiting and training substitutes. Training environment costs rested on assumptions, but single-variable sensitivity analysis demonstrated that these had small effects overall (see report to ACGME) 7
. Finally, the data on PAEs and their costs are several years old.
In conclusion, how programs are implementing the new ACGME policies is not yet known but this will have a substantial effect on the total direct cost. The new policies will result in net financial losses for teaching hospitals unless PAEs decline substantially. The effect of the 2011 ACGME Common Program Requirements on PAEs is not yet known, but modest declines in PAEs might make these policies cost-saving or cost-effective to society.