- Associated Press - Saturday, September 19, 2015

PHOENIX (AP) - Arizona medical schools say more residency positions are needed if the state doesn’t want a doctor shortage on its hands.

The University of Arizona’s medical school in Phoenix estimates that half of its graduates go outside the state for the next stage of their careers.

“What we cannot afford as the state medical school (is) to become a farm system, where our graduates go to other states. We need them here,” Dr. Stuart Flynn, dean of the UA’s College of Medicine Phoenix, said.

The state has made efforts in the last several years to boost investment in medical schools. About $156 million from the state’s general fund was earmarked for the UA’s Phoenix campus in fiscal year 2006. Arizona also approved university regents signing onto lease-to-own and bond transactions to raise $800 million for new facilities and building renewals. Officials allocated $376 million of those funds to the Phoenix Medical Campus. However, if residency positions don’t fulfill the demand, the state will be confronted with the same problem.

According to The Pew Charitable Trusts, a nonprofit, roughly 500 medical students graduated in 2014 in Arizona. Only 473 first-year-residency spots in the state were available.

Stakeholders say one contributing factor is a 1997 federal law that limits how many residency positions Medicare can fund at teaching hospitals, the Arizona Capitol Times reported (http://bit.ly/1UYM88b). The median cost per resident per year at teaching hospitals is around $135,000, according to a Rand study. The federal government has proposed cutting Medicare payments for educating medical grads by $16.3 billion over a decade, an idea health care groups oppose.

Erica Brown, the manager of academic affairs at St. Joseph’s Hospital and Medical Center’s residency program, said Arizona and other states are caught in a Catch 22. The more states do to increase graduating doctors, the more graduates have to relocate to get that coveted residency position. Thus, Arizona is stuck with a shortage.

In fiscal year 2016, Arizona’s graduate medical education program is expected to receive $157 million in funding from local governments and public universities. None will come from the state’s general fund.

Christina Corieri, Gov. Doug Ducey’s health policy adviser, said state Medicaid is hoping to pay more to teaching hospitals without going into that fund. Under current law, the Arizona Health Care Cost Containment System must develop rules for reimbursing a portion of hospitals’ indirect costs for training. According to Corieri, AHCCC is pursuing a rule change that will help cover a larger portion of the expenses reported by teaching hospitals.

“The end result is that every hospital receiving GME (graduate medical education) money will receive more, some of them a lot more,” Corieri said.

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