Decreased public funding, a competitive healthcare market, and higher patient care costs have been blamed for the present financial challenges that confront academic health centers. The authors examined the costs associated with graduate medical education, particularly, indirect medical education expenses in the operating room. The results indicate that it is more costly for teaching hospitals to provide surgical care to patients in the operating room. The academic health center's indirect graduate medical expenses only covered a portion of the increased costs. If the missions of academic health centers are perceived as a public good, policy makers must design a system that more appropriately compensates academic health centers for the additional costs associated with surgical procedures in graduate medical education.
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