IMPLEMENTATION AND FINANCING: GROWING THE McLENNAN COUNTY MEDICAL EDUCATION AND RESEARCH FOUNDATION (McMERF)

The residency program's first two residents, who transferred as second year residents from other training programs less interested in meeting their objectives to be primary care physicians, were accepted in July 1970. The program graduated its first class in 1972. The program has grown from 6 residents (2 per year) in the early 1970s to 36 residents (12 per year) today.

The residency has a current faculty of 15 in-house physicians and other health care providers as well as 70 volunteer community physicians. The training program relies on a team concept for education and patient care. Each of four resident teams operates from a distinct location in the program facility and has its own supplies, clerical and nursing support, assigned faculty physician and assigned patients.

In an effort to strengthen the governing structure and fiscal condition of the residency and better support the delivery of patient care services, the family practice residency was incorporated in 1976 as the McLennan County Medical Education and Research Foundation (McMERF), a 501(c)(3) nonprofit, teaching and research institution and medical treatment facility. McMERF is governed by a seventeen member, mostly volunteer, Board of Directors elected from the membership of the county medical society. The Board’s officers include a President and a Secretary/Treasurer who is a certified public accountant charged with managing daily program operations. In 1986, a second organization, Waco Family Practice Foundation (WFPF) was incorporated to provide dedicated administrative support to McMERF. WFPF manages the Family Practice Center building, equipment and financial resources. Its governing board is composed of 9 physicians and 15 community leaders. Two distinct boards were created because Texas law does not allow non-physicians to hire physicians, and because a board composed only of physicians would not provide for the critical representation or support from community leaders.

The Family Practice Center facility houses the three-year community-based residency training and patient care programs. Until 1983, Center activities were located in leased space of local Providence Hospital. In 1983, the Center moved to its own new 28,000 square foot facility.

Madison Cooper Outpatient Clinic, location of the Center’s patient care programs, serves assigned resident patients and specific community groups needing a variety of health care services. Services provided include child welfare examinations, rehabilitation/disability determinations, child abuse treatment, emergency room follow-up for patients with no regular doctor, Salvation Army referrals, City of Waco employment exams, and physical exams and care for probation juveniles and county jail inmates. The Clinic delivers a full range of ancillary support services including a complete pharmacy. In addition to physicians, available providers include nurse practitioners, a nurse midwife, a nutritionist, and a social worker.

The Clinic has become the major provider of basic health services for insured and uninsured community residents. The Clinic has 108,000 registered patients, of which 40,000 actively seek care and record 70,000 annual office visits. Residency physicians now deliver half (1,660) of all babies born annually in the county, and on average follow 70 patients a day in the two area hospitals.

A complete description of state support for medical education and current policy issues facing the state are chronicled in Appendix A.

Interest by state officials in providing support for family medicine education surfaced beginning in the early 1970s. In 1972, a state legislator representing the Waco area, Lyndon Olsen, Jr., introduced legislation that would provide state support in the form of a per resident stipend for family practice residency training. Recognizing that the state had a growing shortage and maldistribution of primary care physicians and that reports concluded that 70 to 80 percent of the state's physicians practice within a 100 mile radius of their residency training, the Texas legislature in 1977 made state financial support available for postgraduate training in family medicine for the first time. The legislation gave the Texas Family Practice Residency Program, under the administration of the Texas Higher Education Coordinating Board (THECB), authority to allocate state funds to family practice residencies on a contract basis. THECB requires all programs to have substantial sources of support from other entities, such as patient revenue, hospital and local funds, or medical schools. These state funds are limited to no more than 35 percent of a residency program's total revenues.

McMERF's initial appropriation from the state in 1977-78 totaled about $46,000 for 18 residents or about $2,500 per resident. By 1989-90, state support peaked at about $473,000 for 23 residents -- $20,565 per resident. In 1997, the program is expected to receive $396,000 to support 36 residents or just $10,850 per resident. While a 1995 law enhances state funding for family practice residency training programs (the first increase in state funds for these residencies since 1988), many medical educators are arguing for still more state support for graduate medical education.

Finally, a 1989 law requires all family practice residency programs to provide an opportunity for residents to have a one-month rotation through a rural setting. The rural rotation is required to be offered as an optional site for family practice residents.

The above 1989 law also gave Texas the distinction of becoming the first state to require its public medical schools to incorporate into their curriculum a third-year clerkship in family practice for all medical students. The law also requires schools to report on their efforts to interest at least one-fourth of their students to enter a family practice residency. All medical students must complete a family practice clerkship during their third year of medical school. The 1989 measure mandated that the third-year family practice clerkships start with the 1990-1991 school year in each of the state’s eight medical schools.

By the middle 1970s, McMERF was providing a significant amount of indigent care to community residents, relieving area hospitals (that had not agreed to a hospital tax for indigent care) of this burden. In fact, the residency quickly became the community’s single major source of indigent care as Waco had no public hospital or community health center. The number of indigent patients the residency has seen has tripled in last decade.

In 1975, the Foundation’s first president obtained initial funding from the City of Waco to offset a portion of the indigent care provided. The City believed that providing support to the residency program in this way was more politically acceptable than increasing local resident property taxes to establish a hospital district. Currently, McMERF receives annually $900,000 from the city as partial offset to $1.2 million in indigent care costs. Payment is based on historical analyses of health care services provided to city residents. In recent years, the program had discussed with the city the idea of using long-term bond funding as an alternative to annual city appropriations.

Waco's two private, nonprofit hospitals benefit greatly from the residency program. Residents and program faculty are the major source of patients for specialty referrals and hospitalization and entitle the hospitals to receive graduate medical education pass-through funds from Medicare. Also, as noted, McMERF relieves each facility of a significant amount of its uncompensated, nonurgent care burden. Without the presence of the residency program, each hospital itself would have to recruit primary care physicians to the community to staff the facility. Each hospital pays one-third of McMERF’s resident salaries, and patient revenues of the Family Practice Center are used to cover the remaining one-third.

Patient collections generated from care provided in the Madison Cooper Outpatient Clinic have become McMERF’s single largest source of income, representing 66 percent of the budget. Most of these revenues are received from the Texas Medicaid program. In recent years, the Family Practice Center has more aggressively persued private patient collections through the institution of a sliding fee scale for indigent patients and an employee incentive plan.

McMERF in recent years has widened its support base through grant appeals, fund raisers, and corporate and private giving programs. The program has recently received grants from 1) the U.S. Department of Health and Human Services to establish an electronic medical records training program, 2) the local Waco Foundation and Cooper Foundation to purchase and install automatic doors and complete various building renovations, and 3) the United Way to institute an immunization program.

During the 1980s, the Family Practice Center saw community demand for its services grow significantly. McMERF increasingly views as it mission the obligation to deliver patient care and provide resident training in the county’s schools and within the area’s more indigent and underserved communities.

In 1992, the Family Practice Center begun to collaborate with the Texas Department of Health and the Waco Independent School District to provide a school-based health clinic at Bell Hills Elementary School. The clinic provides primary care to about 1,300 low-income children. This clinic is one of only 19 in Texas.

Also in conjunction with the Texas Department of Health, as well as townspeople of the small rural community of Valley Mills, the Family Practice Center since the early 1990s has operated and staffed a primary care clinic in this town of 1100 persons. Valley Mills is located 25 miles from Waco. For four years prior to this arrangement, Valley Mills had been without a primary care physician. The community continues to rely on the clinic for its basic care, although one of McMERF’s recent graduates has decided to set up a practice there.

This rural site also provides a setting for the training program to meet the state requirement to offer a rural rotation for family practice residents. McMERF now requires residents to spend one month in Valley Mills in each of their second and third years. Reports from residents rotating there suggest the arrangement is attractive and an effective educational experience. Some members of the McMERF board would like to see the program expand to offer patient care and resident training at another rural site in the county.

Residents also provide prenatal care and participate in sexually transmitted disease clinics at the county health department. They also serve as supervisors for the nurse practitioners practicing at these health department clinics.

At its inception, McMERF saw no immediate need to establish a medical school affiliation. At first, local physicians and community leaders largely felt that medical student awareness and interest in being matched to the residency would be driven by the program’s unique mission of family medicine. By the middle 1970s, the program began to realize the increasing complexities and costs of attracting medical students and wanted more formal access to a medical school's resources.

In 1976, McMERF’s first president, Dr. Chris Ramsey, negotiated the residency program’s first medical school arrangement with Baylor College of Medicine (BCM) in Houston. At that time, BCM, like other medical schools in Texas, was beginning to feel pressure from state lawmakers to train more primary care physicians for practice in rural and underserved areas. They wanted to be able to show the state that they were aggressive in getting their students exposure to rural Texas practice.

Initial arrangements called for BCM to compensate McMERF for the opportunity to receive two to three fourth-year medical students per month for one month at the residency. Despite receiving routine payments from BCM, McMERF was sent few students during the fourteen-year contract period. The rural clerkship remained an elective during this time. Most students were not encouraged to participate; many students were not interested in traveling so far away from Houston for one month.

By the late 1980s, BCM was experiencing a budget crisis and wanted to terminate the arrangement with McMERF. Furthermore, the medical school wanted training sites that were closer to Houston to comply with the new state family clerkship requirement.

Despite the small numbers of students who rotated at McMERF, many of them reportedly had a positive exposure to community rural medicine. Interestingly, McMERF's current president (Dr. Brown) was a BCM medical student in the late 1970s who did a rural rotation in Waco under this arrangement.

In the late 1980s, the The University of Texas Southwestern Medical School had a reputation for training a very low proportion of graduates interested in primary care. With the new state clerkship requirement, the medical school was provided the incentive to give greater attention to primary care and family medicine. In 1993, Southwestern recruited Shelley Roaten, MD to become chairman of the school's Department of Family Practice and Community Medicine and invigorate Southwestern's attention to primary care education. At the time, Dr. Roaten was the president of McMERF in Waco.

Shortly before Dr. Roaten's departure from McMERF, the residency program's arrangement with BCM ended, and McMERF was looking to affiliate with another medical school. Dr. Roaten negotiated an agreement with Southwestern. The arrangement was intended to help the medical school demonstrate to the state that it was investing in family medicine education. The agreement also provided McMERF further revenue and an audience of medical students with a potential interest in doing their graduate training in Waco.

In 1990, Southwestern began sending four third-year medical students virtually every month to Waco for a one-month clerkship. Students "shadow" resident faculty in both the Waco Family Practice Center and McMERF's school-based and rural clinics. Currently, McMERF receives from Southwestern $180,000 annually to offset faculty salaries, and is reimbursed $15,000 for additional expenses incurred to provide students local housing.

According to Dr. Roaten, the Waco experience is ranked quite highly among the 50 Southwestern students annually serving a family practice clerkship. The positive experience by Southwestern students and the receipt of critical funds have been key factors benefiting McMERF in this academic partnership. However, McMERF reports that it has not seen significant interest among Southwestern graduates in deciding to apply to Waco for postgraduate training.

Clerkship experiences in Waco and elsewhere have helped to improve the stature of family practice at Southwestern. (The medical school has chosen to encourage students to do their rotations in residency-based clerkships rather than in private practice-based preceptorships.) Roaten would like to see more students have an earlier exposure to family medicine than the third year.

In earlier years, the fledging Department of Family Practice and Community Medicine was staffed by faculty from community-based residency programs and had very little presence on campus. However, recent market pressure on Southwestern from area managed care plans has encouraged the university teaching hospital to build a primary care clinical practice and recruit primary care physicians to campus. Yet, according to Dr. Roaten, the presence of community-based faculty has helped the Department to integrate community training with the medical school's academic curriculum.

In 1990, the Family Practice Center established a separate faculty training institute. The institute provides specialized training for all of the academic family medicine institutions in Texas as well as convenes faculty development workshops for physicians who teach medical students in their office. In addition, the Center, in conjunction with BCM and the McLennan County Community College, offers on-site clinical educational opportunities for pre-medical and nursing students.

McLENNAN COUNTY MEDICAL EDUCATION AND RESEARCH FOUNDATION 25 YEARS LATER:WHAT HAS BEEN THE PAYOFF?

By most accounts, the late 1960s crisis in the county health care delivery system has been eliminated. It is commonly believed that now no one in Waco goes without access to basic preventive and primary care. In addition, resident exposure to community-based rural practice has been effective in sustaining interest by graduates practicing in Waco and surrounding communities in large numbers. Specific indicators include the following:

1. There has been a significant reduction in the number of medically underserved; more than half of the county's population are registered patients of McMERF's Family Practice Center;

2. There has been significant improvement in the county's mortality rate;

3. Population-to-physician ratios have improved considerably and specifically the number of primary care physicians has grown dramatically. Since 1969, the number of physicians in the county medical society has increased 270 percent and the number of primary care physicians is up 640 percent (The county population has risen just 22 percent.). Major specialists are no longer pressed to provide primary care;

4. Retention of McMERF graduates in Waco and needed communities has been successful. Of 166 residency graduates, thirty continue to practice in Waco, 85 percent stay in Texas, and a majority of other McMERF graduates are practicing in small rural Texas towns. Over half of all family practice physicians practicing in Waco are McMERF graduates. A small number of early McMERF graduates practicing in Waco have recently retired, requiring the residency to actually replenish its local supply of graduates;

5. The average age of physicians in the county has declined by 9 years to age 42;

6. Physician coverage of the two area hospital emergency rooms is supplemented by McMERF resident rotations. Hospital provision of nonurgent indigent care in such settings has decreased dramatically;

7. As a consequence of McMERF assuming many public and preventive health care functions, McLennan county has a per capita tax expense for public health expenditures that is one-third to one-half less that of most other Texas counties;

8. Continuing education is much more readily available to all physicians in McLennan and neighboring counties;

9. Teachers at Bell Hills Elementary School say student attendance and performance have improved because of the presence of the school clinic. Valley Mills residents no longer have to travel long distances to see a primary care physician.

McMERF’s history and evolution is tied to its creation as an independent, community-based teaching and patient care program. Its creation was a decision of local physicians and community leaders knowledgeable and concerned about the inadequacy of primary care in Waco, particularly for the indigent. Its successful evolution over the past 25 years is attributable to many factors, including the governing guidance of several presidents and other board members who have ably met many political and program management challenges. Specifically:

1. Freestanding, "homegrown" residency programs owe their successful existence to a local community convinced that they gain from committing their endorsement and support. Such programs’ formation and operation are not singly or significantly influenced by a medical school, teaching hospital, or state or local government; and

2. By their nature, community-based teaching programs are not as efficient, well funded or well organized as other community health care providers; thus extraordinary leadership and management skills are essential to their ability to flourish and compete in a managed care world. These skills include: a) keenly understanding and effectively addressing local patient care needs and political forces, and b) capturing an adequate and diverse array of funding (including from academic partnerships) so as to not rely upon a single source of financial aid to support resident education and indigent care.

Local community support was critical to the initiation of McMERF. Yet later, but still in the program’s early stages, the existence of new state funds and regulations became an important factor in its successful development. At such time:

1. State incentives or requirements for medical schools and residencies to institute primary care clerkships and rural rotations in community settings are effective. In general, community-based residencies produce significantly more family practice graduates than do academic health center residencies;

2. State funding for primary care residency training can be an effective incentive, but support must keep pace with the (appropriate) growth in residency positions and total residency program costs;

3. State funding to support medical student preceptorships in community-based primary care prior to a student's third year is not costly and may provide significant weight to a student's choice of specialty and practice location;

4. Local funding to offset, at least partially, the cost for a primary care residency's service to the low-income and indigent population is a vital sign of community support and can be a major source for sustaining a residency's financial condition; and

5. Movement by states to redirect their Medicaid programs into managed care may either help or hinder a family practice residency program to succeed. Factors include whether the residency or its affiliated teaching hospital depends significantly on Medicaid patient revenues and whether the residency is allowed to participate in the managed care program. Often Medicaid programs see little value in allowing residency programs to participate as providers under managed care from fear that the turnover of medical residents limits continuity of patient care. Furthermore, managed care plans that serve Medicaid recipients typically have more interest in profits than supporting graduate medical education or serving the uninsured.

For McMERF officials, participation in Medicaid managed care is viewed as essential, and at least one official believes it would be financially advantageous. As Texas expands its Medicaid managed care program statewide, the state plans to contract with a select group of Medicaid providers in McLennan county beginning in the year 2000. Reportedly, participating providers will be paid on either a capitation basis or under a primary care case management formula whereby providers will receive a small case management fee above their regular fee.

McMERF, a freestanding residency which has independent affiliations with both area hospitals, is confident it will be selected as a participating Medicaid managed care provider. Already, 13,000 of McMERF's Family Practice Center 18,000 patients seen in the past year are Medicaid recipients. Furthermore, the program delivers primary care in a "managed care" environment to a very large number of Medicaid recipients in the county and would immediately profit from either kind of new reimbursement arrangement. Of course, if McMERF is not selected to participate, the negative impact would be significant.

Some family practice residencies in Texas with more direct linkages to area teaching hospitals (such as John Peter Smith Hospital in Fort Worth) have not been allowed to bid for the Medicaid contract because they do not have an HMO affiliation. As a result, officials of such hospitals are worried they will lose not only a large proportion of the hospital's revenues, but also revenues of its affiliated family practice training program (with 72 residents) which are derived from serving Medicaid patients.