MCG budget deal will pay for residents

The company that operates Medical College of Georgia Hospital and Clinics passed a tight budget Wednesday for next year that includes a compromise to pay for graduate medical education and more staff to avoid turning away patients.


The board of directors of MCG Health Inc. had a third and final budget reading on its Fiscal Year 2009 budget that begins July 1. The operating company had budgeted $4.5 million less for student residency training than Medical College of Georgia had requested. But in a "very good meeting" last week, the two sides and the University System of Georgia Board of Regents agreed to a compromise, MCG Health CEO Don Snell said. The health system will kick in an additional $1.25 million; the school will absorb $1.25 million; and the regents will add $2 million.

The health system hopes to avoid future squabbles over the number of residents it will support by increasing its volumes and patient revenues, Mr. Snell said. The federal and state governments don't fund medical education enough, he said.

"If we can grow the clinical volume, both the hospital side and the professional side, then these underfunded areas don't become as much of a problem," he said.

The health system is still in a dispute with Physicians Practice Group, which represents MCG's doctors, over what it will pay for administration and other services.

Included for next year is the equivalent of 27 full-time employees to beef up staffing and up to 65 more beds to handle volume. Because of a lack of certain beds, the health system has had to go on diversion and refuse some patients. The health system estimated the $1.6 million cost would be made up by an equivalent amount of increased revenue. Diversion is a problem for other Augusta hospitals, and problems at one can affect the others, Mr. Snell said.

In other action, the board approved hiring local firms R.W. Allen and J.H. Cleveland to serve as construction managers on three large renovations in the hospital.

Reach Tom Corwin at (706) 823-3213 or



BACKGROUND: Since 2004, the health system has operated a "captive" insurance company it established in the Cayman Islands. It is a common practice among large health systems (University Hospital in Augusta has one) that allows hospitals to get better premiums and coverage while using their own risk-loss history as a guide.

WHY? Of the 900 health care captive insurance companies, 725 are in the Caymans because it has favorable regulations that make it cheaper to do business there.

WHAT'S THE BENEFIT? The projections for MCG Health were favorable enough for next year that the captive insurance company was able to pay a $2 million dividend back to the health system and still be well above what it needed to cover liabilities, according to MCG Health officials.