Closing a residency program can significantly disrupt a physician’s training. In 2019, the closure of Hahnemann University Hospital in Philadelphia forced 570 residents to find new placements. First-year residents discovered a week before they started that the hospital was closing after its owner filed for bankruptcy.

Fast forward to January 2024. Within days, two additional residency training programs in the Philadelphia area announced closures.

Albert Einstein Medical Center said it was ending its pediatric residency program. Current residents will be able to complete their three-year training, but the hospital won’t matriculate a new class in July. A spokesperson for Jefferson Health, which owns Einstein, attributed the closure to the community’s “changing medical needs,” but did not elaborate. Einstein had an operating loss of $17 million on revenue of $1.6 billion in the year ended June 30, 2023. Jefferson, the parent organization, finished its 2023 fiscal year with a $231 million operating loss, excluding gains from the sales of businesses.

A surgical residency program at Crozer-Chester Medical Center lost its accreditation and is slated for closure pending an appeal. The program, which has 15 training slots, was being withdrawn “under special circumstances.” This type of closure occurs due to one of two conditions: 1) catastrophic loss of resources, including faculty members, facilities, or funding, or 2) egregious non-compliance with accreditation requirements. Crozer is owned by Prospect Medical Holdings Inc., a Los Angeles for-profit company. Current residents will need to complete their training elsewhere unless the hospital’s appeal is successful.

Although training programs shut down for various reasons, it is clear that medical residents are not immune to the whims of big business. What was once unthinkable and held sacred to the profession – the uninterrupted training of future physicians – has become acceptable collateral damage to the churn of the medical-industrial complex.

Bit by bit, the medical profession is being blown apart, flapping in a breeze created by the winds of change. Just consider the five critical issues the American Medical Association (AMA) has adopted as its “recovery plan” so physicians can stay focused on patient care: fixing prior authorization, reforming Medicare payment, fighting scope creep, supporting telehealth, and reducing physician burnout. The first four initiatives are all business-related; burnout is the result of overzealous or failed business tactics.

It is an utter disaster when the business aspect of medicine impacts residency training programs. At the very least, it lowers residents’ morale. At worst, scenarios play out like the ones in Philadelphia, uprooting and displacing residents, forcing them to scramble and even beg other institutions to allow them to continue their training.

In addition, the closure of programs puts a strain on personal finances. It may result in an immediate need to sell a home or break an apartment lease, and closure impacts the overall length of training and possibly future job prospects. Any resident with a claims-made malpractice policy must independently purchase a policy for tail coverage. (Hahnemann’s owners were forced to pay for the professional liability tail insurance for its displaced residents and fellows.) The sudden closure of residency programs disrupts families and creates chaos.

During 2021-2022, 42 residency programs closed or voluntarily withdrew their accreditation. The closing of residency programs is becoming more and more common due in large part to changing fiscal dynamics in health care. In 2022 alone there were 46 health care bankruptcies with liabilities of $10 million or more.

It is essential for residency programs to strike a balance between business and clinical considerations, ensuring that residents receive comprehensive training that prepares them for the realities of modern health care while maintaining their morale and job satisfaction.

Here are the main business factors I’ve identified that affect residents’ morale and their attitude toward learning and practice in general.

1. Funding and budgetary constraints. Residency programs are largely funded by government sources like Medicare. Hospitals pay for their own residents only about 20 percent of the time. Budgetary constraints can affect the quality and quantity of training programs available, the number of residency positions, and the resources available to residents.

2. Workload and hours. The business side of health care often focuses on efficiency and productivity, which can translate to long hours and high workloads for residents. This may lead to burnout, decreased morale, and potentially lower quality of patient care.

3. Emphasis on profitability. The pressure to increase revenue may shift the focus from education and patient care to more profitable procedures and services. This can limit the breadth of training and experience residents receive and negatively affect their experience.

4. Administrative burden. Increased focus on business operations can lead to additional administrative tasks for residents such as documentation, billing, and compliance, taking away from their direct patient care and educational time.

5. Health system consolidation. The trend of hospital mergers and acquisitions can lead to changes in residency programs, potentially causing instability and uncertainty for residents. Jefferson Health has grown by leaps and bounds over the past decade, in part through acquisitions. However, bigger is not necessarily better.

6. Market competition. Competition among health care providers may impact residency programs as hospitals strive to attract top talent. This could either improve training quality and morale (if resources are invested in education) or harm them (if resources are diverted elsewhere).

7. Influence on specialty choice. The business of medicine can influence residents’ choice of specialty, with many opting for high-revenue specialties over primary care, which can lead to a shortage in certain essential health care services.

8. Expectation vs. reality. Often, the business aspects of medicine are not fully or even partially covered in medical school, leading to a gap in knowledge and skills for residents, which may affect their ability to negotiate an employment contract and find a job after residency.

The bottom line is that residency training programs are no longer shielded from the business concerns that plague the medical profession. Residents have been swept into the financial struggles of institutions and subsequently swept out to sea along with the owners of those institutions.

Officers of the Accreditation Council for Graduate Medical Education wrote: “Residents and fellows, who are navigating their professional journey through this rapidly changing landscape, should have a proper voice in the development of regulations and policies that speak to these new challenges.” But the reality is they don’t have a say in the matter. (First-hand accounts of impacted residents can be found here and here.)

One of my favorite cartoons shows cows grazing in a pasture. All of them are deemed to be sacred. One cow, however, sits atop a hill next to an elephant wearing a chef’s hat and apron labeled “GOP.” The elephant is holding a can of gasoline used to ignite and kindle the fire shooting out of a barbeque kettle with the words “budget cuts” inscribed on the front. The caption comes from the cows in the pasture, and it reads: “I Smell BBQ.”

The fact is, what used to be considered as precious as a sacred cow, i.e., the education of future doctors, has been sacrificed in the name of corporate business. Residents need to be attuned to a grilling before it actually occurs lest they become steak dinners for wealthy health care executives who stand to profit from the market.

Arthur Lazarus is a former Doximity Fellow, a member of the editorial board of the American Association for Physician Leadership, and an adjunct professor of psychiatry at the Lewis Katz School of Medicine at Temple University in Philadelphia, PA. He is the author of Every Story Counts: Exploring Contemporary Practice Through Narrative Medicine and Medicine on Fire: A Narrative Travelogue.