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Finance Cases

Business Meeting

How Can We Get More Medicare Funding:
Rural Designation

The Client

Germane Solutions was contacted by a health system with various medical school partners to evaluate opportunities to centralize GME activity and develop their own programs while creating a financially viable, long-term outlook for operating the new and existing programs.

The Challenge

Germane Solutions first held a visioning session with key players from the client side to comprehensively understand the organization’s respective goals and discuss potential strategies. This visioning session helped provide detailed information on the expected bottom line for the planning, development, and operational periods of new GME programs. The Rural Designation strategy was discussed for the largest teaching hospital in the system. By electing Rural Designation, this urban hospital would recognize an immediate 30% increase to their IME cap, the ability to develop additional IME cap for new programs started, and potentially reclass into a nearby CBSA area with a higher wage index. The one downside of this strategy is that the hospital would have to be paid at the rural wage index for approximately one year. This opportunity was discussed in detail during the visioning session as the health system had already committed to starting new programs without any federal GME Funding and was very interested to have any financial offset for future programs.

The Solution

A rural designation analysis was completed summarizing the first-year loss and the positive financial impact over the next 5-10 years. This analysis allowed the health system leadership to decide to proceed with the strategy allowing them to build additional IME cap for the new programs in the system.


Germane Solutions remains engaged with this client to annually reassess the reclass portion of the strategy and ensure maximum financial benefit year over year.

Aerial View of Hospital

The Germane Effect

Utilizing Germane Solutions’ innovative ideas and financial analysis, the client was able to address their problem of limited FTE cap and receive additional funds that have set the health system up for a favorable financial outlook for Graduate Medical Education.

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