Hennepin Healthcare warns loss of state family medicine residency appropriation would cut training slots

Hennepin Healthcare officials told the House Higher Education Finance and Policy Committee that the state appropriation supporting family medicine residency training funds faculty teaching and accreditation work, and that eliminating the funding would force the program to drop several residency slots.

Dr. Megan Walsh, chief academic and research officer at Hennepin Healthcare, and Charles Esler, vice president of finance, presented the program’s operating costs and said the Office of Higher Education appropriation—$645,000 annually, $1.29 million per biennium—directly pays faculty who supervise residents at the bedside and meet accreditation requirements.

“The appropriation from the Office of Higher Education is specifically used to support the teaching portion of residency,” Dr. Walsh said. She told the committee Hennepin’s family medicine residency maintains 11 new residents each year in a three‑year program (33 total) and that the average annual cost to train one family medicine resident at Hennepin is about $188,000 when salary, faculty teaching time, benefits, accreditation and indirect costs are included.

Walsh said federal direct medical education (DME) payments and other funding sources do not cover the full cost: she told members that DME “does not even cover the salary of a single resident” and that the state family medicine appropriation contributes roughly $19,000 per resident. Hennepin’s analysis estimated an annual shortfall of about $86,000 per resident.

“Without this funding, we would be forced to reduce the number of residents we train,” Walsh said. She told the committee a $645,000 loss would require eliminating nearly four residency positions per year.

Committee members asked about clinical billing and how faculty time devoted to teaching affects revenue. Walsh said residents’ billable clinical time is billed under supervising faculty and that teaching slows some patient throughput—for example, a faculty member admitting a patient alone would do so more quickly than admitting with a new resident and teaching during the admission.

Charles Esler said the health system absorbs the training shortfall and that the institution’s other operations cover uncompensated residency costs. “Every dollar matters to the overall financial results,” Esler said.

Members from both the House higher‑education panel and the health committee expressed support for maintaining residency funding, noting the program’s role as a workforce pipeline: Walsh said Hennepin has trained “over 550 family medicine physicians” since the residency’s founding and that a large share remain in Minnesota, many in urban and rural practice settings.

Walsh and committee members asked the legislature to consider the residency appropriation’s role in sustaining statewide primary care capacity as budget negotiations continue.