Federal Capitation Support and Its Role in the Operation of Medical Schools

HRD-78-105: Published: May 16, 1978. Publicly Released: May 16, 1978.

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The Comprehensive Health Manpower Act of 1971 authorized institutional assistance in the form of formula grants, called capitation grants, based on statutorily established amounts per student per year and a bonus for enrollment of first-year students beyond mandated levels. Subject to the availability of appropriations, medical schools were authorized to receive $2,500 for each enrolled first-year, second-year, and third-year student, and $4,000 for each graduating student.

Although it provides a relatively small percentage of the resources needed to operate a medical school, Federal capitation support has played an important role in medical education. Because of the flexibility in expenditures allowable from this source of revenue, school officials believe that terminating the program would adversely affect medical school teaching programs and possibly result in reduced enrollment. However, data do not show conclusively the impact that loss of capitation grants would have on medical schools. Federal funding to medical schools has increased but not at the same rate as other funding sources. Federal support of medical schools amounted to about 50 percent of their total revenue in 1975-76, a decline of 3 percent since school year 1973-74. The major portion of Federal support comes from National Institutes of Health research grants. If this source of funding had not increased, the Federal share of medical school revenue would have been about 44 percent in 1975-76. Medical school revenues are increasing. From 1974 to 1976, public-supported medical schools increased their revenues by 35 percent while private medical schools increased their revenues by 22 percent. However, medical school expenditures have also increased.

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