SOUTH DAKOTA – The debate over healthcare provision in South Dakota heated up this week following Governor Kristi Noem’s controversial proposal to cut funding for the state’s medical residency program. Healthcare organizations are raising alarms that this decision could severely impact the availability of doctors within the state at a time when the entire nation is grappling with a critical physician shortage.

Gov. Kristi Noem

Gov. Kristi Noem

Gov. Noem’s proposal could disrupt the state’s ability to attract and retain medical doctors, and the implications are significant given South Dakota’s existing healthcare challenges. The state ranks 35th nationally in terms of patient-to-physician ratio, with an average of 763 people per primary care physician. According to the South Dakota Department of Health, 51 out of the 66 counties in the state are considered health professional shortage areas, highlighting the ongoing struggle to meet healthcare demands in these regions.

The potential cuts involve a proposed elimination of $1.7 million from the state’s general fund, alongside a reduction of $1.86 million in federal Medicaid matching funds for medical residencies. This raises serious concerns for the 78 residency programs, spread across specialties from pediatrics to internal medicine, facilitated by health systems including Sanford, Avera, and Monument Health. The expected result? A detrimental impact on the South Dakota healthcare landscape, aggravating the current physician deficit.

Jacob Parsons

Jacob Parsons

Jacob Parsons, Director of Advocacy and Reimbursement for the South Dakota Association of Healthcare Organizations, expressed his concerns at the Legislature’s Joint Appropriations Committee meeting. “I think the message we’d be sending to our potential residents is that, ‘Why not go to Iowa?’ They’re going to put funding forward there,” he remarked, pointing out that neighboring states are increasing their investments to attract medical practitioners.

This sentiment resonates particularly as Iowa’s Republican Governor, Kim Reynolds, recently proposed the creation of 460 new medical residency slots over the next four years as part of a larger strategy to combat her own state’s growing doctor shortage.

Despite the scarcity of doctors, more than 80% of medical residents who complete their training in South Dakota opt to remain in the state, serving its communities, according to Parsons. This is largely thanks to robust residency programs supported by a mix of health system funding, Medicare, and state Medicaid funds. Given this context, further cuts in funding could pose a significant risk to the continuity of these programs, potentially pushing residents to complete their training in states with better resources and funding.

In an effort to underscore the gravity of the funding cuts, Avera Health’s Vice President of Public Policy, Kim Malsam-Rysdon—who served as the state Department of Health secretary from 2015 until 2022—voiced that “if South Dakota doesn’t have the capacity for residencies as other states, we’ll lose doctors to states where they’re being trained.”

Without sustainment from state Medicaid funding, Malsam-Rysdon warned that some residency slots might be cut altogether, thereby hampering the healthcare sector’s capacity to scale and innovate in response to the state’s needs.

Jason Simmons

Jason Simmons

During the Joint Committee on Appropriations’ budget review, Jason Simmons, Chief Financial Officer of the South Dakota Department of Social Services, explained that state funding is calculated based on the number of Medicaid patients served by these residencies. He also confirmed there are currently 154 residents engaged in the state’s programs, all of whom could potentially be affected by the proposed budget cuts.

While Noem’s administration plans to boost funds for the rural residency programs by $70,821, this increase is conceived as separate from the general residency funding and does little to offset the overall financial deficits predicted to arise from the broader funding cuts.

South Dakota’s trajectory in the realm of healthcare employment and training appears uncertain as lawmakers deliberate on the final budget. If the state fails to uphold its financial responsibilities toward medical education, the reverberations could lead to an exacerbated healthcare crisis—a scenario that South Dakota can ill afford given the existing challenges with accessibility and availability of medical professionals.

The outcome of the budget discussions will be critical for the state’s healthcare future, determining not just the wellbeing of its residents but also its capacity to remain competitive in retaining healthcare talent.