ACADEMIC MEDICAL CENTERS: Coping with BBA Cutbacks

      PBS' Sept. 15 "NewsHour" explored academic medical centers, the "powerhouses of education, science and technology" that conduct nearly $20 billion in basic biomedical and clinical research, provide 40% of care to the uninsured and help train new doctors, but also are in "serious [financial] trouble." After World War II, AMCs "multiplied and prospered," but also generally charged more than local community hospitals to cover the "higher level of care" they provided, as well as their "social missions" and teaching costs. However, the advent of managed care in the early 1990s created some "financial stress" for AMCs, as health plans "began to resist paying these higher fees as a way to contain health costs." Furthermore, the 1997 Balanced Budget Act, which was expected to save $116 billion in Medicare spending over five years, now is projected to total $200 billion in Medicare cuts. Partially due to these financial changes, about 50% of AMCs nationwide are losing money, NewsHour reports. Some AMCs, such as New York Presbyterian, face delays in "installing state-of-the-art information technology that could revolutionize treatment of patients." Furthermore, Kathleen O'Donnell, associate dean of Columbia University's medical school, said that with continually declining reimbursement rates, physicians "find they have to work harder to generate the same amount of funds they used to generate or take a loss in income." This also restricts the time doctors can spend with patients, NewsHour reports. To deal with the problem, some hospitals have resorted to hiring "turnaround" experts, such as David Hunter, who has recommended that some AMCs cut back on staff, close affiliated clinics and hospitals or scale back their social missions. Taking his advice, the University of California-San Francisco closed Mt. Zion Hospital, its inner-city facility that treated many uninsured patients. Noting the negative impact of the changes on the nation's AMCs, some lawmakers, including Sen. Daniel Patrick Moynihan (D-N.Y.), have reversed their positions on the BBA. Moynihan, who called AMCs a "public good" said that the BBA "never should have been signed into law." President Clinton also is taking action, proposing a $21 billion Medicare giveback over the next five years, partly to alleviate AMCs' financial problems. Moynihan, though, would like to see "broader changes." He has recommended a national trust fund earmarked for medical education and research, saying, "These [institutions] are teachers. These are people who give their lives to research. They are healers. This is not the NASDAQ. These are people who devote their lives to the science of helping human beings who need their help" (PBS, "NewsHour," 9/15). A transcript of the NewsHour report is available at http://www.pbs.org/newshour/bb/health/july-dec00/amc.html