UCLA MEDICAL CENTER: School’s Net Income Plummets to Near Zero
Once considered "the hardiest UC medical campus in a punishing health care economy," UCLA Medical Center has watched its net income drop from $50 million to near zero in the past two years, the Los Angeles Times reports. Administrators cite lower reimbursements from managed care plans, a "Medicare crash diet" prescribed by the 1997 Balanced Budget Act and increasing labor and prescription drugs costs as the culprits. Dr. Linda Demer, UCLA's chief of cardiology, said: "It's quite horrible to watch. This (is) an intellectual environment that leads to discovery. It's hard to put a price on it ... But it's like the rain forest that evolved over years -- easy to chop down and hard to replace." UCLA initially adjusted well to industry changes brought on by managed care, making cutbacks and building primary care networks in the area, but last summer, it was forced to make more than $60 million in additional cuts and lay off 300 employees. Dr. Gerald Levey, UCLA's provost for health sciences, said that UCLA and other academic medical centers are "especially challenged" in the current health care economy because of their complicated and costly three-tiered mission: research, patient care and education. While the research component is "thriving," taking in $231 million annually, the other two service missions have "destabilized" the institution. Levey said, "We have to bring the system back into balance."
The Future: Bright or Bleak?
Insisting that the financial downturn is temporary, UCLA administrators said that the latest squeeze will not affect quality of care. They expect improvements as early as next year and note that neither UCLA nor any other campus is in danger of closing. Despite these reassurances, others expressed concern. Levey said, "We have to cut so significantly that if we have (to make) any more ... it will have a significant negative effect on our ability to continue to be one of the nation's cutting edge institutions." Maribeth Shannon, UCLA's director of clinical services development, said, "Things are looking up in health care ... [because] there's not much lower we can go" (Marquis, 8/3).