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Because of these BBA cuts, these hospitals will lose $1.678 billion between
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This year this Congress passed a budget resolution that would have allowed for $792 billion in tax breaks, mostly to millionaires and billionaires, those who are living the good life, but not one red cent to fix the damage to Medicare from the BBA.
Ironically, today in this Congress we are seeing that Members who voted for the BBA 2 years ago, they are now switching. They are now reversing their positions. They are now supportive of fixes to Medicare.
Mr. Speaker, the Members on both sides of the aisle, this Congress, the Republicans particularly, this Congress must fess up and admit that it made a mistake;
and it must do the right thing by funding for substantial increases in Medicare reimbursements.
Mr. DAVIS of Illinois. Mr. Speaker, let me just thank the gentleman from Illinois (Mr. Rush) for the comments that he has made because what he has said actually is the same thing that I am hearing from constituents of mine each and every day.
In my hand and in my office are actually thousands of cards that I have received from constituents of my district asking that we provide for them some relief. They are very active people who understand what is going on, who recognize when they hurt that they need to cry, and who recognize that if they do not cry chances are nobody will even know that they are hurting.
I can say that the people of the 7th District are crying. They are crying out for relief from the Balanced Budget Act. They are crying out to make sure that their hospitals, that their health centers, that their skilled nursing homes, can continue to exist and provide for them the greatly needed services that they so richly and rightly deserve.
So I thank the gentleman for being where the people are, and I appreciate his comments.
Not only, though, are we saying it, I mean the Members of Congress are saying it, but also I am looking at editorials, and I would put these entered into the RECORD at this point, Mr. Speaker.
Medicare Reductions Threatening Hospitals
If these are the good years, then why are hospitals administrators so blue? The answer is that they're seeing red.
Medicare cuts being implemented now are ``the most serious reductions in the history of the program,'' says Ken Robbins, president of the Illinois Hospitals and Health Systems Association.
Hospitals operating on a slim margin, or dependent on Medicare for almost all of their revenues, will close, he says. Those which stay in business will cut staff, eliminate unprofitable programs and increase prices charged paying patients, forcing insurance rates up.
Teaching hospitals, which will lose more assistance than most, will cut residency slots. That will threaten medical specialities and charitable care, which depends heavily on resident physicians. Already OSF St. Francis has trimmed seven positions and is considering eliminating an entire residency program. In the 26 years he's been looking Robbins says he's never seen a more critical threat.
It seems peculiar that hospitals are ringing this alarm as congressman fan out across the land to tell of a federal treasury overstuffed with surplus dollar bills. The timing is not accidental.
The federal surplus owes its existence not just to a booming economy but to the domestic spending cuts mandated by the Balanced Budget Act of 1997. About half of them will come from Medicare and Medicaid. The American Hospital Association anticipates that by 2002, hospitals will lose $71 billion, a little more than one of every 10 Medicare dollars they take in.
OSF St. Francis figures it will give up $27.6 million; Methodist, $22.6 million; Proctor, $18.2 million. To appreciate the size of the losses, and the steps necessary to compensate, consider that Methodist and Proctor derive 50 percent of their income from Medicare, while St. Francis gets 40 percent. By the end of 2002, Robbins says Illinois hospitals will be treating more Medicare-dependent patients for fewer inflation-factored dollars than they get now. He says everybody who needs hospital care will feel the effects.
The hospital association wants legislation that will restore $25 billion, a little more than a third of what hospitals lost. To get the money, it will have to fight off those who would spend the surplus on tax cuts and those who would pay down the federal debt.
Members of both camps say they want to make sure the anticipated surplus isn't used to increase spending. That is an understandable goal but an inaccurate description of the alternative. The third choice in the surplus arguments is not whether to expand federal programs with the extra money but whether to maintain the present level of service.
Permitting spending to grow at the rate of inflation would cost nearly $750 billion, or three-fourths of the predicted 10-year non-Social Security surplus. Assuming that defense spending will not be reduced, the Balanced Budget Act will require domestic spending cuts of about 20 percent over five years. If Congress boosts military spending, as it has indicated it would like to do, then bigger reductions in domestic spending will be necessary.
The hospital lobbyists would seem to be at vanguard of those who will feel the pinch. Earlier this month Peoria officials said they anticipated a 10 percent cut in Community Development Block Grant funds for neighborhood-based programs. Housing and Urban Development Secretary Andrew Cuomo warned last week of budget cuts that would leave 156,000 people without affordable housing. The nation's parkland preservation program is due to be reduced to one-tenth of its 1978 level. Congress has put out feelers about taking back from the states $4.2 billion in welfare reform money.
Cuts of this magnitude may have made sense when the nation was battling to control deficit spending and the threats it posed. The case for them is not as strong now that it's been declared the post-deficit era on Capitol Hill.
Certainly maintaining Head Start participation and national park dollars and environmental enforcement at present levels, rather than slashing them, deserves an equal platform with tax cuts and debt reduction as decisions are made. So do the hospitals' concerns.
It is particularly irksome that the facts of the issue have been so poorly laid out and that the budget cuts which lie ahead have claimed so small a stage in the national debate. Perhaps the hospital lobbyists will help.
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When Hospitals Get Sick
The nation's teaching hospitals, the backbone of the country's health care system, are getting sick. Squeezed on one side by managed care's demand for lower costs and shorter stays and on the other by federal cuts in Medicare reimbursements, the average teaching hospital will have lost $43 million between 1997 and 2002. That will leave nearly 40 percent of the facilities operating in the red.
Similar dire figures are projected for facilities here. By the end of this year, St. Louis-area teaching hospitals will have seen their revenues reduced by $70 million. The reduction for all the state's teaching hospitals will be about $126 million. By 2002, the figure will have climbed to over $100 million in St. Louis and $214 million for Missouri. Barnes-Jewish Hospital has gone from generating $30 million a year to just $4 million this year.
Those figures are much more than just numbers on a balance sheet. Teaching hospitals, particularly in St. Louis and Missouri, are unique, vital cogs in the health care network. Though they represent only 4 percent of all of the nation's hospitals, they treat 44 percent of the uninsured patients. Meanwhile, they provide expensive, highly specialized programs, such as the organ transplant, bone marrow transplant and trauma programs operating at St. Louis University Hospital and Barnes-Jewish Hospital.
In St. Louis and Missouri, this continued financial hemorrhaging could hurt the local economy. Barnes-Jewish Hospital, with over 8,000 employees, is the largest private employer in the city of St. Louis. Its network, BJC Health System, is Missouri's single largest private employer.
Sen Daniel Patrick Moynihan, D-N.Y., and Rep. Charles Rangel, D-New York, have an answer for the current mess. Mr. Moynihan has introduced a bill to freeze the reductions in Medicare reimbursements for the next two years. The New York Democrats have proposed the establishment of a Medical Education Trust Fund that would be financed by a 1.5 percent assessment on private health insurance premiums and funding from Medicare and Medicaid.
Congress' desire to rein in rising medical costs is commendable, but the 1997 Balanced Budget Act, which cut the Medicare reimbursements for teaching hospitals, produced serious unintended consequences. The nation must not sacrifice the great institution of the teaching hospital to the budgetary scalpel.
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UIC To Cut Hospital Jobs, Seek Merger
In a rare move that highlights the deepening financial crisis of one of the city's biggest teaching hospitals, the University of Illinois said Thursday it will turn over management of its West Side academic medical center to a Florida consulting firm.
At the same time, the university reassigned the hospital's director, announced that more than 10 percent of the hospital's employees will lose their jobs and said it will seek a merger with another health-care firm.
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The dire measure for the University of Illinois at Chicago Medical Center were recommended by The Hunter Group of St. Petersburg, Fla., in the wake of millions of dollars in losses, blamed in large part on drastic reductions in Medicare spending growth as a result of the Balanced Budget Act of 1997.
As part of the government's effort to slow the growth in spending for Medicare, the federal health insurance for the disabled and the booming elderly population, the Balanced Budget Act is taking $33.5 million in projected revenue from the UIC's budget over a five-year period, and thus far has contributed to an $8 million deficit in the hospital's second quarter. As recently as 1997, UIC had income of $6.1 million on a budget of nearly $300 million.
UIC has also been vulnerable to an intensely competitive health-care marketplace in Chicago, where one in three hospital beds remains empty and managed-care companies and developments in science are keeping patients out of the hospital.
``We are struggling with making ends meet,'' said Dieter Haussmann, vice chancellor for health services at UIC. ``Unless things change, you will see fewer teaching hospitals in the next decade.''
Like all academic medical centers, UIC is particularly vulnerable to managed care, which emphasizes low-cost outpatient care.
Contracts with teaching hospitals are less attractive to managed-care insurers because the costs of training the nation's future doctors and conducting cutting-edge research typically make services at teaching hospitals 20 to 25 percent higher than at community hospitals.
To keep the UIC's teaching mission of educating doctors viable, The Hunter Group will begin looking for potential partners, possibly leading to a merger or sale to one of any number of possible buyers. Haussmann speculated about one scenario involving the UIC forming some partnership with Rush-Presbyterian-St. Luke's Medical Center or Cook County Hospital, both within a block of the UIC on Chicago's West Side.
``Without some sort of partnership, we are going to have serious difficulties being viable,'' Haussmann said.
Rush executives Thursday seemed open to the idea. ``The University of Illinois is a major institution within the Illinois Medical Center District, and therefore it would be logical for Rush and Cook County to pursue mutually beneficial discussions with the University of Illinois,'' said Rush's senior vice president, Avery Miller.
UIC officials, however, said they would be exploring all options.
``Anything is possible,'' Haussmann said. ``We won't leave any stones unturned from the outset.''
Thursday's decision by the university's board of trustees follows a 14-week study by the Hunter Group, which was paid $1.2 million for its work and will now manage the hospital for $140,000 a month over a period officials expect will be less than a year.
Sidney Mitchell, the hospital's executive director for the last several years, will be reassigned for the time being within the university, Haussmann said. Mitchell was unavailable Thursday for comment.
About 275 of the hospital's 2,600 full-time employees will lose their jobs as part of The Hunter Group's recommendations, but it remains unclear exactly when the cuts will take effect and who will be affected.
Officials hope most of those employees, mainly clerical workers and support staff, will be able to find jobs within the university system, but negotiations on those positions will also take place with some unions.
Earlier this year, the UJC implemented a hiring freeze and eliminated 250 positions, and most of those workers were placed elsewhere, university officials said.
Meanwhile, the proposed changes will also mean a different employment arrangement for more than 300 physicians who are either full- or part-time faculty at the University of Illinois at Chicago College of Medicine and do clinical work at the hospital. They will become more independent, with employment contracts, much like doctors at other academic medical centers where the physicians work for affiliated practices.
Thus, doctors will be forced to build up a base of patients and referrals for the hospital rather than relying largely on the hospital's contracts with insurance companies.
``The idea that the board is looking at is, can these physicians take on more responsibility for their actions?'' said David Hunter, chief executive of The Hunter Group, which will officially take over management sometime next month, once its contract is made final. ``Can physicians take more control over their lives and their practice, and therefore be more productive?''
Physicians appeared to support the changes. ``I'm very positive, and I believe the physicians will be, too,'' said Dr. Gerald Moss, a surgeon and dean of the medical school. ``We believe with these changes the hospital will return to profitability.''
The hospital is also going to streamline billing and collection systems and reduce supply expenses, aiming to save more than $6 million by 2002.
UIC ANNOUNCES CHANGES
University of Illinois at Chicago Medical Center said Thursday it will implement changes for improving hospital operations.
Major recommendations include: Reduce staffing by about 275; Implement supply expense reduction program; Streamline patient registration, billing and collection systems; and Seek a merger or sale.
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Deep Medicare Cuts Draw Blood at Teaching Hospitals--Top Med Centers Take Largest Hit; Survival of Fittest
Chicago's academic medical centers, known for treating the most challenging cases and training the nation's top doctors, are facing some tough medicine of their own.
Already struggling with pressures from managed care, rising drug costs and a surplus of local hospital capacity, they now are bracing for one of the sharpest cutbacks ever in Medicare payments to hospitals.
And the prognosis isn't good. Some top hospitals are already in the red. Others have seen operating income fall sharply. The most pessimistic observers question whether, long term, the region can support all of its high-end medical centers.
In Chicago, which has an unusually high concentration of such facilities--five major academic medical centers and seven medical schools--the effects of the statewide $2.5-billion retrenchment will be staggering: The five academic medical centers together will lose about $350 million over five years.
Two of the five--University of Illinois at Chicago Medical Center and Rush-Presbyterian-St. Luke's Medical Center--already are feeling the pinch, having reported operating losses in fiscal 1998.
Two that were in the black--Northwestern Memorial Hospital and University of Chicago Hospitals--reported sharp downturns from 1997. Loyola University Medical Center posted operating income after a loss in 1997.
``Clearly, we are in for some difficult times for academic medical centers over the next few years,'' says health care consultant David Anderson of Health Care Futures L.P. in Itasca.
The downward spiral is expected to worsen over the next few years because the cuts--mandated under the Balanced Budget Act of 1997 and phased in from fiscal 1998 to fiscal 2002--widen each year. Some of the current losses have been offset by a robust stock market, which has helped hospitals stay in the black. But that can't continue forever.
HOW MUCH THEY'LL LOSE
Medicare payments are the lifeblood of many teaching hospitals--accounting for 20% to 40% of total revenues.
In addition to receiving payments from Medicare for treating elderly patients, the hospitals also are paid through Medicare for training physicians in residency programs. The larger a hospital's Medicare population and the larger its residency program, the larger its Medicare payment.
Rush-Presbyterian and the University of Chicago Hospitals will lose the most because of their greater dependence on public aid and larger residency programs: Rush will see $104 million in cuts over five years, and U of C will lose $95 million.
As for the other three. Northwestern Memorial will lost $65 million; Loyola, about $50 million, and UIC, $33.5 million, according to Ralph W. Muller, president and CEO of U of C Hospitals and chairman-elect of the Assn. of American Medical C olleges, which is lobbying Congress to restore the cuts.
The fallout from the cuts could drastically change the hospital landscape in Chicago.
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