Copyright 1999 Star Tribune
Star Tribune
(Minneapolis, MN)
September 3, 1999, Friday, Metro Edition
SECTION: NEWS; Pg. 16A
LENGTH: 843 words
HEADLINE:
Inequalities in federal payments hurt Minnesota teaching hospital
BYLINE: Coralie Carlson; Staff Writer
DATELINE: Washington, D.C.
BODY:
Wide disparities in the amount of money
teaching hospitals receive from the federal government leave medical schools in
Minnesota with a fraction of the dollars sent to schools in major Eastern
cities.
New York University's teaching
hospital received more than $47,000 for each student in 1996
from the direct Medicare payments to cover the cost of teaching. The University
of Minnesota's teaching hospital got $7,900.
"We get less money for doing the same
thing," said Gordon Alexander, vice president and administrator of the
University of Minnesota hospital. "I don't know why; it doesn't seem appropriate
to me." The gap results from a decades-old
accounting formula, but a recent article about it in the New England Journal of
Medicine has fueled debate about the role of the federal government in
supporting medical schools, which are facing financial difficulty across the
country.
Two teaching hospitals have
closed in New York. To save money, Stanford University and the University of
California, San Francisco, recently merged the schools' teaching hospitals.
Still, the merged hospital is expected to lose $60 million and
lay off 2,000 employees this year.
Facing
financial problems, the University of Minnesota sold its hospital to Fairview
Health System two years ago. Alexander said the hospital, now called
Fairview-University Medical Center, is working to break even, and he described
its finances as "strong, but unsustainable."
.
Mounting pressure
Teaching hospitals are facing pressure
from all sides. Managed-care medicine has pinched insurance income; the number
of days patients stay in hospitals has fallen, and federal payment streams have
slowed.
"It's like getting through that
knot in the bow tie where everything constricts," Alexander said.
Combined with these pressures, cuts in
Medicare payments will leave about half of the nation's 300 major teaching
hospitals in the red by 2002, said Bob Dickler, vice president at the
Association of American Medical Colleges. The University of Minnesota hospital
stands to lose $20 million over four years.
Medicare makes up more than one-quarter of
the university hospital's $1 billion budget. The direct
Medicare payments for teaching programs are a fraction of that amount, about
$2.5 million annually.
But with revenue sources shrinking,
officials at teaching hospitals are painfully aware of disparities in formulas
that help keep some medical schools relatively healthy while others suffer.
The disparities stem from differences in
bookkeeping methods the hospitals were using at the time the formula was
developed. In the category of direct Medicare payments for medical education,
hospitals that had recorded costs as "hospital expenses" qualified for
reimbursement and those that had recorded costs as "medical school expenses" did
not, said Bruce Kelly, director of governmental relations for the Mayo Clinic in
Rochester, Minn.
Under that formula, Mayo
didn't qualify for any money, he said. But Mayo was one of a few hospitals to
negotiate a compromise with Medicare officials. Now it receives a payment based
on the national average, about $26,662 per resident in 1997.
Because the University of Minnesota
hospital recorded more costs as medical school expenses, it qualified for much
less _ $7,924 per resident in 1997.
.
Before
Congress
Teaching hospitals aren't united
in the effort to update payment schedules because many of them benefit under the
present system, Dickler said.
In 1997,
Congress further restricted direct Medicare payments by limiting the number of
graduate students hospitals can report for compensation.
This fall Congress may make changes to the
Balanced Budget Act to address broad Medicare payments policies. But provisions
in that bill are still up in the air, said Greg Crist, spokesman for the House
Ways and Means Committee.
Teaching
hospitals want to freeze cuts. Dickler said factors from tax cuts to
prescription drug benefits could affect the outcome of possible Medicare
adjustments.
.
.
Disparities in payments to teaching
hospitals
.
Here are Medicare payments for graduate
medical education received by select teaching hospitals in 1996:
.
Hospital Total
Medicare education Medicare payment
payment
(millions) per resident
.
New York University-
Tisch Hospital, New
York $12.4 $47,827
.
Mayo Clinic Hospitals,
Rochester,
Minn. $12.6 $26,221
.
Duke University Hospital,
Durham,
N.C. $7.0 $16,289
.
University of Washington
Hospital,
Seattle $3.7 $13,030
.
University of California
Medical Center, San Francisco
$5.3 $10,872
.
University of Minnesota
Hospital,
Minneapolis $2.1 $7,924
.
Note: Mayo Clinic figures are estimates for 1997.
.
Source: New England Journal of Medicine and the Health Care Finance
Administration
GRAPHIC: CHART
LOAD-DATE: September 4, 1999 
