Academic Medical Centers Look to Health Reform for Financial Help

September 04, 1994|By JOHN FAIRHALL

WASHINGTON — Washington. -- The debate over health care reform has never been just about insurance -- as officials of the Johns Hopkins University and the University of Maryland know only too well.

The major reform bills in the House and Senate included another kind of reform, affecting the future of academic medical centers and the valuable research and teaching they do. Looking for long-term financial security, which is increasingly threatened, the centers lobbied Congress for assistance. Lawmakers responded, adding provisions to health reform legislation that would, in effect, guarantee funding of medical research and teaching.

But that guarantee is in danger now that comprehensive health reform legislation seems dead. Even though Congress may yet enact more modest reforms, it's not clear that aid to academic medical centers will be included -- or that it will be dealt with in separate legislation.

Academic medical center officials are worried. Without assistance, "academic medical centers will be in big trouble," warns Dr. Donald E. Wilson, dean of the University of Maryland School of Medicine.

The centers -- teaching hospitals and affiliated medical schools -- are under financial pressure from health maintenance organizations, networks of doctors and hospitals that save money by using cheaper hospitals.

HMOs "don't want to hear about our education and research costs," Dr. Wilson says. "They just want to hear about costs. And when we talk about our quality, people take a very strange view. They say, 'A doctor is a doctor, a nurse is a nurse -- how can you prove to me it's worth paying another 20 percent?' "

HMO officials dispute this. In deciding which hospitals to use, HMOs don't simply look at the issue of cost, but quality, too, says Karen Ignagni, president of the Group Health Association of America.

Even some lawmakers who support academic medical centers want to hold them accountable for the new money they would have received in the comprehensive reform bills -- a total of $74 billion over five years.

These bills required the centers to focus on educating primary-care doctors, like internists and family practitioners, while reducing the number of specialists. Critics of the health system say that emphasis on primary care, especially preventive steps such as mammograms and cholesterol tests, would save money and improve health.

Although some medical school officials grumble about government interference, they say guaranteed funding for education and research is worth the restrictions.

Under the comprehensive reform bills, financing for academic medical centers would have come from Medicare, the program for the elderly that already contributes to the cost of education and research, and a new source, a tax of up to 2 percent on insurance premiums. Consumers ultimately would pay such a tax in the form of higher premiums -- a recognition that medical education and biomedical research are societal benefits, according to supporters of the tax.

Academic medical center officials assert that the $74 billion was not new money but a replacement of funds they are losing as HMOs and other insurers shift business to other hospitals. Historically, these centers have recovered much of the cost of education and research by building this expense into the rates they charge insurers. But this system has broken down with the growing influence of HMOs, which steer patients to less-expensive hospitals.

The comprehensive reform legislation would have permitted teaching hospitals to lower their rates, making them more competitive. That would "help level the playing field" for hospitals, said Robert A. Chrencik, vice president of the University of Maryland Medical System.

Although Hopkins and the University of Maryland are faring better than some academic medical centers, officials of both institutions worry about the future. HMOs and other insurers that control patients' choices of hospitals are gaining ground -- 30 percent of Marylanders are enrolled in these types of health plans.

The Hopkins and University of Maryland hospital rates exceed nonacademic hospitals' rates because of education, research and a third factor: the cost of treating uninsured people, who are concentrated in Baltimore and often end up in those two inner-city hospitals.

To help Maryland hospitals that treat many uninsured patients, the comprehensive reform bills would have let the state divide the cost of charity care among all hospitals. That would help close the gap between the the higher rates charged by city hospitals and lower rates of suburban hospitals.

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