Hospitals face losses in subsidies for training Republicans press budget-cutting action

cuts of millions feared

September 21, 1995|By David Folkenflik | David Folkenflik,SUN STAFF

Major academic hospitals, including Johns Hopkins and the University of Maryland, each stand to lose millions of dollars a year if Congressional Republicans succeed in slashing a little-known Medicare subsidy for training doctors.

The $6 billion subsidy is intended to help the academic medical centers cover the cost of training of medical residents -- newly minted doctors apprenticed in teaching hospitals.

Officials at the nation's medical centers anxiously are awaiting the bill that House Republican aides spent the day crafting yesterday. Details have not been released on the GOP proposal, expected to be discussed tomorrow at a hearing of the House Ways and Means Subcommittee on Health.

"Some people have the idea that medical education is an economic windfall," said Dr. Donald E. Wilson, dean of the University of Maryland School of Medicine. "That's clearly not the case. The kinds of things that you have to have in place to train medical professionals is very costly."

Although the subsidy is included in Medicare, it has little direct relation to the Great Society program, a health insurance program for senior citizens.

Under Maryland's "all-payer" system, state regulators could significantly blunt the effect of the cuts for academic hospitals by building teaching costs into the hospital rates. Such a move, now a topic of sharp debate in Annapolis, appears unlikely.

The Republican majority in Congress, and particularly a core of fiscal conservatives in the House, is intent on reducing the rate of Medicare spending by $270 billion over seven years to head off deficits in the trust fund.

Some compromise proposals floated by House Republicans would cut $2 billion of $4 billion set aside for the so-called "indirect" costs of medical training of residents -- such as computers, libraries and the salaries of senior doctors.

John F. Burness, Duke University's senior vice president for public affairs, said he was told by a senior Republican Senate aide that it would be far easier for the Congress, in trying to control Medicare costs, to take on medical centers than senior citizens, an unusually combative special interest group: "There are 37 million of them," the senate staffer said, "and only 126 of you."

Some moderate Republicans have suggested creating a trust fund for medical training apart from Medicare. Rep. Benjamin L. Cardin, a Baltimore Democrat, said he intends to propose an "all-payer" revenue source to replace the subsidy. But such a move is unlikely to succeed in a Congress whose new leadership was elected with a prominent "No New Taxes" pledge, Mr. Cardin said.

In a speech Monday to health maintenance officials in Baltimore, Rep. William Thomas, a California Republican, said that, at the least, American taxpayers should no longer pay for the training of young doctors in specialty fields or of "noncitizens."

Those two cuts alone could cost the University of Maryland Medical System $500,000 to $700,000 a year, Dr. Wilson said.

The new bill also is likely to reduce payments given to hospitals for the treatment of uninsured and elderly patients -- a burden that falls disproportionately on the academic medical centers.

"Teaching hospitals attract sicker patients, because they're more complicated patients," said Dr. Michael Johns, dean of Johns Hopkins School of Medicine. "That's what we're good at. That's what we should continue to do."

Analysts said academic health centers appear a fat target.

"There has been a consensus among many -- not including the academic medical centers -- that relative to other providers, the payment to academic medical centers was generous," said University of Pittsburgh health economist Judith Lave.

For the past three decades, there have been two primary means of funding medical education. Besides the Medicare subsidy, university hospitals increased their bills to patients. But academic centers have been trying to hold down bills, as insurance companies and health maintenance organizations threaten to shift clients to lower-cost hospitals.

Left to its own resources, Duke Medical Chancellor Ralph Snyderman said, his hospital would not be able to pay for more than 10 to 15 percent of its medical training.

For the past fiscal year, Johns Hopkins Hospital received $42 million toward educating 479 residents and interns from all sources, a hospital spokesman said.

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