|
|
|
|
|
Contact: Media Relations Officer, (202) 828-0975.
AAMC Calls for Restoration of BBA Medicare Cuts To Teaching Hospitals
New Analysis Demonstrates Financial Impact of BBA
Washington, D.C., April 28, 1999--The cuts authorized by the Balanced Budget Act of 1997 (BBA) have gone too far and are threatening the long-term financial stability of U.S. teaching hospitals, the Association of American Medical Colleges (AAMC) said today at a briefing in Washington, D.C. The AAMC called upon Congress to halt and restore the Medicare-related payment cuts and released an analysis of the BBA's current and projected impact on teaching hospitals. Jordan J. Cohen, M.D., president, AAMC, was joined at the briefing by Jeffrey Otten, president, Brigham and Women's Hospital, Boston, and Harry Jacobson, M.D., vice chancellor for health, Vanderbilt Medical Center, Nashville.
"Left unchecked, the BBA cuts could force some of the nation's major teaching hospitals to reduce the scope of their special and unique community services such as burn, cardiac and trauma care centers, as well as care for the uninsured," said Dr. Cohen. "At a time when the health care marketplace is driven by the goal of cost containment, the BBA imposed reductions that are making a tough financial situation even tougher for teaching hospitals. Federal policymakers need to make immediate and substantive corrections to the BBA before it is too late and the damage is done."
U.S. teaching hospitals are where 44% of all indigent care in the country is provided, 75% of all residents are trained and a vast majority of the clinical research is performed. These highly valued education, research and service-related missions are threatened by the financial instability caused by the BBA.
The perilous effects of the BBA, as well as price competitive market forces, are being felt today at teaching hospitals in cities around the country. This is demonstrated by recent media coverage in Boston, New York, Chicago, Washington, D.C., San Francisco, Providence, Detroit and Dayton, Ohio.
"Teaching hospitals across the country are being squeezed from all sides. Our institutions play a unique role in America's health care system. We cannot continue to provide critical patient care, teach the next generation of physicians and conduct the research that will lead to new treatments and cures without the continued commitment of the federal government," said Mr. Otten.
The AAMC is seeking to eliminate any further cuts to the indirect medical education (IME) and disproportionate share (DSH) payments as a result of the BBA. In particular, the AAMC calls for the IME and DSH payments to return to their pre-BBA levels. Also, the direct medical education (DME) and IME payments associated with Medicare managed care enrollees, which are being paid in 20% increments over the life of the BBA (1998-2002), should be paid at a 100% level beginning in fiscal year 2000.
"How do we provide the Poison Control Center for the state of Tennessee, fund our school-based health care services, or teach kids to wear helmets and bring reality to the risks of drinking and driving through our school trauma education program -- all services no one pays us to provide -- if we have to struggle to make ends meet?" asked Dr. Jacobson. The AAMC has conducted an analysis of the potential impact of the BBA using the Association's Council of Teaching Hospitals and Health Systems (COTH) members. COTH hospitals are generally considered to be the nation's largest and most comprehensive teaching hospitals. Major conclusions from the AAMC analysis show that:
- Medicare reductions resulting from the BBA could result in the total margin for a typical COTH-member hospital falling by as much as half or more -- to about 1% -- by 2002. [Go to chart]
- Thirty-eight percent of COTH-member hospitals, about 100 institutions, could face negative total margins -- that is, could be losing money -- by 2002. [Go to chart]
- Projected BBA Medicare payments, compared to estimates of what Medicare payments would have been had the BBA not been enacted, reveal a cumulative loss of $45.8 million in Medicare support for a typical general, acute, non-federal COTH hospital by 2002. The cumulative BBA losses for all COTH hospitals are estimated to be $14.7 billion. [Go to chart]
- BBA changes to Medicare policy are slated to have a particularly adverse effect on teaching hospitals with substantial numbers of residents -- institutions with an intern and resident to bed ratio (IRB) of .25 or greater. The total margins for this subset of teaching hospitals could fall from an average of 3% in 1996 to an average of 0.3% in 2002. Forty-seven percent or more of these hospitals could face negative total margins by 2002 or sooner. [Go to charts]
For a printed copy of the slides, please contact Media Relations Officer, AAMC Office of Communications, at 202-828-0041.
###
The Association of American Medical Colleges represents the 125 accredited U.S. medical schools; the 16 accredited Canadian medical schools; some 400 major teaching hospitals, including 74 Veterans Administration medical centers; 87 academic and professional societies representing nearly 88,000 faculty members; and the nation's 67,000 medical students and 102,000 residents.
|
