New York, New York, May 1, 2002 - A new report details the potential risks of Medicare cutbacks to teaching hospitals, which are scheduled to occur later this year. The report, Medicare Reimbursement for Teaching Hospitals: Understanding the Implications of Indirect Medical Education Payment Policy, was prepared by The Moran Company, an independent health care and research consulting firm. The report was commissioned by Greater New York Hospital Association (GNYHA) and the Association of American Medical Colleges (AAMC).

In addition to providing basic health services to their communities, teaching hospitals provide clinical education for all types of health professionals, an environment in which clinical research can flourish, and highly specialized patient care. Because of their education and research missions, teaching hospitals offer the newest and most advanced services and equipment, and, with residents and supervising physicians available around-the-clock, teaching hospitals care for the nation's sickest patients.

A specific type of Medicare funding to teaching hospitals, known as the indirect medical education (IME) payment adjustment, is scheduled to be reduced by 15% on October 1, 2002, cutting funds to teaching hospitals by almost $800 million in Federal fiscal year 2003, and $4.2 billion over five years. The report concludes that these significant cutbacks would put further stress on teaching hospitals, which are already struggling with poor profitability and may be less likely than other hospitals to be able to leverage private payers because teaching hospitals are often located in competitive urban markets. Compounding this problem are new costs for emergency preparedness.

"In this post 9/11 world, teaching hospitals must be ready to handle the truly unpredictable in addition to the many services they already provide to this nation," said AAMC President Jordan J. Cohen, M.D. "Now is not the time to weaken one of the greatest resources of our health care system. That's why we strongly urge Congress to act soon to prevent these devastating cuts."

"Our teaching hospitals are national treasures," said Kenneth E. Raske, President of Greater New York Hospital Association. "They provide the most sophisticated medical care, treat the very sickest patients, help train tomorrow's doctors, and now they face the added burden of trying to ensure that they are prepared for any future terrorist acts or emergencies. It's time to strengthen not weaken our teaching hospitals. Future generations depend on it."

The report concludes that "deciding IME financing policy solely in the context of Medicare payment system terms runs the risk of arriving at solutions that may be judged to be optimal from a Medicare policy perspective, but which may be suboptimal from the perspective of the Nation's interest in promoting the graduate training of physicians-and the yet broader interest we have in insuring the continued viability of major hospitals that perform a wide variety of important roles in our health care system."

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Greater New York Hospital Association (GNYHA) is a trade association representing more than 200 not-for-profit hospitals and long-term care institutions, both voluntary and public, in the New York metropolitan area.

The Association of American Medical Colleges is a non-profit association founded in 1876 to work for reform in medical education. Originally representing only medical schools, the AAMC represents the nation's 125 accredited medical schools, nearly 400 major teaching hospitals, more than 105,000 faculty in 98 academic and scientific societies, and the nation's 66,000 medical students and 97,000 residents.

The Moran Company is an independent health care and research consulting firm founded by Donald W. Moran in 1998 after a 24-year career in the health and human service fields. Mr. Moran served previously as Legislative Assistant to Congressman David Stockman (R-MI), as well as Staff Director of the House Republican Economic Policy Task Force and Executive Associate Director for Budget and Legislation at the U.S. Office of Management and Budget, among other activities.

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The Association of American Medical Colleges is a not-for-profit association representing all 129 accredited U.S. and 17 accredited Canadian medical schools; nearly 400 major teaching hospitals and health systems, including 68 Department of Veterans Affairs medical centers; and 94 academic and scientific societies. Through these institutions and organizations, the AAMC represents 109,000 faculty members, 67,000 medical students, and 104,000 resident physicians. Additional information about the AAMC and U.S. medical schools and teaching hospitals is available at www.aamc.org/newsroom.

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