Washington, D.C., May 15, 2002 - Today more than 100 hospital and medical school representatives from 29 states and the District of Columbia called on Congress to halt Medicare cutbacks to the nation's teaching hospitals. The Indirect Medical Education (IME) payment, a specific type of Medicare funding for teaching hospitals, is scheduled to be slashed by 15 percent on October 1. This $800 million reduction could balloon to a $4.2 billion loss in federal funding over the next five years.

"This loss of federal support comes at a particularly painful time for our teaching hospitals as they grapple with a struggling economy, nursing shortages and intense pressure to ensure our readiness for the possibility of future terrorist attacks," said Jordan J. Cohen, M.D., president, Association of American Medical Colleges.

While they make up only twenty percent of America's hospitals, this country's 1100 teaching hospitals provide a wide variety of services critical to the nation's health care delivery system. Teaching hospitals conduct two thirds of all highly specialized surgeries, and treat nearly half of all patients with highly specialized diagnoses. The average institution also handles more than 30,000 annual emergency room visits, nearly three times the number of visits to non-teaching hospitals. In addition, teaching hospitals train more than 100,000 resident physicians in various medical specialties every year, and provide hospital care for more than 70 percent of the country's 43 million uninsured citizens. Medicare IME payments help offset the higher costs of providing these patient care and medical education services.

If the IME payment is reduced in FY2003 as planned from 6.5 percent to 5.5 percent, it would have a serious financial impact on teaching hospitals, because these institutions are already running on budgets that, on average, are only about 2 percentage points above a deficit. For example, over the next five years, with the IME decrease in place, teaching hospitals are estimated to lose $416 million in Pennsylvania, $91 million in Missouri, and $266 million in California.

"Even with the current level of federal support, this reduction will have a devastating effect on our nation's teaching hospitals, jeopardizing their ability to provide the level of care that their communities, states and regions count on," said Dr. Cohen. "I urge Congress to act soon to stop this cut in Medicare funding. Now is not the time to weaken one of the greatest resources of our health care system."

Congress is currently considering two bills that would prevent this reduction in Medicare support. The American Hospital Preservation Act, sponsored by Senators Kay Bailey Hutchinson (R-TX) and Evan Bayh (D-IN), and Representatives Mark Foley (R-FL) and Richard Neal (D-MA), and the Teaching Hospital Preservation Act, sponsored by Senator Dick Durbin (D-IL), are both supported by the AAMC.

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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 Veterans Administration medical centers; more than 105,000 faculty in 98 academic and scientific societies; and the nation's 66,000 medical students and 97,000 residents.

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The Association of American Medical Colleges is a not-for-profit association representing all 130 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 nearly 90 academic and scientific societies. Through these institutions and organizations, the AAMC represents 125,000 faculty members, 70,000 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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