[Congressional Record Volume 145, Number 65 (Thursday, May 6, 1999)]
[Senate]
[Pages S4882-S4884]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                   FUNDING OF ACADEMIC HEALTH CENTERS

  Mr. KENNEDY. Mr. President, the combination of Medicare payment cuts 
and the growth of managed care has become a devastating one-two punch 
against many of the nation's most respected academic health centers. A 
front-page article in today's New York Times documents what is 
happening. Teaching hospitals across the country are losing money and 
facing the prospect of cutting back the research, the teaching and 
training, and the advanced medical care that have made American 
medicine the envy of the world. These centers are also major safety-net 
institutions that provide extensive care for the uninsured.
  Every American depends for quality health care on doctors trained in 
the nation's teaching hospitals. Research conducted at these hospitals 
is the basis for much of the astounding progress that we are making in 
medical science, and these institutions are indispensable in bringing 
advances in the laboratory to the bedside of the patient. For the most 
serious and intractable illnesses, teaching hospitals are the 
caregivers of last resort. They have the newest and most sophisticated 
equipment. The physicians who practice there are on the cutting edge of 
new treatments, and they see the largest number of such cases.
  It would be an American tragedy if, as a result of short-sighted 
Medicare payment policies and equally short-sighted pressures for HMO 
profits, academic health centers are forced to

[[Page S4883]]

close their doors or to curtail the research, training, and advanced 
care that make them such indispensable components of modern American 
health care.
  I ask unanimous consent that the New York Times article be printed in 
the Record, and I urge my colleagues to review it carefully. It is 
becoming increasingly clear that this Congress has an obligation to act 
before irreparable damage is done to these essential institutions.
  There being no objection, the article was ordered to be printed in 
the Record, as follows:

         Teaching Hospitals Battling Cutbacks in Medicare Money

                          (By Carey Goldberg)

       Boston, May 5--Normally, the great teaching hospitals of 
     this medical Mecca carry an air of white-coasted, best-in-
     the-world arrogance, the kind of arrogance that comes of 
     collecting Nobels, of snaring more Federal money for medical 
     research than hospitals anywhere else, of attracting patients 
     from the four corners of the earth.
       But not lately. Lately, their chief executives carry an air 
     of pleading and alarm. They tend to cross the edges of their 
     palms in an X that symbolizes the crossing of rising costs 
     and dropping payments, especially Medicare payments. And to 
     say they simply cannot go on losing money this way and remain 
     the academic cream of American medicine.
       Dr. Mitchell T. Rabkin, chief executive emeritus of Beth 
     Israel Hospital, says, ``Everyone's in deep yogurt.''
       The teaching hospitals here and elsewhere have never been 
     immune from the turbulent change sweeping American health 
     care--from the expansion of managed care to spiraling drug 
     prices to the fierce fights for survival and shotgun 
     marriages between hospitals with empty beds and flabby 
     management.
       But they are contending that suddenly, in recent weeks, a 
     Federal cutback in Medicare spending has begun putting such a 
     financial squeeze on them that it threatens their ability to 
     fulfill their special missions: to handle the sickest 
     patients, to act as incubators for new cures, to treat poor 
     people and to train budding doctors.
       The budget hemorrhaging has hit at scattered teaching 
     hospitals across the country, from San Francisco to 
     Philadelphia. New York's clusters of teaching hospitals are 
     among the biggest and hardest hit, the Greater New York 
     Hospital Association says. It predicts that Medicare cuts 
     will cost the state's hospitals $5 billion through 2002 and 
     force the closing of money-losing departments and whole 
     hospitals.
       Dr. Samuel O. Thier, president of the group that owns 
     Massachusetts General Hospital, says, ``We've got a problem, 
     and you've got to nip it in the bud, or else you're going to 
     kill off some of the premier institutions in the country.''
       Here in Boston, with its unusual concentration of academic 
     medicine and its teaching hospitals affiliated with the 
     medical schools of Harvard, Tufts and Boston Universities, 
     the cuts are already taking a toll in hundreds of eliminated 
     jobs and pockets of miserable morale.
       Five of Boston's top eight private employers are teaching 
     hospitals, Mayor Thomas M. Menino notes. And if five-year 
     Medicare cuts totaling an estimated $1.7 billion for 
     Massachusetts hospitals continue, Mayor Menino says, ``We'll 
     have to lay off thousands of people, and that's a big hit on 
     the city of Boston.''
       Often, analysts say, hospital cutbacks, closings and 
     mergers make good economic sense, and some dislocation and 
     pain are only to be expected, for all the hospitals' tendency 
     to moan about them. Some critics say the hospitals are partly 
     to fault, that for all their glittery research and 
     credentials, they have not always been efficiently managed.
       ``A lot of teaching hospitals have engaged in what might be 
     called self-sanctification--`We're the greatest hospitals in 
     the world and no one can do it better or for less'--and that 
     may or may not be true,'' said Alan Sager, a health-care 
     finance expert at the Boston University School of Public 
     Health.
       But the hospital chiefs argue that they have virtually no 
     fat left to cut, and warn that their financial problems may 
     mean that the smartest edge of American medicine will get 
     dumbed down.
       With that message, they have been lobbying Congress in 
     recent weeks to reconsider the cuts that they say have turned 
     their financial straits from tough to intolerable.
       ``Five years from now, the American people will wake up and 
     find their clinical research is second rate because the big 
     teaching hospitals are reeling financially,'' said Dr. David 
     G. Nathan, president of the Dana-Farber Cancer Institute 
     here.
       In a half-dozen interviews, around the Boston medical-
     industrial complex known as the Longwood Medical Center and 
     Academic Area and elsewhere, hospital executives who normally 
     compete and squabble all espoused one central idea: teaching 
     hospitals are special, and that specialness costs money.
       Take the example of treating heart-disease patients, said 
     Dr. Michael F. Collins, president and chief executive of 
     Caritas Christi Health Care System, a seven-hospital group 
     affiliated with Tufts.
       In 1988, Dr. Collins said, it was still experimental for 
     doctors to open blocked arteries by passing tiny balloons 
     through them; now, they have a bouquet of expensive new 
     options for those patients, including springlike devices 
     called stents that cost $900 to $1,850 each; tiny rotobladers 
     that can cost up to $1,500 and costly drugs to supplement the 
     reaming that cost nearly $1,400 a patient.
       ``A lot of our scientists are doing research on which are 
     the best catheters and which are the best stents,'' Dr. 
     Collins said. ``And because they're giving the papers on the 
     drug, they're using the drug the day it's approved to be 
     used. Right now it's costing us about $50,000 a month and 
     we're not getting a nickel for it, because our case rates are 
     fixed.''
       Hospital chiefs and doctors also argue that a teaching 
     hospital and its affiliated university are a delicate 
     ecosystem whose production of critical research is at risk.
       ``The grand institutions in Boston that are venerated are 
     characterized by a wildflower approach to invention and the 
     generation of new knowledge,'' said Dr. James Reinertsen, the 
     chief executive of Caregroup, which owns Beth Israel 
     Deaconess Medical Center. ``We don't run our institutions 
     like agribusiness, a massively efficient operation where we 
     direct research and harvest it. It's unplanned to a great 
     extent, and that chaotic fermenting environment is part of 
     what makes the academic health centers what they are.''
       ``There wouldn't have been a plan to do what Judah Folkman 
     has done over the last 20 years,'' Dr. Reinertsen said of the 
     doctor-scientist at Children's Hospital in Boston who has 
     developed a promising approach to curing cancer.
       Federal financing for research is plentiful of late, 
     hospital heads acknowledge. But they point out that the 
     Government expects hospitals to subsidize 10 percent of 15 
     percent of that research, and that they must also provide 
     important support for researchers still too junior to win 
     grants.
       A similar argument for slack in the system comes in 
     connection with teaching. Teaching hospitals are pressing 
     their faculties to take on more patients to bring in more 
     money, said Dr. Daniel D. Federman, dean for medical 
     education of Harvard Medical School. A doctor under pressure 
     to spend time in a billable way, Dr. Federman said, has less 
     time to spend teaching.
       The Boston teaching hospitals generally deny that the money 
     squeeze is affecting patients' care, (a denial some patients 
     would question,) or students' quality of medical education (a 
     denial some students would question,) or research--yet.
       The Boston hospitals' plight may be partly their fault for 
     competing so hard with each other, driving down prices, some 
     analysts say. Though some hospitals have merged in recent 
     years, Boston is still seen as having too many beds, and 
     virtually all hospitals are teaching hospitals here.
       Whatever the causes, said Dr. Stuart Altman, professor of 
     national health policy at Brandeis University and past 
     chairman for 12 years of the committee that advised the 
     Government on Medicare prices, ``the concern is very real.''
       ``What's happened to them is that all of the cards have 
     fallen the wrong way at the same time,'' Dr. Altman said. ``I 
     believe their screams of woe are legitimate.''
       Among the cards that fell wrong, begin with managed care. 
     Massachusetts has an unusually large quotient of patients in 
     managed-care plans. Managed-care companies, themselves 
     strapped, have gotten increasingly tough about how much they 
     will pay.
       Boston had already gone through a spate of fat-trimming 
     hospital mergers, closings and cost cutting in recent years. 
     Add to the troubles some complaints that affect all 
     hospitals: expenses to prepare their computers for 2000, 
     problems getting insurance companies and the Government to 
     pay up, new efforts to defend against accusations of billing 
     fraud.
       But the back-breaking straw, hospital chiefs says, came 
     with Medicare cuts, enacted under the 1997 balanced-budget 
     law, that will cut more each year through 2002. The 
     Association of American Medical colleges estimates that by 
     then the losses for teaching hospitals could reach $14.7 
     billion, and that major teaching hospitals will lose about 
     $150 million each. Nearly 100 teaching hospitals are expected 
     to be running in the red by then, the association said last 
     month.
       For years, teaching hospitals have been more dependent than 
     any others on Medicare. Unlike some other payers, Medicare 
     has compensated them for their special missions--training, 
     sicker patients, indigent care--by paying them extra.
       For reasons yet to be determined, Dr. Altman and others say 
     the Medicare cuts seem to be taking an even greater toll on 
     the teaching hospitals than had been expected. Much has 
     changed since the 1996 numbers on which the cuts are based, 
     hospital chiefs say; and the cuts particularly singled out 
     teaching hospitals, whose profit margins used to look fat.
       Frightening the hospitals still further, President 
     Clinton's next budget proposes even more Medicare cuts.
       Not everyone sympathizes, though. Complaints from hospitals 
     that financial pinching hurts have become familiar refrains 
     over recent years, gaining them a reputation for crying wolf. 
     Critics say the Boston hospitals are whining for more money 
     when the only real fix is broad health-care reform.
       Some propose that the rational solution is to analyze which 
     aspects of the teaching hospitals' work society is willing to 
     pay for, and

[[Page S4884]]

     then abandon the Byzantine Medicare cross-subsidies and pay 
     for them straight out, perhaps through a new tax.
       Others question the numbers.
       Whenever hospitals face cuts, Alan Sager of Boston 
     University said, ``they claim it will be teaching and 
     research and free care of the uninsured that are cut first.''
       If the hospitals want more money, Mr. Sager argued, they 
     should allow in independent auditors to check their books 
     rather than asking Congress to rely on a ``scream test.''
       For many doctors at the teaching hospitals, however, the 
     screaming is preventive medicine, meant to save their 
     institutions from becoming ordinary.
       Medical care is an applied science, said Dr. Allan Ropper, 
     chief of neurology at St. Elizabeth's Hospital, and strong 
     teaching hospitals, with their cadres of doctors willing to 
     spend often-unreimbursed time on teaching and research, are 
     essential to helping move it forward.
       ``There's no getting away from a patient and their 
     illness,'' Dr. Ropper said, ``but if all you do is fix the 
     watch, nobody ever builds a better watch. It's a very subtle 
     thing, but precisely because it's so subtle, it's very easy 
     to disrupt.''

                          ____________________