[Congressional Record (Bound Edition), Volume 145 (1999), Part 6]
[Extensions of Remarks]
[Pages 8943-8944]
[From the U.S. Government Publishing Office, www.gpo.gov]




                      BOSTON'S TEACHING HOSPITALS

                                 ______
                                 

                        HON. JOHN JOSEPH MOAKLEY

                            of massachusetts

                    in the house of representatives

                         Thursday, May 6, 1999

  Mr. MOAKLEY. Mr. Speaker, I submit to the Congressional Record an 
article from today's New York Times which details the financial 
difficulties facing Boston's teaching hospitals. Many of the Boston 
teaching hospitals, which are located in my district, are experiencing 
serious Medicare cuts as a result of the Balanced Budget Act as well as 
from continuous cuts from managed care payments. These cuts threaten 
the important mission that our teaching hospitals provide--training 
physicians, caring for the sickest patients and providing care for the 
indigent.
  I would ask my colleagues to read this important article and to take 
these points in mind as we debate the future of the Medicare program.

                 [From the New York Times, May 6, 1999]

    Teaching Hospitals Say Medicare Cuts Have Them Bleeding Red Ink

                          (By Carey Goldberg)

       Boston--Normally, the great teaching hospitals of this 
     medical Mecca carry an air of white-coated, best-in-the-world 
     arrogance, the kind 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--with one line symbolizing rising costs and the 
     other dropping payments, especially Medicare payments--and 
     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: ````Everyone's in deep yogurt.''
       Jeffrey Otten, president of Brigham and Women's Hospital: 
     ``Most of the hospitals are losing money at a rate between a 
     half-million and a million dollars a week,'' though their 
     beds are mostly full.
       Dr. Samuel O. Thier, president of the group which owns 
     Massachusetts General Hospital: ``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.''
       The teaching hospitals here and elsewhere have never been 
     fully 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 closure of money-losing departments and whole 
     hospitals.
       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, 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. 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 not be true,'' said Alan Sager, a health-care finance 
     expert at the Boston University School of Public Health.
       But hospital chiefs argue that they have virtually no fat 
     left to cut, and are warning that their financial problems 
     could mean that the smartest edge of American medicine would 
     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,'' warned 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 officer 
     of Caritas Christi Health Care System, a seven-hospital group 
     affiliated with Tufts.
       In 1988, Collins said, it was still experimental for 
     doctors to open blocked arteries by passing tiny balloons 
     through them; now, they have a whole bouquet of expensive new 
     options for those patients, including spring-like 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,'' 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.''
       Federal financing for research is plentiful of late, 
     hospital heads acknowledge. But they point out that the 
     government expects hospitals to subsidize 10 or 15 percent of 
     that research, and they must also provide important support 
     for researchers still too junior to win grants.

[[Page 8944]]

       A similar argument for slack in the system comes with 
     teaching. Teaching hospitals are pressing their faculties to 
     take on greater loads of 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, Federman said, has less time to spend 
     teaching.
       ``Good teaching stops to ask the question `Why?--Why is 
     this patient anemic?'--and explore the science,'' Federman 
     said. ``That gets squeezed now.
       ``If you don't ask `Why?,' nothing moves forward,'' he 
     added.
       The Boston teaching hospitals generally deny that the money 
     squeeze is affecting patients' quality of care, students' 
     quality of education or research. But they say that if the 
     current losses swell as expected, deterioration in all 
     three will inevitably follow.
       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 an oversupply of beds, 
     and virtually all hospitals are teaching hospitals here.
       Whatever the causes, said 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,'' 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 also 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 againt charges of billing 
     fraud.
       But the back-breaking straw, hospital chiefs say, came with 
     Medicare cuts, enacted under the 1997 balanced-budget law, 
     that will slash 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 
     major teaching hospitals will lose something 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 consistently compensated them for their special 
     missions--training, sicker patients, indigent care--by paying 
     them extra.
       For reasons yet to be determined, 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 were 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. 
     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 then abandon the Byzantine old Medicare cross-
     subsidies and pay for them straight out, perhaps through a 
     new tax.
       Others question the numbers.
       Whenever hospitals face cuts, said Alan Sager of Boston 
     University, ``they claim it will be teaching and research and 
     free care of the uninsured that are cut first.''
       If the hospitals want more money, Sager argued, they should 
     allow independent auditors to check their books rather than 
     asking Congress to rely on a ``scream test.''
       For many doctors at the teaching hospitals, 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,'' 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.''

     

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