Some Funding Restored to Teaching Hospitals

Harvard again flexed its lobbying muscles in Washington earlier this year, helping to win back government funding for teaching hospitals after deep cuts put hospitals across the country in the red.

On Nov. 19, the Medicare, Medicaid & SCHIP Balanced Budget Refinement Act was signed into effect, increasing funding for teaching hospitals from the rock-bottom levels set in 1997's Balanced Budget Act.

Teaching hospitals are attached to medical schools and give medical students and residents hands-on training. The hospitals are generally more expensive to run than regular hospitals because of the extra expense involved in teaching and research, and because they generally cater to a sicker clientele because of their reputations for good care.

Medicare--the federal health insurance program for the elderly--usually subsidized these hospitals by allocating extra funding per Medicare patient served.

The Balanced Budget Act in 1997 capped the total amount of Medicare funding and began actually scaling it back. For instance, in Massachusetts, teaching hospitals were originally slated to get $1.85 billion in Medicare funding in 2002. With the cuts mandated by the Balanced Budget Act, they were expected to get only $1.55 billion that year.

Harvard officials, including President Neil L. Rudenstine, spoke out against this reduction, and Harvard's lobbyist joined advocates for other schools in pushing for a revision of the act.

'Bleeding Red Ink'

According to Dr. Joseph B. Martin, dean of Harvard Medical School (HMS), funding for teaching hospitals is especially important because many medical school teachers are paid only by the hospitals where they work.

"That is expensive to do, that is not done by community hospitals and that is what is under threat of disappearing because of [funding] cuts," said Jane H. Corlette, associate vice president for government, community and public affairs.

The Balanced Budget Act was projected to cost the seventeen major Massachusetts teaching hospitals a total of $2.1 billion over five years, according to figures provided by the Massachusetts Hospital Association.

After the cuts were mandated, all hospitals affected cut costs as much as possible, while still running deficits, according to Jennifer A. Watson, a spokesperson for Partners Health Care.

Partners manages Massachusetts General Hospital and Brigham and Women's Hospital, two of Harvard's main teaching hospitals.

"As the Balanced Budget Act has crunched bottom lines, teaching hospitals have had to pay more attention to the delivery of health care and not teaching," said Martin.

Harvard's major teaching hospitals also include Beth Israel Deaconess and Children's Hospital. All except Childrens's--which serves few Medicare patients--were affected drastically.

"After the first quarter of last fiscal year, the hospitals realized that they were bleeding red ink, they approached Rudenstine and Fineberg and asked for help," Corlette said.

Can You Spare a Dime?

Corlette says Harvard prefers not to get tangled up in lobbying for funding that isn't directly allocated to the University, in this case the massive loss of money meant they had to act.

Rudenstine, Provost Harvey V. Fineberg '67 and the entire Harvard lobbying machine went to work on this issue, according to Corlette.

In this effort, Harvard worked with higher education associations like the American Council on Education and the Association of American Universities.

"It's a team effort," Martin said. "We all joined forces--leadership in Washington, medical schools, hospitals. We all worked very effectively."

Members of the Children's administration, including CEO David Weiner, were also active in lobbying for this legislation.

Davis said that a grassroots campaign was also organized at all levels of hospital staff, encouraging staff members to send e-mail messages and letters to the Administration and the Congress.

Harvard's Washington allies in this fight included Senators Edward M. Kennedy '54-'56 (D-Mass.) and Daniel Patrick Moynihan (D-NY), Congress enacted the Balanced Budget Refinement Act.

Kennedy set up meetings with hospital officials, members of Congress and Administration officials, including Jacob J. Lew '78, director of the federal Office of Management and Budget.

"Senator Kennedy and the rest of the Massachusetts delegation did a great job of getting hospitals relief. It was very much an uphill battle, and they won that battle," Watson said.

According to a staff member on Kennedy's health committee, funding for Medicare and teaching hospitals are among his top priorities.

Top officials at Partners, as well as the individual teaching hospitals, were also personally involved with lobbying.

Early this year, Samuel O. Thier, CEO of Partners, traveled to Washington to lobby members of Congress and of the Clinton Administration.

"He was one of the first heads of the teaching hospitals to be making the case that the Balanced Budget Act had gone too far and that the teaching hospitals were at risk," Watson says.

Funding Increased, But Still Lower

The lobbying paid off with the passage of the Refinement Act, which increased Medicare funding from the lowered levels, though it did not return them to the levels before the Balanced Budget Act.

The new act will restore about 10 percent of the lost funding at teaching hospitals nationwide.

According to Corlette, an additional $105 million will be available to Boston area teaching hospitals because of the action. These hospitals make up the bulk of teaching hospitals in the state.

"Last year at this point, we were hopeful. But when we heard the news we were overjoyed," Corlette says. "It was not all we had asked for but it was very well received."

Because the legislation has just been passed, the funding has not been redirected yet, Watson said. However, when allocated, it will be used throughout the hospitals' budgets, she said.

Davis praised Kennedy's involvement in this legislation.

"He just kept pushing and pushing and didn't let it die on the vine," she said.

The current legislation provides relief for fiscal years 2000-2002, but officials are unaware of ramifications beyond that point.

But one thing is certain, officials say: legislators are now by and large convinced of the important role that teaching hospitals play in medical education.

"There needs to be a longer term solution to this problem," Corlette said. "But somebody has to pay for the public good. No one has offered a solution to that. That is our challenge for the future," she added.