Medical School to Increase Hospital Funding by $20 Million

Harvard's teaching hospital's are getting a much-needed $20 million boost in funding over the next five years, University President Neil L. Rudenstine and Medical School Dean Joseph B. Martin announced last week.

As long as the stock market stays steady, the 30 percent increase in teaching hospital funding will come from the University's endowment, $1.5 billion of which belongs to the Medical School.

"We've used a mechanism that taps into the Harvard endowment and takes advantage of the generosity of donors and the appreciation in the investments," said Cynthia L. Walker, associate dean of finance at the Medical School.

Walker said that the 102 hospital-based endowed professors can apply for funding from the extra payouts--but only for academic purposes.

"Proposals are coming in now, and we're already seeing some great examples of how this can be used," she said. "Everything from proposing new courses to new pieces of equipment to helping the students on clinical rotations."

But the Medical School's gravy train doesn't stop there. The University is also plans to free up funds previously earmarked for professors' fringe benefits. Many faculty already receive health insurance and other benefits through their hospitals, University officials say. With the change, these funds can now be used for academic means.

"This increase in endowment payout has given us a unique opportunity to solidify our commitment to medical education at a time when traditional funding sources are being cut back," Martin said in a statement.

"We hope that these new funds and flexibility will bring about very tangible relief to the financial pressures facing Harvard's hospitals, academic departments and faculty," he said.

Earlier this year, University administrators shared Martin's concern over the future of their teaching hospitals.

Cutbacks in Medicare spending put into place by the Balanced Budget Act of 1997 put a heavy strain on hospitals that depend on federal aid.

Hospitals also suffered losses from the recent trend of private health insurers passing more responsibility for the costs of patient treatment to the tighter fists of managed care programs.

"This year we'll muddle through," Rudenstine told The Crimson in the spring, "but within 12 to 24 months, we'll be looking at disaster.... It is not an abstract concern."

But school officials hope the bolstered endowment payout will prove to be a life raft for teaching hospitals sinking into debt.

"It's a win for the students, it's a win for the faculty, it's a win for donors who are seeing their donations put to use," Walker said.