June 1999 Bulletin

Teaching hospitals face "crisis;" blame BBA Medicare cuts

U.S. teaching hospitals where 44 percent of all indigent care in the country is provided, 75 percent of all residents are trained and a vast majority of clinical research is performed are threatened by financial instability, according to the Association of American Medical Colleges (AAMC).

The AAMC blames the cuts authorized by the Balanced Budget Act (BBA) of 1997. From 1998 to 2003, BBA reduces Medicare payments to hospitals by $9 billion. Left unchecked, the AAMC said BBA cuts could force some of the nation's major teaching hospitals to reduce the scope of their community services such as burn, cardiac and trauma care centers, as well as care for the uninsured.

AAMC asked Congress to halt and restore the Medicare-related payment cuts.

Neil Rudenstine, Harvard University president, said teaching hospitals face an "absolute crisis." All of the nation's 400 major teaching hospitals are on a downward slope. "Two or three more years like this and you would have some institutions either going out of business or turning to for-profit." Rudenstine said.

Jordan J. Cohen, MD, president of AAMC, said, "At a time when the health care marketplace is driven by the goal of cost containment, the BBA imposed reductions that are making a tough financial situation even tougher for teaching hospitals. Federal policymakers need to make immediate and substantive corrections to the BBA before it is too late and the damage is done."

Jeffrey Otten, president of Brigham and Women's Hospital, said, "We cannot continue to provide critical patient care, teach the next generation of physicians and conduct the research that will lead to new treatments and cures without the continued commitment of the federal government."

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