New York State’s prestigious teaching hospitals could lose more than $1 billion a year as part of plans under negotiation in Washington to reduce the federal deficit that the hospitals say will lead to drastic service reductions.
Michael Kamber for The New York Times
Jennifer Davis, a physician assistant, left; Dr. Matthew Kusulas, a resident; and Dr. Lindsey Douglas with a patient at the Children's Hospital at Montefiore.
Among the other residents at the hospital are, from left, Dr. Teresa Martorella, Dr. Arunjot Singh and Dr. Netta Schneller. Montefiore could lose much of the Medicare subsidy it gets for training doctors.
The cuts would reduce the Medicare subsidy for training doctors and for providing intensive medical services like trauma centers and burn units and sophisticated equipment that the teaching hospitals offer. The plan would apply to teaching hospitals nationwide but would have its most profound impact in cities like New York and Boston, where medical schools and their affiliated hospitals have a significant presence.
Dating to the 1960s, the subsidy has helped make New York State the world capital of medical education, training about 16,000 doctors a year, or 14.5 percent of the nation’s total, more than any other state.
The benefits have been criticized for years by both conservatives and liberals who see them as a sweetheart deal for teaching hospitals in a few states. But now, with the pressure on the federal budget, they are being seriously considered in talks among the Obama administration and leaders of both parties in Congress.
The fate of the proposal, part of negotiations on raising the nation’s debt ceiling, is still unclear. A smaller package of cuts is also being considered.
Critics of the Medicare payment say it has become a hidden subsidy for hospitals’ operating costs. But the administrators of New York’s teaching hospitals say they operate on very thin margins because they serve large proportions of patients who are receiving government insurance for the poor and the elderly, and because they provide some of the most sophisticated — and expensive — medical treatment in the country. Either way, the hospitals have come to depend on the money.
Three New York hospitals — Montefiore Medical Center in the Bronx and Mount Sinai Medical Center and NewYork-Presbyterian Hospital in Manhattan — would be the hardest hit in the nation, followed by U.P.M.C.-Presbyterian in Pittsburgh, the Hospital of the University of Pennsylvania in Philadelphia and Massachusetts General Hospital.
“The impact would be devastating to a place like Montefiore and to the borough of the Bronx and the City of New York,” Dr. Steven M. Safyer, president and chief executive of the medical center, said Monday. “It would be incomprehensible what it would lead to. We’re the main employer in the Bronx, with 18,000 employees. It would lead to loss of jobs, curtailing the pipeline of the doctors of tomorrow, exacerbating the health needs of this very challenged community, the Bronx.”
Though the final numbers may well change, under the worst-case situation New York hospitals estimate they would lose $1.25 billion, or 57 percent, of the $2.19 billion a year they currently receive in Medicare subsides for medical education, according to the Greater New York Hospital Association, a powerful lobbying group. It expects the cut would begin in 2015. Nationwide, hospitals would lose $5.8 billion of their current $10.9 billion in payments, or 53 percent, according to the group.
A more modest deficit-reduction package now being discussed, however, would cut only $1.4 billion nationwide over 10 years.
If the larger proposal is passed, Montefiore will lose $100 million a year in revenue, or $1 billion over 10 years. The hospital trains 1,200 residents at any one time, turning out 350 to 400 doctors a year, Dr. Safyer said. A vast majority of its patients — 80 percent — are on either Medicare, the government insurance for the elderly, or Medicaid, the program for the poor.
A nonprofit institution, Montefiore has a budget of about $3 billion. Because of the hospital’s high percentage of poor and elderly patients, its revenue exceeds expenses by only one percentage point, and that money is invested back into the hospital, Dr. Safyer said.
The New York hospitals and hospital union leaders have historically had great success in staving off cuts in Albany and Washington, and are planning a trip to Washington on Wednesday to lobby the state’s Congressional delegation, said Kenneth E. Raske, president of the hospital association. The association is also planning a one-day print advertising campaign. The advertisements accuse Democrats of being “about to kill health reform” and challenge Republicans to keep their promise to protect Medicare.
Representative Carolyn B. Maloney, a Democrat whose district includes parts of Manhattan and Queens, said in a statement on Monday that cutting money for medical education would be a mistake. Ten teaching hospitals on the East Side of Manhattan rely on the subsidy and “train doctors who will, once trained, provide care for Americans across the country,” Ms. Maloney said.
A White House spokesman, Nicholas Papas, said of the proposal, “We haven’t been commenting on the details of the negotiations.”
Federal financial support for medical education began with the G.I. Bill of Rights after World War II, and became part of Medicare after it was established in 1965, according to a study in the Journal of General Internal Medicine. It has survived, with modifications, many attempts to curtail it over the years.
The Simpson-Bowles Commission, which advised Mr. Obama on debt and deficit reduction, called in December for reducing “excess” payments to hospitals for medical education. The commission said the payments could be brought in line with the costs of medical education by limiting the direct subsidy to 120 percent of the national average salary paid to residents. A second, indirect subsidy, which pays for intensive services and advanced equipment that teaching hospitals typically provide, should also be reduced, the commission said.
Gail R. Wilensky, a former senior health and welfare adviser to the first President George Bush, said numerous studies by the Congressional Budget Office and others have found that the indirect subsidy is overfunded by “several percentage points higher than can be justified empirically.”
But it has not been cut, she said, because, “there has been a long history of heavy protection by people senior on the finance committee in the past who have kept that from happening, so New York receives a disproportionate amount of academic medical subsidies.”
Dr. Wilensky said it might make more sense for subsidies for training medical residents in various specialties to go directly to the residents, who are working for low wages and essentially supporting the hospitals with their cheap labor, rather than to the institutions.
But hospital officials said the payment covered not only residents’ salaries and benefits, but also the supervising physicians’ salaries and benefits, and overhead like classroom space.
The average resident salary in the Northeast was $54,093 in 2009, the most recent year for which figures are available. In New York, with fringe benefits, supervisors’ salaries and overhead, the total cost of training came to $128,400, according to the hospital association. On average, Medicare subsidized 39 percent of that amount, or $49,581, roughly proportional to the percentage of inpatient treatment that was covered by Medicare.
Senator Charles E. Schumer, Democrat of New York, who has been involved in the negotiations, said he was doing everything he could to keep the education payments.
“This to me is one of the lifebloods of New York,” Mr. Schumer said. “One of the best things New York does for America is train high-quality physicians who then sally forth around the country and provide great medical care for the rest of their lives.”
Jo Craven McGinty contributed reporting.
© 2011nytimes.com
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