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The academic medical center: A stressed institution
The Academic Medical Center: A Stressed Institution The academic medical center is a stressed institution in 1988, more so than ever before in its history. The reasons are not difficult to discern. Although they are extraordinarily heterogeneous, academic medical centers do share some common features: most are medical school associated; most conceive of their mission as being a combination of teaching, research, and service; all are members of the Council of Teaching Hospitals (although not all COTH members are academic medical centers); they tend to be large and urban; and they tend to attract patients who require fairly sophisticated tertiary care. Importantly, they also provide service to a very high proportion of the poor. Because of the catholic nature of their goals, because of the complexity of the care they render, and because of the population to whom they render it, they also tend to be more costly and that, of course, is the source of their angst. I believe that the academic medical center will continue to be stressed until society decides upon the answers to three critical questions: (1) Who is to pay for biomedical research? (2) Who is to pay for medical education? and, most importantly, (3) Who is to pay for the care of the poor? Who is to pay for biomedical research? It certainly is no secret as to who is paying for it now. Two-thirds of all research support in the United States today comes from the federal government. The amount of that support has increased substantially over the past two-and-a-half decades-an altogether appropriate increase because it has been altogether effective. It is becoming increasingly clear, however, that biomedical research is no longer a priority item in Washington. This fact becomes distressingly apparent when one compares the percentage increase over the past several years in the budget of the Defense Department (average greater than 30 percent) to the percentage increase in the budget for the National Institutes of Health (average less than 10 percent). The contrast in absolute dollars is even more striking: in 1984, for example, almost seven billion dollars were appropriated for the prevention of war, 100 times less than what was provided for the preservation of health. The trend continues today with the end result being that, while the number of research applications received at the NIH and the number of research applications approved by its various study sections have remained constant, the number of research applications actually funded has decreased dramatically. Five years of service on a study section have convinced me that this phenomenon is not a reflection of declining grant quality; rather, it is an indication that grants of real merit are going unfunded, particularly those from new investigators. It takes no great prescience to see that, if this circumstance persists, the nation runs a real risk of significantly impairing a major mission of the Presentedat the Johns Hopkins Medical and Surgical Association Biennial Meeting, Baltimore, Maryland, June 12- 13, 1987.
538
THE AMERICAN JOURNAL OF SURGERY
academic medical center and of losing a whole generation of investigators to other fields of endeavor. To paraphrase one astute surgical savant, James C. Thompson, MD, the biomedical research of today is the clinical medicine of tomorrow; without it, the clinical medicine of tomorrow will be the clinical medicine of today.
Who is to pay for medical education? The business of medical education is big. In 1983-84, for example, the 127 medical schools in the United States expended over nine billion dollars going about their daily tasks-a tenfold increase relative to two decades ago. This increase is, of course, a reflection of the fact that, at some point in the early 196Os,somebody decided that the nation was facing a serious undersupply of physicians. To meet this perceived crisis, 41 new medical schools were established, class sizes were increased, and unprecedented numbers of new physicians have churned into the practice arena ever since. This effort was aided and abetted by the easy availability of capitation monies for students and of NIH monies for faculty salary support and institutional support through indirect costs. But times have changed: undersupply has been replaced by oversupply, capitation has disappeared, and indirect costs are under serious attack. This has led to a significant and, I believe, a potentially dangerous change in the manner in which medical schools are funded. In 1965, fully 40 percent of all their financial support emanated from the federal government. By 1984, this had decreased by more than half. In contrast, in 1965 only 6 percent was derived from the clinical practice of medicine by faculty; by 1984, that percentage had risen to more than 30 percent. This ever-increasing reliance on practice income to meet educational needs poses serious problems for the academic medical center. First, it has real potential for’ significantly disrupting educational priorities and for compromising the quality of undergraduate medical education. Second, it poses a particularly difficult and perhaps even insoluble conundrum for clinical department chairpersons: how to retain quality faculty in the academic arena when the time and resources available to do those things that attracted them in the first place, research and teaching, have become increasingly constrained by the necessity to generate clinical income. Most importantly, perhaps, heavy reliance on practice dollars forces the medical school to depend on a source of funding which, in all probability, will shortly not exist in the amounts currently available. Again, it takes no great prescience to predict that some more concrete form of income restraint will shortly become a reality. When that day arrives, the impact will be felt most heavily in those specialties that currently generate the most revenues for medical schools. In addition, the competition between physicians and hospitals for patients, bad as it is today, will only become worse. The Graduate Medical Education National Advisory Committee (GMENAC) report of 1980 has proved
VOLUME 157 JUNE 1989
more accurate than many thought: by 1999, we will experience a 20 percent oversupply of physicians in general and a 50 percent oversupply of specialists, a portion of which are surgeons. Since no one anticipates a 50 percent increase in the number of patients requiring surgical procedures, the end result can only be that the patient pie will be approximately the same size but the slices will be very much smaller. Fiscal stress is also being felt in graduate medical education. Three decades ago, for the most appropriate of reasons, it was recognized that in order to produce quality physicians, graduate medical education was a completely necessary continuum of the undergraduate educational experience. Today, no one doubts the fundamental wisdom of that concept. The same perception of an undersupply of physicians that led medical schools to expand in number also saw a concomitant more than twofold increase in the number of residency positions available. In an era of cost plus reimbursement, funding for graduate medical education was not an issue. But cost plus is gone and prospective payment is here; with it, the debate over who should pay for graduate medical education has become strident. Ninety-four percent of all resident stipends are derived from patient care revenues, and the bill is large. The hooker, of course, is that the federal government picks up one-third of that amount and it is a highly visible one billion plus dollars to a Congress that is increasingly convinced that there are too many medical students, too many medical specialists, excessively high costs of medical care, and excessively high physician fees. In point of fact, the actual amount expended is miniscule compared with the total cost of health care in the United States-less than one-halfof 1 percent. Furthermore, it is certain that the amount of service rendered by residents and fellows is a fiscal bargain compared with the alternatives. That service is also completely integral to the quality of medical care provided to the elderly and poor in this country. Indeed, Congress explicitly recognized that fact in the 1965 legislation authorizing the Medicare and Medicaid Programs. However, Congress has become ob sessed with a two hundred billion dollar budget deficit and may be about to change its collective mind. Within the last 18 months, the Health Care Financing Administration has made major attempts to curtail sharply its very real responsibility to pay its share of graduate medical educational costs. For the time being, at least, it has backed away from the most draconian of these, but change, and not for the better, is on its way! HCFA will be responsible for part of it; the ever-increasing wmpetition between hospitals for patients and patient care revenues will be part of it; and the increased share of the patient care dollar controlled by HMOs and corporate medicine-neither of which, I submit, have a significant interest in graduate medical education-will also be part of it. The end result will be a decreased commitment by all parties to funding graduate medical education, a defrtit with which the academic medical center is ill equipped to deal. Who is to pay for the care of the poor? This is surely the most vexing question of all. In this country, indigent THE AMERICAN
care and the academic medical center have been inextricably linked from the very beginning. The oldest teaching hospital in the United States, The Pennsylvania Hospital, had its origins as an alms house. For the poor, the academic medical center has traditionally been very much like Robert Frost’s definition of home: “A place where, when you have to go there, they have to take you in.” In the days before prospective payment, the cost of providing care to the medically indigent was covered by a hodgepodge of hidden subsidies, inflated bills, and redistributed resources. With the advent of DRGs and with the enormous pressure being placed on all hospitals to provide bottom line pricing, this system of cost shifting has virtually disappeared and the academic medical centers are bearing the brunt: although they comprise, at best, only 6 percent of all hospitals in the United States, they account for 28 percent of all Medicaid patient days, 35 percent of all bad debts, and-a striking figure-47 percent of all charity care. The volume of that charity care can only be expected to increase because the safety net of Medicaid has become more porous during the last 10 years. In 1978,90 percent of persons living below the poverty level were eligible; today, that number has fallen to less than 6 in 10. Tragically, almost one-third of those deemed ineligible are children. The magnitude of the problem can be placed in sharp perspective by citing a specific example. The total amount of bad debt and charity care experienced by hospitals in the Commonwealth of Pennsylvania in 1986 amounted to 272 million. Not surprisingly, the metropolitan areas of the state were responsible for 92 percent of the total. One in particular stood out, the City of Philadelphia, which 10 years ago closed its only municipal hospital and has contributed virtually nothing to charity care ever since. The wnsequences of such abrogated responsibility can be placed in even sharper perspective by wnsidering the case of the academic medical center with which I am currently associated. It is urban and owns its own 500~bed university hospital. It is associated with a medical school whose students usually achieve positions in reasonably good postgraduate training programs. Its faculty contains several individuals of national prominence. It ranks 37th amongst all medical schools in terms of NIH funding. It offers a wide variety of primary, secondary, and tertiary referral services including one of the larger heart and heart-lung transplant programs in the United States. In other words, it is at least an average example of the species. There is one major difference, however: Temple University Medical Center is located in the most socioeconomically depressed census tract of the entire city. This means that 16 percent of the 20,000 patients admitted annually to its hospital have absolutely no way of paying their medical bills. The fiscal wnsequences are startling to behold: for charity care alone, without regard to under-reimbursed Medicaid patients, the Medical Center will experience totally unreimbursed hospital costs of almost $4 million this tiscal year. I sub mit that even the most well-endowed, well-run, and costefficient hospital, public or private, would find it very stressful to have to absorb this kind of debt year in and JOURNAL
OF SURGERY
VOLUME
157
JUNE
1989
539
year out. Of course, the Medical Center has provided more than free hospital care. Totally unreimbursed professional services by its faculty during the same period of time will amount to almost $7 million. To ask that faculty to expend this much effort on an enterprise for which they see no return is to strain their charitable instincts to the utmost. It also strains to the utmost the ingenuity of the clinical department chairpersons who must somehow find dollars from other sources to ensure fair and competitive compensation. Temple University Medical Center really has only two choices: to refuse to care for the poor to the extent that it currently does (in effect, to turn its back on the local community-a morally unacceptable option) or to continue to do business in the same old way and run the real risk of bankruptcy. I suspect that all medical centers are stressed to greater or lesser degrees for having to assume such a disproportionate share of the cost of caring for the indigent. Further, I submit that it is not their sole
540
THE AMERICAN JOURNAL OF SURGERY
responsibility to do so; rather, society as a whole must address-and urgently-the need to underwrite the care of that substantial segment of the population that is currently underserved at best. It represents an important test: The best measure of a nation’s civility is the manner in which it treats its poorest citizen. These, then, are the reasons that academic medical centers are stressed today as never before. Like all reasonably good pedagogues, I can identify the issues but, unlike the best, I have absolutely no idea as to how they can be resolved. I am certain, however, that H. L. Mencken’s famous aphorism is applicable: “To every complex problem, there is a solution that is neat and simple-and wrong.”
VOLUME 157 JUNE 1989
Wallace
P. Ritchie, Jr., MD, PhD Professor
and Chairman
Department Temple
of Surgery
University
Hospital
Philadelphia,
PA
538
THE AMERICAN JOURNAL OF SURGERY
academic medical center and of losing a whole generation of investigators to other fields of endeavor. To paraphrase one astute surgical savant, James C. Thompson, MD, the biomedical research of today is the clinical medicine of tomorrow; without it, the clinical medicine of tomorrow will be the clinical medicine of today.
Who is to pay for medical education? The business of medical education is big. In 1983-84, for example, the 127 medical schools in the United States expended over nine billion dollars going about their daily tasks-a tenfold increase relative to two decades ago. This increase is, of course, a reflection of the fact that, at some point in the early 196Os,somebody decided that the nation was facing a serious undersupply of physicians. To meet this perceived crisis, 41 new medical schools were established, class sizes were increased, and unprecedented numbers of new physicians have churned into the practice arena ever since. This effort was aided and abetted by the easy availability of capitation monies for students and of NIH monies for faculty salary support and institutional support through indirect costs. But times have changed: undersupply has been replaced by oversupply, capitation has disappeared, and indirect costs are under serious attack. This has led to a significant and, I believe, a potentially dangerous change in the manner in which medical schools are funded. In 1965, fully 40 percent of all their financial support emanated from the federal government. By 1984, this had decreased by more than half. In contrast, in 1965 only 6 percent was derived from the clinical practice of medicine by faculty; by 1984, that percentage had risen to more than 30 percent. This ever-increasing reliance on practice income to meet educational needs poses serious problems for the academic medical center. First, it has real potential for’ significantly disrupting educational priorities and for compromising the quality of undergraduate medical education. Second, it poses a particularly difficult and perhaps even insoluble conundrum for clinical department chairpersons: how to retain quality faculty in the academic arena when the time and resources available to do those things that attracted them in the first place, research and teaching, have become increasingly constrained by the necessity to generate clinical income. Most importantly, perhaps, heavy reliance on practice dollars forces the medical school to depend on a source of funding which, in all probability, will shortly not exist in the amounts currently available. Again, it takes no great prescience to predict that some more concrete form of income restraint will shortly become a reality. When that day arrives, the impact will be felt most heavily in those specialties that currently generate the most revenues for medical schools. In addition, the competition between physicians and hospitals for patients, bad as it is today, will only become worse. The Graduate Medical Education National Advisory Committee (GMENAC) report of 1980 has proved
VOLUME 157 JUNE 1989
more accurate than many thought: by 1999, we will experience a 20 percent oversupply of physicians in general and a 50 percent oversupply of specialists, a portion of which are surgeons. Since no one anticipates a 50 percent increase in the number of patients requiring surgical procedures, the end result can only be that the patient pie will be approximately the same size but the slices will be very much smaller. Fiscal stress is also being felt in graduate medical education. Three decades ago, for the most appropriate of reasons, it was recognized that in order to produce quality physicians, graduate medical education was a completely necessary continuum of the undergraduate educational experience. Today, no one doubts the fundamental wisdom of that concept. The same perception of an undersupply of physicians that led medical schools to expand in number also saw a concomitant more than twofold increase in the number of residency positions available. In an era of cost plus reimbursement, funding for graduate medical education was not an issue. But cost plus is gone and prospective payment is here; with it, the debate over who should pay for graduate medical education has become strident. Ninety-four percent of all resident stipends are derived from patient care revenues, and the bill is large. The hooker, of course, is that the federal government picks up one-third of that amount and it is a highly visible one billion plus dollars to a Congress that is increasingly convinced that there are too many medical students, too many medical specialists, excessively high costs of medical care, and excessively high physician fees. In point of fact, the actual amount expended is miniscule compared with the total cost of health care in the United States-less than one-halfof 1 percent. Furthermore, it is certain that the amount of service rendered by residents and fellows is a fiscal bargain compared with the alternatives. That service is also completely integral to the quality of medical care provided to the elderly and poor in this country. Indeed, Congress explicitly recognized that fact in the 1965 legislation authorizing the Medicare and Medicaid Programs. However, Congress has become ob sessed with a two hundred billion dollar budget deficit and may be about to change its collective mind. Within the last 18 months, the Health Care Financing Administration has made major attempts to curtail sharply its very real responsibility to pay its share of graduate medical educational costs. For the time being, at least, it has backed away from the most draconian of these, but change, and not for the better, is on its way! HCFA will be responsible for part of it; the ever-increasing wmpetition between hospitals for patients and patient care revenues will be part of it; and the increased share of the patient care dollar controlled by HMOs and corporate medicine-neither of which, I submit, have a significant interest in graduate medical education-will also be part of it. The end result will be a decreased commitment by all parties to funding graduate medical education, a defrtit with which the academic medical center is ill equipped to deal. Who is to pay for the care of the poor? This is surely the most vexing question of all. In this country, indigent THE AMERICAN
care and the academic medical center have been inextricably linked from the very beginning. The oldest teaching hospital in the United States, The Pennsylvania Hospital, had its origins as an alms house. For the poor, the academic medical center has traditionally been very much like Robert Frost’s definition of home: “A place where, when you have to go there, they have to take you in.” In the days before prospective payment, the cost of providing care to the medically indigent was covered by a hodgepodge of hidden subsidies, inflated bills, and redistributed resources. With the advent of DRGs and with the enormous pressure being placed on all hospitals to provide bottom line pricing, this system of cost shifting has virtually disappeared and the academic medical centers are bearing the brunt: although they comprise, at best, only 6 percent of all hospitals in the United States, they account for 28 percent of all Medicaid patient days, 35 percent of all bad debts, and-a striking figure-47 percent of all charity care. The volume of that charity care can only be expected to increase because the safety net of Medicaid has become more porous during the last 10 years. In 1978,90 percent of persons living below the poverty level were eligible; today, that number has fallen to less than 6 in 10. Tragically, almost one-third of those deemed ineligible are children. The magnitude of the problem can be placed in sharp perspective by citing a specific example. The total amount of bad debt and charity care experienced by hospitals in the Commonwealth of Pennsylvania in 1986 amounted to 272 million. Not surprisingly, the metropolitan areas of the state were responsible for 92 percent of the total. One in particular stood out, the City of Philadelphia, which 10 years ago closed its only municipal hospital and has contributed virtually nothing to charity care ever since. The wnsequences of such abrogated responsibility can be placed in even sharper perspective by wnsidering the case of the academic medical center with which I am currently associated. It is urban and owns its own 500~bed university hospital. It is associated with a medical school whose students usually achieve positions in reasonably good postgraduate training programs. Its faculty contains several individuals of national prominence. It ranks 37th amongst all medical schools in terms of NIH funding. It offers a wide variety of primary, secondary, and tertiary referral services including one of the larger heart and heart-lung transplant programs in the United States. In other words, it is at least an average example of the species. There is one major difference, however: Temple University Medical Center is located in the most socioeconomically depressed census tract of the entire city. This means that 16 percent of the 20,000 patients admitted annually to its hospital have absolutely no way of paying their medical bills. The fiscal wnsequences are startling to behold: for charity care alone, without regard to under-reimbursed Medicaid patients, the Medical Center will experience totally unreimbursed hospital costs of almost $4 million this tiscal year. I sub mit that even the most well-endowed, well-run, and costefficient hospital, public or private, would find it very stressful to have to absorb this kind of debt year in and JOURNAL
OF SURGERY
VOLUME
157
JUNE
1989
539
year out. Of course, the Medical Center has provided more than free hospital care. Totally unreimbursed professional services by its faculty during the same period of time will amount to almost $7 million. To ask that faculty to expend this much effort on an enterprise for which they see no return is to strain their charitable instincts to the utmost. It also strains to the utmost the ingenuity of the clinical department chairpersons who must somehow find dollars from other sources to ensure fair and competitive compensation. Temple University Medical Center really has only two choices: to refuse to care for the poor to the extent that it currently does (in effect, to turn its back on the local community-a morally unacceptable option) or to continue to do business in the same old way and run the real risk of bankruptcy. I suspect that all medical centers are stressed to greater or lesser degrees for having to assume such a disproportionate share of the cost of caring for the indigent. Further, I submit that it is not their sole
540
THE AMERICAN JOURNAL OF SURGERY
responsibility to do so; rather, society as a whole must address-and urgently-the need to underwrite the care of that substantial segment of the population that is currently underserved at best. It represents an important test: The best measure of a nation’s civility is the manner in which it treats its poorest citizen. These, then, are the reasons that academic medical centers are stressed today as never before. Like all reasonably good pedagogues, I can identify the issues but, unlike the best, I have absolutely no idea as to how they can be resolved. I am certain, however, that H. L. Mencken’s famous aphorism is applicable: “To every complex problem, there is a solution that is neat and simple-and wrong.”
VOLUME 157 JUNE 1989
Wallace
P. Ritchie, Jr., MD, PhD Professor
and Chairman
Department Temple
of Surgery
University
Hospital
Philadelphia,
PA