WASHINGTONAt a congressional briefing titled The Crisis
at Academic Health Centers, Samuel O. Thier, MD, described the
situation succinctly. We are going through tough times,
said the president and chief executive officer of Partners Health
Care Systems, Inc., which resulted from the merger of Massachusetts
General and Brigham and Womens hospitals.
In 1999, 34.2% of US hospitals operated in the red, and academic
health centers are being hit particularly hard. The average profit
margin at academic health centers has reached a historic low,
dropping from 5.3% in 1996 to 2.6% last year.
For the first time ever, an academic centerthe Allegheny Health
Education and Research Foundation in Pennsylvaniawent into
A statement by the Congressional Biomedical Research Caucus reads,
Although many institutions, especially in less competitive
markets, continue to have healthy bottom lines, there is no way to
know with certainty whether the nations academic health centers
as a group will emerge stronger or weaker from current stresses, or
how their social missions will be affected in the process. The
caucus, which consists of members of Congress with a strong interest
in biomedical issues, sponsored the briefing.
Academic health centers make up only 6% of US hospitals, Dr. Thier
noted. Yet nationwide, they account for 20% of patients, 22% of
outpatient care, 19% of surgical procedures, and 28% of
health-related research, much of it translational. Dr. Thier said
that Partners Health Care Systems provides more than $100 million a
year in free services to uninsured patients and that, overall, US
academic health centers provide billons in free services annually.
Declining profits have severely pinched the ability of academic
health centers to carry out their traditional four-pronged
roleclinical research, medical and health education,
specialized care, and treating the indigentsaid Dr. Thier, who
is also professor of medicine and health care policy, Harvard Medical
Dr. Thier attributed reduced profits to several factors, including
rising costs, declining revenues from private and public third-party
payers, the gap between research grants and the cost of research, and
miscalculations by academic health center managers.
If we did not have NIH support, we would not be in
business, Dr. Thier said. Nonetheless, the National Institutes
of Health pays only about 85% of the actual research costs, and
declining payments from payers have reduced the flow of funds that
once filled that gap and helped support care for indigent patients.
Moreover, unfunded seed research, necessary for proposed
research projects, is threatened.
Medical-related costs are rising, in part because of the fruits of
research. Knowledge is being generated that we could not
imagine 15 or 20 years ago, he said.
The Financial Squeeze
He cited several examples to show the variety of ways in which
academic health centers are being squeezed financially.
Patient costs rose 20% in constant dollars between 1993 and
Drug price inflation is currently averaging 13% and growing
2.5 times faster than medical inflation as a whole.
The use of stents has decreased the need for bypass
operations, but increased the cost of angioplasty.
Concerns about latex allergies have increased the use of more
expensive nonlatex gloves.
New privacy laws are adding to administrative costs.
A shortage of nurses affects academic health centers
ability to provide care and earn revenues.
We are running out of nurses, Dr. Thier said. Brigham and
Womens recently temporarily closed two hospital floors because
it could not hire enough nursing staff during the summer vacation