Funding falls short of health center’s request

Sean Madigan

Despite a yearlong plea for support on a $37 million budget request, the state Legislature granted the Academic Health Center little more than 40 percent of the money they asked for. Health center officials say the lean appropriation is a start but certainly not a fix to their perennial financial problems.
At the mid-May close of the 1999 legislative session, a three-party system hammered out a deal, handing the AHC $16 million over the next two years. Unlike past years, the AHC received no support from the state’s general fund.
The AHC was allotted a portion of the annual interest generated from the $968 million tobacco endowment to support public health programs. The interest on a $377 million endowment for medical education will provide all of the state funding for the AHC. In the first year the AHC will reap 70 percent of the interest and 49 percent the second year, totaling $16 million to support their biennial request.
“We asked for $37 million not because it was a nice number, but because that’s what we really needed,” said Chris Roberts, a spokeswoman for the AHC. “How do you take $16 million and spread it over $37 million worth of need?” Roberts asked.
The Medical School will run a deficit again next year. This year the Medical School was forced to draw more than $6.5 million from their savings.
With limited financial resources, AHC officials said they will have to prioritize need and re-determine which programs they can afford to implement. Replacing patient care revenue and supporting community-based programs comprise the largest chunks of the 2000 budget.
“It allows us to get started,” said Frank Cerra, senior vice president of the AHC. “But it isn’t joint to permit us to get done what we really need to get done.”
The AHC will devote more than $2.3 million to boost salaries of faculty working in clinical departments.
Faculty physicians treat patients and generate revenue to be channelled back into the AHC for physician salaries. This work made up roughly 19 percent of the AHC’s budget in 1999. State funding comprised little more than 17 percent this year. Tuition accounts for just 6 percent of the AHC’s annual revenue.
Yet throughout the country, patient revenue is declining because of managed care cost-cutting and a freeze in Medicare and Medicaid spending. At the University, AHC officials say physicians are seeing more than 25 percent more patients to make up the revenue loss. Consequently, seeing more patients means spending less time with students. If they had been fully funded, AHC officials wanted to spend $4 million to replace clinical revenue.
The AHC is also concentrating $2.25 million on community-based education throughout the state. A new AHC facility in Rochester and a dental program in Hibbing will be established next year. The AHC also will direct funding toward expanding pharmaceutical care, nurse education and outreach programs.
The University’s Center for Spirituality and Healing, in a joint venture with Fairview-University Medical Center, will use more than $300,000 to help support a new clinic. The Mind Body Spirit Clinic is a center for alternative medicine and opens in September.