Originally, the University Medical School had three main focuses: patient care, education and research. But due to health maintenance organizations, managed care, funding crunches and changes in focus, the University is struggling to find a balance between the three.
One reason for the newfound problems is the federal government’s determination to curb Medicare reimbursements to medical schools. As recently as five years ago, federal reimbursements from Medicare were one of four ways medical education was subsidized.
Now, state subsidies are increasing and revenue from grants is still funding a high percentage of faculty salaries.
This year, various state agencies could give up to $76.5 million to medical teaching institutions throughout the state.
But patient care revenues are decreasing, due to managed care. This is causing companies not to pay the increased rates medical schools have historically charged to offset research and education costs.
Last year, the United States Congress chopped Medicare reimbursements. Educational institutions throughout Minnesota stand to lose nearly $90 million in Medicare funding.
“When all of that comes together it gets pretty tough,” said John Kralewski, professor and director of health services research and policy in the School of Public Health.
The strain is illustrated by the medical school’s decision to cut their admissions by 25 percent during the next three years.
But at least some students and instructors feel the medical school has maintained its quality and is fulfilling its mission.
Chris Ott, a fourth-year medical student, said balancing education, research and patient care isn’t easy. But the school isn’t any worse off than it was when he started, he said.
“It’s just more difficult,” Ott said. “They’re being pulled in a lot of different directions.”
When he began medical school, Ott expressed concern over the pending funding issues. However, he said the school has taken steps to stay competitive. He complimented the school’s efforts to obtain money from the Legislature. The merger with Fairview Medical Center will provide an increased patient flow, which will benefit the training of physicians, he added.
But Ott said there are no guarantees for the future.
“I think the concerns are still there,” he said. “There are still dark clouds over the horizon.
“It’s a big challenge, but it’s a good group of doctors and they merged with a good organization. Between the two, I think they’ll be able to weather the challenge and come out a better school.”
Academic Health Center Senior Vice President Frank Cerra is aware of the funding problem and is working on possible solutions.
The merger has successfully increased patient flow at the hospital. And other portions of the agreement have Fairview contributing money and resources to the University for teaching and research as well, Cerra said.
Additional funding might also be on its way. The state’s Medical Education and Research Board has committed $24 million, which will be available to medical training institutes after July 1.
In addition, Gov. Arne Carlson recently requested another $10 million from the Legislature for state-wide medical institutions. The request will come up during the current session.
Rep. Lee Greenfield, DFL-Minneapolis, chairman of the Health and Human Services Finance Division, said the Legislature will attempt to funnel the funds through the Medicare program. This move could provide the possibility of a matching federal grant.
How much the University will receive remains undetermined.
“There clearly is a lot of concern both in the legislature and in the governor’s office about making up for the federal cuts,” Greenfield said. “If it doesn’t fully make up for them it will come awfully close.”
Minnesota’s efforts will probably surpass those of other states, he added.
The state also donated $8.5 million to the Medical Education and Research Cost trust fund last year. Cerra said the University should find out in the next few weeks how much of that money they will receive.
In the meantime, however, not everyone is feeling sorry for teaching schools over their lost revenue and changing structures.
Dr. K. James Ehlen, president of Allina Health System, said teaching schools throughout the country haven’t had to deal with many of the problems faced by private care companies.
In the past, there have always been enough beds for patients throughout the state, Ehlen said. Now, with those beds being harder to fill, schools must look towards collaboration with systems such as Allina or HealthPartners, he said.
Ehlen complimented the Academic Health Center on the progress they have made, but said there are areas in which the school could improve. They include:
ù clearly defining the areas in which they will excel.
ù working with the community to evaluate their programs and eliminate unnecessary duplications in expertises such as transplant programs.
ù reaching across public and private boundaries to establish partnerships, which would provide stronger medical care in the future.
The school will have some time to work on strengthening what remains. In what medical school officials will see as good news, it appears as though the Medicare reimbursements cuts are over for now, said Robert Dickler, president of the Association of American Medical Colleges.
“We supported the reductions, reluctantly, as a part of the attempt to balance the budget,” he said. “We are not aware at the present time of any strong proposals to accelerate the timetables … to further cut direct or indirect medical education.”
Dickler, a former director of the University hospital, said on average about 17 percent of a medical school’s revenue comes from contributions or reimbursements from programs such as Medicare.
Cerra said the University receives 40 percent of the cost of graduate medical education from Medicare.
Kralewski said the University must find some other funding mechanisms after identifying needs, costs and the cost for health care issues.
Dickler and officials from the association are in the process of creating ways to assure funding that would remove the emphasis on patient care dollars. One method would create permanent revenue funds from the federal and state governments.
“If we can do that, I think it really benefits everybody,” he said.