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Wednesday, July 6th 2005

Academic Medicine's Finances

Health Care Renewal has taken the time to bash Hermann Memorial, the main teaching hospital for the University of Texas Medical School at Houston, for trying “to increase [their] exposure to paying customers.

I’m tired and my response seems unfocused. I suffer from that sometimes, however, I’ve quoted my comment on HCR’s site below:

You were incredibly hard on Hermann in your post. Academic community teaching hospitals are in horrific financial shape.

It really is an issue that needs to be in the mind of physicians, even those not intimately involved in academia. Teaching hospitals account for less than 20% of all U.S. hospitals and yet are burdened well over half of non-payment patients. To further complicate the issue, they perform the highest risk lowest profit procedures because no one else will do so.

Consider, speciality hospitals. For the sake of a hypothetical we’ll go with heart hospitals. These non-teaching, for profit centers do plenty of high profit CABGs, and despite the comparative ease of the procedure, the fact they have so much experience with them means people choose them over the non-profit academic options.

What the for profit centers don’t take is complicated low profit procedures, which often go hand in hand for three reasons — reimbusement doesn’t rise quickly enough, poor out come expenses (longer hospital stays, lawsuits, etc.) are associated with complicated procedures, and those complicated procedures are more likely to be associated with low income, even indigent, individuals. So the for profit centers take all the healthy paying patients but probably don’t see a whole lot of complicated congenital heart surgeries.

This trend can be broadened to all specialties. Sadly comparatively simple high profit procedures are the only thing allowing the academic health center to break even in the first place.

I applaud Hermann’s candor in trying to improve their financial situation by bringing in healthy, paying customers. In the end, only a stable financial situation can guarantee quality healthcare for those who cannot pay.

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