ROANOKE TIMES
Copyright (c) 1997, Roanoke Times
DATE: Tuesday, January 28, 1997 TAG: 9701280043
SECTION: NATL/INTL PAGE: C-3 EDITION: METRO
SOURCE: MARIE JOYCE LANDMARK NEWS SERVICE
America's medical schools thrived on government funding and health insurance money in the 1960s and 1970s.
New medical schools opened in many communities. Hampton Roads opened Eastern Virginia Medical School in 1973 after raising more than $17 million, largely through local contributions and a little state funding.
Established schools, such as the Medical College of Virginia in Richmond, expanded into high-tech medical centers.
But growth at medical schools has been flat since the 1980s, as insurance and government benefit programs cut payments and competition heated up for federal research funds. That's why a relatively small, new school such as EVMS and a venerable school such as MCV are now talking about joining forces.
The proposed collaboration, announced last week, is part of a trend around the United States, said Robert Jones, an associate vice president of the Association of American Medical Colleges.
``There's a kind of musical chairs going on,'' said Jones, who has studied the issue for the AAMC. ``If you think of our business as an industry, we're in a period of consolidation, not unlike other industries did in the '80s.''
Schools must do this to survive, he said, and communities have an interest in the success of these ventures. The country's 125 academic medical centers provide a lot of charity care and sponsor a lot of medical research, said Jones. ``These are public goods that nobody really understands,'' he said.
According to a report commissioned by EVMS and released last year, the school contributes about half a billion dollars a year to the Hampton Roads economy.
Medical schools are tightening their belts mainly because of managed care insurance programs, which have caused price competition and cut profits of the schools' hospitals and doctors' practices, said Jones and officials from MCV and EVMS.
Schools are forced ``to look at ways they never have worked at before, in terms of collaboration,'' said Eugene Trani, president of Virginia Commonwealth University, which includes MCV.
In the last year, other partnerships have formed around the country. In Pennsylvania, the Medical College of Pennsylvania and Hahnemann University have joined to form one school, called the Allegheny University of Health Sciences. In New York, the academic medical centers of Mount Sinai and New York University have announced a plan to merge. In California, Stanford University and the University of California at San Francisco are planning to combine their hospitals.
Nothing so drastic has happened in Virginia. Trani and EVMS leaders say they'll be looking at sharing the cost of some research projects and faculty, and possibly working together on patient care. Discussions have just started, and officials at both schools declined to talk about specific goals.
Trani and the president of EVMS, Edward Brickell, say an alliance would save money and let them draw on each other's strengths. For example, they said, Norfolk's Jones Institute could combine its expertise in treatments for infertility with Richmond's work in genetics. They declined to give other specific examples, saying it was too early in the discussions.
U.S. medical schools' tremendous growth started after World War II, said Jones. Before that, ``they were more threadbare and genteel.'' They had small faculties, relying on lots of volunteer teachers from the local medical community.
After the war, the federal government decided to put more money toward scientific research at universities.
Medical schools got another boost in the 1960s with the creation of Medicare, the federal health insurance program for the elderly, and Medicaid, the federal and state program for the poor.
Faculty salaries increased. The schools admitted more students and added more specialized training programs.
``It never was the case that [the growth] could continue unended. It's kind of like the stock market,'' said Jones.
In parts of the country with a very high percentage of patients in managed care plans, schools have seen an average 50percent drop in profits on their doctors' practices.
Norfolk's medical school, for example, gets about 40percent of its total revenue from patient care in its doctors' practices. This year, the school cut its overall budget about 2percent in part to handle an expected drop in insurance payments to the practice, although the drop hasn't been as bad as expected.
Trani said the Richmond medical center also has been suffering, in part because of the amount of charity care it performs.
``We may be big, but we are a very vulnerable institution when it comes to funding,'' he said.
The cutting back has come from government programs, too. This year, all poor people using Medicaid in Hampton Roads were switched to HMOs, a move that saved taxpayers money but cut reimbursements.
At the same time, research money is getting harder to come by. Although the total amount of money from the National Institutes of Health continues to grow by about 4percent each year, said Jones, that's a drop from the 1960s and '70s, when it increased by about 20percent a year, he said.
The NIH is more likely to demand cost-sharing, in which the schools have to pony up a certain amount of money in order to get the grant.
With all these pressures, schools are smart to work together, Jones said. Virginia's schools already are working together on several programs, including an effort to entice students into family practice.
``So everybody doesn't have to have Program X,'' Jones said. ``Maybe you'll do X and we'll do Y.''
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