DATE: Sunday, May 18, 1997                  TAG: 9705170547

SECTION: BUSINESS                PAGE: D2   EDITION: FINAL 

SOURCE: BY DEBRA GORDON, STAFF WRITER 

                                            LENGTH:   51 lines

SENTARA COULD LOSE EDUCATION FUNDS

Sentara Norfolk General Hospital faces a challenge few other area hospitals do: the potential loss of indirect medical education funds - extra dollars it receives for training doctors.

Because so much of Medicare, 61 percent, goes towards inpatient care, and so much of inpatient care is geared towards graduate medical education in teaching hospitals like Norfolk General, the federal government attached a special payment to Medicare reimbursements when it created the program 30 years ago to help defray the costs of teaching residents.

In 1995, Sentara Norfolk General Hospital received an extra $5.6 million to help pay for the nearly 120 residents it trains each year.

The hospital also received a separate payment for direct costs - salaries and benefits - for those students.

The indirect cost payment is needed, said Robert W. Kay, a financial vice president at Sentara, because residents practice more expensive medicine than experienced doctors.

``They're not very efficient, they order too many tests. The (indirect graduate medical education payment) is the government saying, `We recognize there's a cost to that training.' ''

But the payments have provided an inducement to hospitals to train as many doctors as they can, leading to this country's current surplus of physicians and particularly specialists, said University of Virginia health policy analyst Carolyn Engelhard.

So the federal government is rethinking this payment, and recently agreed to pay New York hospitals not to train medical students as a way of weaning them from their dependence on the funding.

Sentara knows losing that money would have an impact, but until the government has more concrete plans, Kay said, it hasn't figured out how it would handle the loss.

Same with DePaul, which received nearly $2 million in indirect graduate medical education funding.

``Medicare is like taxes,'' said Kathy Williams, chief financial officer for Bon Secours Hampton Roads, which owns DePaul. ``You never expect taxes to go down; we never expect Medicare reimbursements to go up. We'll always look for ways to reduce costs and keep the quality high. It's a fact of life.'' ILLUSTRATION: Graphic

The Virginian-Pilot

MEDICARE REIMBURSEMENT

SOURCE: Area hospitals

[For complete graphic, please see microfilm] KEYWORDS: MEDICARE STATISTICS HOSPITALS

VIRGINIA

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