Beth Israel Suffers Potential $52 Million Loss

Beth Israel Deaconess Medical Center, one of the main Harvard Medical School (HMS) teaching hospitals, reported unaudited operating losses of $52 million for the 2000 fiscal year.

Officials at the hospital, a hub for HMS students to gain on-site medical experience, did not comment on whether the losses will affect medical student funding because of legal concerns.

Don L. Gibbins, an HMS spokesperson, said he is confident that despite Beth Israel's financial difficulties, the relationship between the hospital and HMS is secure.

"Beth Israel has remained very committed to...both research and teaching," he said.

Gibbins said the hospital does not plan to cut back on funding for HMS students. He said Beth Israel had not wavered on support for students even when its financial situation was worse.

Beth Israel does not receive funding from the University for teaching the medical school students, despite the costs involved.

There are 17 research hospitals affiliated with HMS, some of which have more student participation than others. Beth Israel Deaconess Medical Center is one of the six major teaching hospitals at which most students are taught.

The 2000 financial reports came from unaudited results in the hospital's state Medicaid department application for $990,000 from the "distressed hospital fund."

Despite this year's potential losses, the hospital has suffered larger deficits before--last year's operating losses were $73 million. These operating losses do not include non-operating income that decreases the losses from both years. The likely final losses for this year will be $40 million, while last year's final losses were $63 million.

"We are in the middle of an aggressive turn-around plan," said hospital spokesperson Bill Schaller.

Beth Israel is currently implementing a three-pronged plan to cut costs, increase patient volume and decrease overhead and real estate costs of the hospital.

Schaller cited Beth Israel's "world-class patient care and cutting-edge research." With this turn-around plan, Schaller is confident that Beth Israel will be in a "position to continue to do this for many years."

The financial problems that have struck Beth Israel are also affecting hospitals nationwide. Teaching hospitals are being "hit with a triple threat," Gibbins said.

Increasingly, hospitals must deal with reduced fees from managed care organizations, an increased number of uninsured patients and decreased funding from Medicare cuts in 1997, he said.

The Medicare cuts especially affect teaching hospitals, many of which have struggled with financial problems.

Harvard began to lobby nationally for increases in funding to these hospitals. The University helped lobby for the Refinement Act, which recaptured some of the Medicare funding that had been lost in 1997.

Congress will consider another bill in the upcoming weeks which also attempts to mitigate the drastic national hospital funding problems, Gibbins said.