Year In Review: Medical Center Losses

[DFW HOYA]

"The Restaging Plan initially called for the Medical Center to reduce its losses to $8 million by this year, but that figure was later increased to $19.9 million. Current estimates, however, point towards losses of $25-29 million.

"From the Board’s perspective, this makes it looks like the situation is getting worse, not better," University President John J. DeGioia said.

www.thehoya.com/news/042905/news19.cfm

[RBHoya]

Dam... if the Med Center just continues to lose money, why do we keep it? I dont really know much about the issue, but what good is it doing us in exchange for these massive losses? Also, whys the article say we sold it, but then we continue to incur losses?

[DFW HOYA]

The hospital was sold, but the research portion of the Medical Center is still part of Georgetown.

Here's the catch--almost all of Georgetown's reseach dollars go through the Medical Center. Without it, Georgetown's rankings will fall even more because it won't have anything close to the research dollars of its peers.

[TrueHoyaBlue]

Chalk that up to not-quite-accurate reporting. The quick version goes something like this.

Way back in the day (pre-HMO)... University hospitals were a significant source of income for the Universities that had them. The money that came in from the clinical enterprises (treating patients) provided funding not only to support the research enterprises, but also provided enough surplus funds to support programs on the main campus and even at the law center.

Beginning in the 80s, and increasingly throughout the 90s, the health care landscape began to change drastically. The rise of HMO power, among other factors, led to reduced incomes for the clinical aspects of hospitals. Through some structural problems ("teaching hospitals" are required to have a capacity of a minimum number of beds, something like at least 400, which for many of these hospitals is not a sustainable number in the new "drive-thru medicine" landscape).

Many universities were hit by this change, and a lot of university hospitals were sold to private enterprises in the nineties. Georgetown's process of selling was slow, partly because of a later start, partly because of the Catholic identity, and partly because there hadn't been the best financial management in the years leading up to the transaction (when most of the losses were incurred).


The sale of the hospital meant that all of the clinical enterprises were now owned by Medstar, but the research and the Med School continue to be owned by Georgetown. The challenge of the last five years has been to turn the remaining parts of the Med Center into money-making, rather than money-losing enterprises. This has been slow progress, as there was an institutional history of these parts of the university relying on Hospital revenue that hasn't been there for 20 years.

It's been a slow road, and as a result, there have been a couple of changes in leadership at the med center in the last five years. First, they tried to get savings by generating more revenue, through philanthropy and increased research funding. This was partially successful, but not nearly successful enough.

The current effort (which started about a year ago) is focused on streamlining, eliminating waste, and making strategic budget cuts, while working to preserve the parts of the Med Center that really are sites of excellence (Lombardi Cancer, the Med School, and NHS, among others). It has been more successful than the first (revnue-based) attempts, but still, progress is not nearly as fast as it needs to be.


... Believe it or not, that was the (extremely) quick version, although DFW's was even quicker.

[DFW HOYA]

Thanks for the update--more informative than my item, to be sure.

[2ndRyan]

Just saw that Johns Hopkins named a new president of Johns Hopkins Medicine. I assume that encompasses the med school, research and the JH health system.

Would be illuminating know if they have largely avoided the problems Georgetown has encountered at its Medical Center.

An easy answer would appear to be that with their reputation they have been able to attract the research dollars but is there more to it? I note that Hopkins still has its own health sysyem (hospital?). How have they avoided the reimbursement issues that have injured a lot of teaching hospitals?