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UCLA Medical Center Stands to Lose in Federal Program Cuts

UCLA Medical Center Stands to Lose in Federal Program Cuts

Health Care

by Laurence Darmiento

Despite its reputation for providing the most advanced care, often to an elite patient group, UCLA Medical Center is not exempt from the medical industry’s financial turmoil.

The university may lose up to $3.5 million if the government follows through on a plan to slash funding Oct. 1 for a program called the Indirect Medical Education payment.

The special Medicare funding compensates teaching hospitals for the extra costs in treating what are often the sickest patients, while training medical students to become the nation’s future doctors.

However, the program was slated for cutbacks in 1997 as part of the government’s effort to balance its budget cuts that were delayed but are now scheduled to kick in later this year.

The amount UCLA could lose may not sound like much given the medical center’s roughly $800 million annual budget. But like other academic medical centers its operating margin is slim.

Last year, UCLA eked into the black with an operating profit of $256,000. That will grow this year to an estimated $7 million to $10 million, but that doesn’t leave much room for comfort.

“Every million has a real impact on our bottom line and ability to stay functional,” says Dr. Michael Karpf, director of the medical center.

UCLA has joined other academic medical centers in the Association of American Medical Colleges in supporting two separate bills in Congress that would halt the reductions.

Last week, House Republicans reached a tentative agreement with hospitals that would slow the implementation of the cut as part of a broader bill to reform Medicare, but the deal is far from law as many other issues remain to be addressed in the package.

Nursing Victory

The concessions the California Nurses Association extracted from the University of California last month on the threat of a one-day strike were extraordinary: compensation increases of up to 38 percent, replacement of merit pay with seniority pay, and hefty pension gains.

The result was a contract that even a CNA spokesman conceded was gilded with platinum. Top nurses at UCLA will now make $88,712 annually before any overtime, which is common in the profession.

And now, the ripples are spreading.

The CNA is seeking to reopen a groundbreaking contract it signed with 20 Catholic Healthcare West hospitals, including four in Los Angeles County, less than a year ago.

Why? Because the contract doesn’t measure up to the recent gains at UCLA and other University of California teaching hospitals.

“If a hospital is going to be able to hold on to its nurses it has to stay abreast,” says David Johnson, the CNA’s Southern California director.

At least one hospital industry official says she’s not surprised, claiming it was clear from the start the union wanted to use the UC contract to set a statewide standard something they have the power to do, given a critical shortage of nurses statewide.

“They wanted to use what they got with the UC system to leverage everybody else,” says Jan Emerson, vice president of external affairs for the California Healthcare Association.

Staff reporter Laurence Darmiento can be reached at (323) 549-5225 ext. 237 or at

ldarmiento@labusinessjournal.com.

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