Contending that its financial viability was at stake, Texas' only state-owned cancer hospital has won state permission to limit some indigent care, raise revenues and cut costs.
Like other teaching hospitals that perform a balancing act between state requirements and funding, University of Texas M.D. Anderson Cancer Center in Houston is required to treat Texans regardless of their ability to pay. However, its state funding of $116 million hasn't increased for a decade.
The new law, approved this year by the state Legislature and signed in March by Texas Gov. George Bush, helps "position the institution for survival in a managed-care environment," said Anderson's president, Charles A. LeMaistre, M.D.
State funding accounts for 15.6% of Anderson's budget. Without the legislation, Anderson would face a revenue shortfall totaling $773 million by 1999, according to a study by the consulting firm KPMG Peat Marwick.
Among the new law's provisions is a limit on unsponsored charity care. law permits the hospital to peg indigent care to the percentage of patients coming from a particular county. And it allows the 518-bed Houston hospital to contract with counties for treatment of indigent patients and payment if services go above a certain level.
The only county immediately affected by this will be Harris, Anderson's home county. The local hospital district may have to come up with an additional $5 million in funding to cover cancer services to the indigent. Harry Holmes, Anderson's associate vice president for government relations, said about 40% of Anderson's patients now come from Harris County, even though the county accounts for just 17% of the state's population.
"This is going to have a substantial impact on our budget," said Roger Widmire, a spokesman for the 819-bed Harris County Hospital District. The district treats about 1,000 cancer patients annually, but that's expected to grow as Anderson limits the number of Harris County residents it will treat.
Paying for more cancer care could be difficult in light of a $30 million cut in local taxes for the fiscal year beginning April 1, 1996, he said. County commissioners agreed to cut the district's tax support by 3 cents per $100 valuation.
Anderson officials are proposing a joint board with the hospital district and physicians to coordinate cancer care and ensure that care is provided in the most cost-effective settings. Anderson has one of the nation's busiest outpatient programs, treating 2,200 patients daily.
The new law also allows patients to seek treatment without a physician referral. Holmes said such a measure won't increase Anderson's indigent-care load.
"We get 300 calls a month from people who want to come to Anderson and jump out of their managed-care networks," he said. "Cancer is a life-threatening disease. If you have less expensive managed care and it doesn't save your life, what good is it?"
Under the legislation, Anderson can cut costs by allowing employees to retire before age 65 with full retirment benefits, an arrangement the hospital couldn't previously make because of state regulations. In the past 18 months, Anderson has cut about 700 positions from the 7,800-employee work force.
Anderson already has cut $54 million through staffing reductions and other changes. For example, the hospital shut down its cyclotron, which was used for research and treatment of rare cancers, for a savings of about $2 million annually. Patients are being referred to cyclotrons in Detroit and Seattle.