Dartmouth, D-H Expected to Detail Geisel Restructuring
Hanover — Uncertainty continues regarding the restructuring plan that Dartmouth College is developing for its Geisel School of Medicine, where annual budget deficits had been headed toward $30 million.
There is particular worry over the fates of the unspecified number of faculty and staff whose jobs will be eliminated . Some employees may be laid off. Others expect to be hired at Dartmouth-Hitchcock, the medical system that is affiliated with Dartmouth but has its own budget, endowment, management, governing boards, and salary and benefits structure.
Rick Adams, a spokesman for D-H, said that D-H and Geisel are “continuing to talk about the timing and the financial terms” of a transition of research activities to the hospital, which expects to make an annual financial commitment between $7 million and $12 million annually for those activities.
“We’re committed to working with the college and with Geisel to make sure the transition is a success,” he said.
At town hall meetings scheduled for Monday and Tuesday, Dartmouth and D-H leaders are expected to provide further details of the restructuring plan.
The aim of restructuring, according to a Dec. 22 report to holders of bonds issued by the college, is to seek more “financial support for (the medical school’s) clinical departments and faculty” from D-H, reduce and redesign research and related activities, and establish “a new medical education division with a core, dedicated teaching faculty focused on the pre-clinical curriculum delivery.”
At a March 9 town hall meeting at Spaulding Auditorium, Geisel’s interim dean, Duane Compton, said that seven full-time faculty would staff a new department of medical education, and the school’s psychiatry department and some research positions would move to D-H.
But the absence of specifics is causing anxiety, said Paul Holtzheimer, a professor in Geisel’s psychiatry department who expects his job to be moved to D-H’s payroll. “The devil is in the details, and we still don’t know the details,” he said. “A lot of good people are considering other options.”
The college does not release a detailed or audited financial report on its medical school unit. Instead, medical school revenue, spending, assets and liabilities are included in, but not broken out from, the college’s audited financial statement. And while that approach is typical of universities and colleges that include medical schools, it can be confusing.
Some numbers have entered the record. Geisel ended fiscal 2015 with 268 full-time faculty, including 69 with tenure, and 81 part-timers, the college said in its report to bondholders. The school had about 870 staff employees and 420 full-time students, according to a factbook compiled by the school’s Office of Institutional Research. Tuition for the current year is $57,700.
Geisel posted an operating deficit of $12.6 million for the fiscal year that ended June 30, the bondholders report said. The medical school was “expecting growing deficits due to increasing operating expenses and flattening research revenue,” it said.
In September, Compton said the school faced a “structural deficit” between $26 million and $28 million in each of the next seven years. College Provost Carolyn Dever at one point estimated the looming annual deficit at $30 million.
Other medical schools have serious financial problems. Yeshiva University recently spun off its Einstein School of Medicine into a joint venture controlled by Montefiore Health System. Yeshiva sent Einstein packing with half of the former parent’s $1 billion endowment as a comfort. The medical school accounted for about two-thirds of annual operating deficits that had reached $100 million, according to a report in The Forward.
Wayne State University’s medical school, with 1,200 students, recently posted a $29 million deficit, the Detroit News reported in December.
With 1,500 medical and PhD students, 150 tenured faculty and an operating budget of about $650 million, Harvard Medical School posted a $45 million deficit in fiscal 2014, according to the school’s website.
In fiscal 2015, the school closed its New England Primate Research Center, reduced the deficit in its remaining operations to $31.8 million and said that it was making progress toward achieving a “s ustainable financial model.”
Balancing a medical school budget is not for the faint of heart. In 2005, Wiley Souba, then dean of the medical school at Ohio State University, co-authored an article in the journal Academic Medicine that noted that addressing financial issues at medical schools often entailed “heroic attempts to align complex revenue streams with even more complex portfolios of effort for individual faculty members.”
Souba came to Dartmouth in 2009 to head up the medical school, but lasted through only one four-year term, as cuts in federal research funding and other financial pressures tipped the school into the red.
Souba took the reins during what John Prescott, chief academic officer for the Association of American Medical Colleges, termed “a particularly challenging time.”
Financial pressures at medical schools have been driven by cutbacks in state funding, efforts to keep tuition down, falling reimbursements for clinical services and declining federal support for research, he said. Philanthropy often can’t fill in the resulting gaps, he added.
Nor, in most cases, is there enough revenue from tuition to fill in the gaps. A chart included in a since-abandoned medical school strategic plan issued in 2012 by Dartmouth showed tuition generating only 13 percent of the 2013 budget. Tuition and fees accounted for less than 4 percent of the fiscal 2014 revenue at the nation’s 130 fully accredited medical schools, according to the Association of American Medical Colleges
But some medical schools have found the right balance, Prescott added. “There is a sweet spot that … the deans are always striving for,” he said. “There is not just a simple template.”
Finding the right mix of revenue from research, clinical care or other sources is a process of financial alchemy that medical educators often refer to as “alignment.”
“Each institution is different in how they do it,” said Beth Paul, an executive vice president at Tripp Umbach, a consulting firm based in Pittsburgh, Pa.
Paul helped develop a business plan that estimated that a new medical school for as many as 200 full-time students at the University of Illinois would entail $37 million in startup costs and $35 million in annual operating expenses.
But that budget focused on education, while other medical school budgets mix in clinical, research and other revenue and expense lines, making comparisons difficult, Paul said. For example, Dartmouth says Geisel’s operating budget is $250 million, but does not provide details as to what revenues and expenditures it includes.
A slowdown in federal support for research has added to the financial pressure on medical schools. For example, the 2012 plan at Geisel showed research grant revenue of less than $150 million and set a goal of increasing that revenue stream to more than $180 million. However, National Institutes of Health nationwide support for research peaked at $31.2 billion in fiscal 2010 and sagged to $29.3 billion three years later.
A 2010 report from Chartis Group, a management consulting firm, noted that many health centers that included medical schools, teaching hospitals and related clinical practices were “evaluating changes to the governance and ownership structures of their key components in response to economic pressures and anticipated reimbursement changes.”
But the Chartis report warned that “any initiative to redirect strategy and operations must involve an essential element of building understanding and support among the diverse audience of faculty and staff.”
So far, some think that effort has been lacking in the Geisel remake. Said Holtzheimer, the Geisel professor: “It’s fair to say that the communication has not been as clear as it could have been.”
Rick Jurgens can be reached at rjurgens@vnews.com or 603-727-3229.
