Funding cuts could cost region's hospitals $50 million

In a region that counts medicine and medical research among its strengths, a new condition has been detected: fear of sequestration.

Hospitals and health researchers are warning that sequestration, the automatic federal funding cuts that are due to begin Friday, could deal devastating blows in the Philadelphia area. Sequestration could cut Medicare payments by 2 percent, which would cost hospitals in Southeastern Pennsylvania at least $50 million a year, according to the Delaware Valley Healthcare Council, a lobbying group for hospitals.

If the National Institutes of Health budget is cut by 5.1 percent, that would reduce its funding here by $41.5 million, the council projected. Most of those cuts would come in Philadelphia, a national leader in NIH-funded research.

The looming sequester "increases uncertainty, undermining health-care services and jobs at a time when the economy can least afford it," noted Curt Schroder, the former state legislator who is the council's regional executive.

Penn Medicine, which includes the University of Pennsylvania's medical school and health system, estimated it would lose $23 million a year from sequestration's Medicare cuts, affecting everything from physician and hospital payments to graduate medical education and managed-care patients.

Estimates of likely NIH cuts range from 5 percent to 8 percent, said Glen Gaulton, executive vice dean and chief scientific officer for Penn's Perelman School of Medicine. That would result in cuts of more than $20 million at Penn alone.

At Penn Medicine, about 13,800 jobs are linked to research. The most immediate consequence of sequestration cuts would be job losses, Gaulton said.

In the longer term, leaner funding makes it more difficult for researchers to build on scientific advances. As other countries, particularly China, increase science funding, the United States will find itself taking a diminished role, Gaulton said.

Another concern is that a tighter budget - the NIH funds only about 6 percent of grant applications - may cause bright young people to shy away from science.

Shaun O'Brien, a Los Angeles native in his fifth year of graduate study on the immune system at Penn, is part of a new group that advocates stronger research funding. Dwindling aid could lead to a lost generation of young scientists, he said.

O'Brien worries that some Penn labs may have to close, or that postdoctoral opportunities will diminish. NIH funding has not kept up with inflation for years; cutting more now, he said, would be "like asking a starving person to skip lunch and dinner."