Dean's Message
Donald E. Wilson, MD, MACP,
The John Z. and Akiko K. Bowers Distinguished Professor and Dean

One only has to pick up a newspaper or turn on the radio for an update on the fiscal crisis besetting the state of Maryland. And unfortunately, as you well know, the state’s crisis is our crisis. Although the medical school receives only seven percent of its annual revenues from the state, seven percent of a $479 million budget is a great deal of money.

Since the beginning of FY02, our school has lost $5.3 million in state general fund support. We now face an additional reduction of $3.0 million in FY04, which would represent a 25 percent cumulative cut in state general fund support over the last two years. Although we managed the first $5.3 million in cuts by reducing administrative expenses and strategically cutting academic program budgets, the proposed additional $3.0 million reduction will have severe long-term results, since the medical school’s clinical practices are simultaneously facing significant losses due to decreased physician reimbursement.

Currently, the clinical practices, particularly the primary care areas, are dealing with annual losses of nearly $20 million due to low medical assistance payments and un-reimbursed care, in addition to Medicare payments that continue to decline. In FY03, state budget reductions were partially mitigated by a one-time $3 million educational grant from the legislature to offset some of our losses in providing care to medical assistance patients. This grant will not be renewed in FY04.

In addition to the proposed state general fund cut of $3.5 million next year and the $3 million medical assistance grant that will not be renewed, we’ve been told that our cigarette restitution funds grant will also be decreased by $1.8 million. The reductions we face in FY04 and FY05 are permanent reductions to our state support and are far greater than those associated with the fiscal crisis of the early 1990s. It took us a decade to recover from those cutbacks, and now this medical school, which has steadily risen to the top tier of public medical schools and which generates more than $1 billion annually in economic benefits for the state of Maryland, faces another major setback.

Regrettably, we have had to increase tuition, which places an added burden on our students and will negatively affect our applicant pool and our diversity goals. I fear that, ultimately, our escalating tuition rates will make us less competitive. This is even more problematic given that tuition provides only 3.5 percent of our operating budget.

While we face daunting challenges in these difficult times, we also have an opportunity to improve our systems, processes and procedures. Wasteful management practices must be eliminated, improved efficiency and productivity must be achieved, and most importantly, we must discover new ways of doing things to attain our goals. We must begin to transform our organization into one in which we become, in the words of the noted management educator and futurist Peter Senge, “a learning organization.” We must expand our capacity to achieve the results we want, to foster expansive thinking and continually learn to see things together as a whole, rather than only from the perspective of our individual departments or units. In periods of rapid change, only organizations that are adaptive, flexible and productive will thrive. We must develop a shared vision of what is possible, and we must achieve this vision through cooperative and collaborative approaches to problem solving.

Despite the current fiscal crisis, the medical school continues to be a leader in education, patient care and research. Our faculty are pioneers in transplant surgery, minimally invasive surgical techniques, cancer care, vaccine development and in developing responses to bioterrorism. In the eleven years between FY91 and FY02, the medical school increased its annual grant and contract awards by $164.2 million—or 211 percent—from $77.5 million to $242 million. In FY02 alone, we increased grant and contract income by $41 million—or 21 percent. While we receive over 50 percent of our revenues from grants and contracts, we cannot rely on our success in this area to make up for deficits in other components of our budget.

Today’s economic environment presents significant challenges to us for the coming and subsequent fiscal years. But they are challenges we are up to. Together we can overcome this adversity and continue to achieve our vision of the medical school as one of the country’s premier biomedical institutions. You are among the nation’s most active and supportive alumni, and we will be calling on you in the months ahead as we weather this fiscal storm.