The teaching hospitals affiliated with Harvard Medical School have always been known for being bastions of medical research, developing cutting-edge remedies for diseases and other ailments.

But with the Republican Medicare reform bill slated to hit the House floor today, Harvard's affiliated hospitals are bracing themselves for a new kind of bitter medicine.

Teaching hospitals depend on the Medicare program, which provides medical coverage for about 40 million citizens over age 65, for almost 50 percent of their patient revenue and covers a significant portion of their teaching costs, according to Stacey Simon, spokesperson for the Massachusetts Hospital Association.

The proposed cuts in Medicare payments, which total some $270 billion over seven years, will force hospitals to make substantial changes in the way they conduct their business. And Harvard's main teaching hospitals--Massachusetts General, Brigham and Women's, Children's, Beth Israel and the Deaconess--are all very anxious about the prospect of impending cuts.

"We're worried about this legislation," says Jay Pieper, vice president for corporate development and treasury affairs for Partners Healthcare System, the affiliation of Massachusetts General and Brigham and Women's Hospitals. "It is such a focused reduction in a particular segment of health care. If you're intelligent you have to be worried.

Massachusetts hospitals as a whole stand to lose almost $1.3 billion in revenue over the next seven years under the Republican legislation, says Anthony J. Santangelo, director of the Boston Organization of Teaching Hospital Financial Officers, a group made up of 10 chief financial officers of Massachusetts teaching hospitals.

According to Pieper, Partners Healthcare alone would stand to lose about 30 percent of that amount, or roughly $400 million.

Partners alone receives about $100 million per year from Medicare for teaching, which is about one-third of what all Massachusetts hospitals receive, according to Pieper.

Partners had $1.6 billion worth of expenditures in financial year 1994, according to Caroline Castel, director of corporate communications at Partners. She says about 50 percent of the patients at each of the hospitals are paid through Medicare or Medicaid.

Scrambling to Adapt

The teaching hospitals now find themselves scrambling to adapt to the proposed changes.

Robert G. Norton, president of the Deaconess Hospital, says he is less concerned with the way in which the cuts in Medicare are brought about than the actual magnitude of those cuts and the speed with which they're carried out.

"No one in the industry believes that there doesn't need to be change," Norton says. "The issue I have is with the speed of the change and the depth of the change. My own view is that the bills currently in Congress call for that change to be far too fast and far too deep."

Norton says it is important that health care reform move slowly so as not to overwhelm the public. Much of the confusion right now, he says, especially among senior citizens' groups, is a result of reformers trying to push ahead too quickly.

"The pace of change in the industry isn't in any way understood by the consumers of the product. It takes time to change their thinking on this issue," Norton says. "If you try to change the system before changing people's thinking, the patients are negatively affected in the process.