UCLA Medical Center stands to lose in federal program cuts. (Health Care).

DESPITE its reputation for providing the most advanced care, often to an elite patient group, UCLA Medical Center is not exempt from the medical industry's financial turmoil.

The university may lose up to $3.5 million if the government follows through on a plan to slash funding Oct. 1 for a program called the Indirect Medical Education payment.

The special Medicare funding compensates teaching hospitals for the extra costs in treating what are often the sickest patients, while training medical students to become the nation's future doctors.

However, the program was slated for cutbacks in 1997 as part of the government's effort to balance its budget--cuts that were delayed but are now scheduled to kick in later this year.

The amount UCLA could lose may not sound like much given the medical center's roughly $800 million annual budget. But like other academic medical centers its operating margin is slim.

Last year, UCLA eked into the black with an operating profit of $256,000. That will grow this year to an estimated $7 million to $10 million, but that doesn't leave much room for comfort.

"Every million has a real impact on our bottom line and ability to stay functional," says Dr. Michael Karpf, director of the medical center.

UCLA has joined other academic medical centers in the Association of American Medical Colleges in supporting two separate bills in Congress that would halt the reductions.

Last week, House Republicans reached a tentative agreement with hospitals that would slow the implementation of the cut as part of a broader bill to reform Medicare, but the deal is far from law as many other issues remain to be addressed in the package.

Staff reporter Laurence Danniento can be reached at [phone] ext. 237 or at [e-mail].