Cutbacks in Medicare spending put into place by the Balanced Budget Act of 1997 put a heavy strain on hospitals that depend on federal aid.
Hospitals also suffered losses from the recent trend of private health insurers passing more responsibility for the costs of patient treatment to the tighter fists of managed care programs.
"This year we'll muddle through," Rudenstine told The Crimson in the spring, "but within 12 to 24 months, we'll be looking at disaster.... It is not an abstract concern."
But school officials hope the bolstered endowment payout will prove to be a life raft for teaching hospitals sinking into debt.
"It's a win for the students, it's a win for the faculty, it's a win for donors who are seeing their donations put to use," Walker said.