Academic Medicine and Managed Care: An Uncertain Future

U.S. medical students are caught in a period of sweeping change in academic medicine. In Philadelphia and New York, medical schools have merged in a quest to reduce costs and attract new business.1 In Washington, D.C., Louisiana, and California, universities have sold their ailing and unprofitable teaching hospitals to national for-profit hospital corporations.2,3,4 The medical marketplace has become a very real presence in the daily lives of physicians-in-training. Yet the majority of students will learn about the business of medicine and the managed care revolution second-hand, from faculty who may present limited or biased views, because most medical schools do not offer formal coursework to address these timely issues.5,6

• How are medical schools run?
• How is medical education paid for?
• Who pays for residency training positions?
• How is managed care affecting primary care education?
• Will your medical school survive in the managed care marketplace?

The impact that managed care is having on academic medical centers in this country cannot be overstated. The previous era of generous government subsidies and liberal cost sharing between research, clinical practice and the teaching mission is giving way in the face of rising federal debt and the demands of the market.7,8,9,10 Funding for medical student and resident education is particularly vulnerable, especially for those in their early years of training. Belt-tightening is also likely to result in reduced spending on innovative teaching programs, impeding the reforms needed to adequately prepare the next wave of primary care doctors for their role in managed care.8

While concerned educators are changing their curricula to meet these challenges, they do so from their own perspectives and with their own priorities. Most schools are focusing only on moving clinical teaching into the managed care setting.5 A few have gone further to create programs in the business and management topics that physicians must understand in order to lead these systems effectively. However, one important topic remains virtually ignored: No effort has been made to teach medical students how managed care is affecting their medical schools and the teaching hospitals in which they will train after graduation.

In this era of diminishing resources and growing uncertainty, students need to know how financial forces shape the medical landscape, academia and education. This Project-in-a-Box will focus on the challenges that academic medical centers face in the new medical marketplace and the consequences of these challenges for students and residents.

AMC - Academic Medical Center

AAMC - Association of American Medical Colleges

FPP - Faculty Practice Plan

GME - Graduate Medical Education (residency)

UME - Undergraduate Medical Education (medical school)

Academic Medicine Since 1950
The key to understanding why academic medical centers (AMCs) are currently facing serious budget crises lies in their history. Unlike most enterprises of their size, AMCs are based on elaborate and highly decentralized financial structures that rely on profitable functions (clinical practice and funded research) to subsidize unprofitable ones (teaching and unfunded research). This system developed as a consequence of specific political, social and economic forces that fostered the growth of academic medicine in the middle of the 20th century.

Academic medicine has been a growth industry in the modern era. Between 1960 and 1990, average medical school budgets increased eightfold in constant dollars, and 40 new institutions sprung up.11 This expansion was due to large-scale investment by the federal government in education and research, as well as the swelling of faculty practice revenues. Funds from these two sources have become the main financial supports for academic medicine.

Research
Prior to World War II, medical research was supported almost entirely by philanthropic institutions and private industry. Federal involvement with the biosciences began as part of the war effort. The government, looking for the fastest way to improve the state of American medicine, entered into research partnerships with private universities and teaching hospitals.12 The programs resulted in such advances as the development of penicillin and synthetic antimalarial drugs, which received widespread praise from the public and generous support from Congress after the war. Through the National Institutes of Health, direct investment in university-level biomedical research increased from less than $2 billion in 1960 to $8 billion by 1990.11 This support has continued to the present while other sections of the Public Health Service are struggling with significant budget cuts and/or the threat of elimination.

The scientific community responded to this increased flow of dollars from the federal government by expanding at a similar pace. Because grant money covered up to 40% of the researcher's salary (in addition to the costs of experiments), medical schools could add faculty to their rosters without having to bear the full costs of employing them.13 With this inducement, the number of basic science faculty in AMCs quadrupled between 1960 and 1990.11

Education
After World War II, on the basis of what would later prove to be inaccurate population projections, the U.S. and most other western nations anticipated a physician shortage before the end of the century.14 This view continued to hold merit as late as the release of the Carnegie Foundation's Higher Education and the Nation's Health report in 1970.14 In response to these concerns, Congress enacted several pieces of legislation between 1963 and 1973 to support and encourage the training of new doctors. Most notably, the Health Professions Educational Assistance Act of 1963 provided grants to subsidize the construction of medical school facilities and increased enrollment through both direct payments and medical scholarship programs.14 As a result, the number of medical schools in the U.S. increased from 89 in 1965 to 140 today; and the number of medical students graduating each year more than doubled between 1960 and 1980.11

Even faster growth occurred in graduate medical education (GME). While the total number of medical students stabilized in the early 1980s at around 65,000, the housestaff population grew every year from 1960 on and now exceeds 100,000 trainees.11 This is due, at least in part, to the subsidization of GME through the Medicare program, which directly pays teaching hospitals for the costs of educating new physicians. Overall, there are approximately 40% more internship positions available than the number of students graduating from American medical schools each year.11 This gap has been filled by graduates of foreign medical schools, who now make up 20% of all practicing physicians in the U.S.

Patient Care
In an era of wild growth, no segment of academia has expanded faster than the clinical faculty. Facilitated by the development of nontenured positions, the number of full-time academic clinicians increased from 7,000 in 1960 to more than 70,000 by 1992.11 This growth was made possible by the Medicare and Medicaid programs, which turned charity care into a reliable source of clinical revenues by expanding medical services to the poor and aged.13 Nationwide, annual revenues from these plans are now estimated to be in excess of $8 billion.11

This flood of money resulted in the creation of a new and unique entity, the academic medical center; until recently it has been one of the most successful forms of private/public academic collaboration in U.S. history. The linking of teaching hospitals to faculty practice fostered the development of a three-part academic mission of research, education and patient care. Growth in this permissive financial environment has allowed AMCs to maintain traditional academic structures without having to face significant internal conflict over resources.

AMCs: Organization and Financing
AMCs are large and complex organizations. Typically, they consist of a faculty practice plan (FPP), a teaching hospital and a medical school. Many are also affiliated with, or are centers of, more extensive health care systems, which may include primary care networks, community hospitals and other facilities.

FPPs are "arrangement(s) for billing, collecting, and distributing professional fee income," and are in essence academic group practices.15 First started by Duke University in 1931, FPPs thrived after 1965 on the increasing federal dollars from Medicare and Medicaid. By 1980, FPPs were in operation at nearly every medical school in the country. They are usually organized as nonprofit corporations that are either contained within the structure of the medical school or existing as separate legal entities. Most academic medical centers require all faculty to practice through the FPP.

Teaching hospitals are defined as any institution with more than one resident per four beds. Of the roughly 380 hospital members of the Council of Teaching Hospitals, 123 are associated closely enough with a medical school (common university ownership or long-standing relationship) to be considered part of an AMC.16 They are usually not part of the medical school; rather, they exist either as an affiliated institution or as a separate division of the university. They typically use a corporate organizational structure. A management team, led by a chief executive officer, reports to a board of trustees that is composed of members representing the university and other concerned parties and is responsible for the day-to-day operation of the hospital. Because the faculty of the medical school serve as the attending physicians in the hospital, there is considerable overlap between those responsible for both institutions.

Medical schools have an academic structure, in which physicians and researchers are divided up by area of expertise (biochemistry, pathology, neurosurgery and so forth). Each department is run by a chairman, who reports to the dean of the medical school. In addition, a number of associate deans and directors are assigned a variety of interdepartmental responsibilities in areas such as research, finance and admissions. Finally, directors of independent initiatives, such as cancer centers or cardiovascular institutes, exist outside of their parent departments and report to the dean directly.

Funds and Discretionary Funds
Because medical schools do not raise enough money through their independent activities to cover their operational costs, they have worked out complex networks of direct and indirect subsidies from the FPPs and teaching hospitals to pay a portion of their expenses. This practice is referred to as "cost-sharing."

On average, the single most important source of funding is the faculty practice plan, which supplies approximately 35% of a total medical school budget.8,17,18 Although at most schools the research contribution is significantly lower, federal grants at research-intensive private institutions may also approach 35% of the total funding.8 Public schools receive significant support from state and local governments, although this varies widely between states. Teaching hospitals and clinics affiliated with the school also typically contribute 10% to 16% of that school's revenues through cash contributions and especially through the sharing of facilities.17 Between the hospital and faculty practice plan, up to 50% of a medical school's budget may be derived from clinical activities. Tuition rarely accounts for more than 5% of the total, even at the most expensive private university.

Several recent reports in Academic Medicine and the Journal of the American Medical Association have examined the relationship between FPPs and medical schools in detail.8,18 Medical schools receive up to eight cents of every practice plan dollar to support the teaching of medical students; this added up to $702 million nationwide for the 1992-93 academic year.18 Direct support is provided through transfers to individual departments, and to the medical school as a whole, through the "dean's tax" (a 5% to 15% assessment on clinical revenues paid into a general fund).8,18 However, the largest single source of support comes indirectly through paying faculty with clinical revenues for time spent teaching students.8 This same practice is also used to underwrite the training of residents and to support faculty research projects.

Unlike in a business, much of the money gathered by medical schools is designated for specific purposes and cannot be redirected by the administration. Examples of this include grants to support specific research projects, donations to a cancer or women's health center and endowments for specific subdivisions of the school. Additionally, much of the support provided by teaching hospitals comes in the form of shared physical plant and administrative services, with relatively little money exchanging hands.8 The sources of funding that are more flexible include the dean's tax, tuition and the fraction of research grant money earmarked for general institutional support. Out of this pool are drawn faculty salaries, seed money for promising (but unfunded) research initiatives, capitol investments and support for new teaching initiatives. This flexible pool of money can be likened to the "grease in the machine;" as long as there is enough to go around, everything works smoothly. However, many forces are now acting together to reduce the availability of these discretionary funds for most institutions.

Problems and Conflicts: FPPs Face the Open Market
FPPs must compete for patients. At first glance, this would seem to be of little concern; after all, FPPs offer a full range of specialty care in conjunction with the prestige of the university name. However, managed care organizations (MCOs) have found several reasons to choose community physicians over their academic counterparts.

MCOs like the simplicity of contracting with multispecialty group practices. But FPPs are frequently organized by individual departments, with little effort to coordinate patient care or administrative functions.9,19 In addition, the relatively small number of primary care physicians in academia runs counter to the MCO "gatekeeper" strategy, again making them less attractive providers. However, the most important drawback has been, and will continue to be, cost.20 Although private insurers in the past have been willing to pay up to 15% to 35% more for care delivered at academic centers, the managed care revolution is fostering price-based competition that leaves little room for such generosity.10 Because by some estimates only 5% of the services offered by AMCs are truly unique, many contractors are simply choosing community-based specialists with lower price tags rather than making a deal with academic providers. 13

A recent report released by the Association of Academic Medical Centers underscores this trend. Measured in constant dollars, the average revenue per clinical faculty member has been declining since 1993. Among those schools in areas with high managed care penetration, FPP margins (profits as a percentage of revenues) have declined from 20% in 1991 to a low of 9% in 1995.8 This means that after paying their expenses, these FPPs have half as much money left over today to support AMC programs and faculty salaries as they did just five years ago.

FPPs are acutely aware of these pressures and are working to adapt. Across the U.S., university medical centers are hiring primary care faculty or are purchasing private primary care practices in order to increase their patient base.21,22,23 Many are also lowering their fees in order to become more competitive. A survey that covered Georgia and Pennsylvania found agreement among HMO managers that "from their experiences, price concessions were available from academic medical centers and that they were attempting to meet market levels."24 Obviously, if FPPs lower their fees, less money is then going to be available for transfers to the medical school to support education or research. The author of the study quoted above summarized the trend this way: "If academic faculty groups are to compete in managed care markets...they must examine whether they wish to and/or are able to use their practice incomes to support the other two traditional missions of their medical schools, namely education and research."24

Teaching Hospitals' Many Burdens
Teaching hospitals are under even more economic pressure than FPPs. In addition to direct pressures being brought by MCOs to reduce costs, they are also burdened by an oversupply of beds, a decade of declining government reimbursements, and the redirection of graduate medical education funding into the hands of MCOs. Each of these pressures alone would be a serious threat to medical education. Combined, they undoubtedly will force significant changes in the strategic relationship between teaching hospitals and medical schools.

All hospitals in this country are under financial pressure for two reasons. First, between 1980 and 1995, "total inpatient admissions per thousand population and average length-of-stay declined by about 20% each; consequently, inpatient days per thousand population declined by about 40%."25 This has been due primarily to the development of new outpatient surgical techniques, home intravenous infusion systems, and aggressive outpatient therapy protocols that allow more people to be treated in the clinic rather than on the ward. As a result, occupancy rates at U.S. hospitals are typically only around 60%.26 Second, ever since Medicare introduced diagnostic related groups (DRGs) in 1983 (the DRG system pays a hospital a flat fee per hospitalization based on the patient's diagnosis, regardless of the services rendered or length of stay), reimbursement levels have been declining. Estimates from 1996 show that Medicare and Medicaid now pay only 88% and 82% of the cost of care, respectively.25,26 Hospitals lose money treating these patients; only by charging higher fees to private insurers, who typically pay 30% more than the cost of care, have they been able to recoup their losses.25 This practice is referred to as "cost shifting."

Teaching hospitals are under more severe pressure than the average community hospitals for several reasons. First, they treat a larger proportion of uninsured and government-insured patients than their competition. Data from 1993 show that Medicaid and self-pay/no-charge patients made up 38.8% of all discharges at urban AMCs; whereas nonacademic, urban hospitals averaged 19.8% of discharges for these categories.27 Second, even after adjusting for patient-base characteristics, care at teaching hospitals is more expensive than at comparable community hospitals. A 1991 study sponsored by the Association of American Medical Colleges estimated that after subtracting the direct cost of GME, the average cost of care at a major teaching facility was $6,000 per admission, compared to $4,400 per admission at a community hospital. Although the exact reason for this has not been identified, the primary suspects are the inefficiencies inherent in educating students and less effective utilization review due to the "academic culture."28

Whatever the reason for this price discrepancy, the effect has been glaringly clear. In the words of one CEO of a major insurer: "We recognize that AMCs have educational costs. We just aren't going to pay them."20 The result: margins for major teaching hospitals have declined across the board since the mid-1980s to levels significantly lower than those of nonteaching institutions. In some cases, teaching hospitals in areas with high managed care penetration, such as the San Francisco Bay area in California, have actually begun to lose money.10 Teaching hospitals must therefore answer the same serious question faced by the FPPs: in the current medical marketplace, is it possible to compete with nonteaching institutions and continue to subsidize medical education and research?

An Alliance Between Government and Managed Care?
Medicaid and Medicare were established as fee-for-service programs. However, it was not long after they were enacted that analysts at the Government Accounting Office (GAO) published a report projecting that the combination of increasing enrollment and rapid health care inflation would eventually outstrip the money available in the Medicare and Medicaid trust funds.12 Since that time, the government has created several mechanisms for reducing the costs of medical services. DRGs are an early and effective example of such an initiative, while the "resource-based relative value scale" (RBRVS) is the most recent attempt to do so.12

As MCOs have succeeded in reducing the cost of providing health benefits for the corporations, it was only a matter of time before the state and federal governments began channeling government patients into managed care. In 1994, roughly 60% of all HMOs either had contracts to serve Medicare and Medicaid patients or were planning to develop programs to do so within a year.7 As of 1996, 13 million of the 22 million Medicaid recipients in the U.S. received care from an MCO.29 The effects of this shift on an AMC can be severe. When Tennessee enacted the TennCare system, one state school was "assigned only 20% of its former Medicaid population...this resulted in decreased aggregate volumes of 20% to 25% in some departments, such as pediatrics and obstetrics."30 Few hospitals, and indeed few medical schools, could possibly do well in the face of such a rapid loss of patients.

Conclusions: No Margin, No Mission
Because research, patient care and education are frequently mixed together in academia, the funding for these three activities is closely interwoven. Medical schools, faculty practice plans and teaching hospitals typically are unable to determine what proportion of their budgets goes to each activity. This mixing of resource streams began after World War II, when public and private financing of research and patient care rapidly expanded and payers had no incentive to demand accountability from academic providers for their expenses. However, managed care corporations and traditional insurers seeking to control runaway medical inflation now treat AMCs like any other provider and are demanding to pay little or no premium for the support of students, researchers or the "academic culture." Those institutions that will not or cannot accommodate them are being passed over in favor of their competition in the community. In addition, many states seeking to reduce costs are turning to MCOs to provide capitated coverage of their Medicare and Medicaid populations, a move that has the potential to dramatically reduce public support of academic clinical practice. These factors are causing FPP and teaching hospital revenues to fall, thus reducing medical school budgets. This pits faculties, administrators and students against each other in a struggle to claim a share of a shrinking pool of discretionary funds.

"After a long period of nurture marked by consistent and abundant resources, the enterprise has come face-to-face with a radically altered environment of generalized resource constraints and limitations of an intensity beyond anything in recent experience...[A] fundamental problem that has been gathering force for many years... [is] the chronic and growing gap between academic medicine's seemingly insatiable demand for total resources and the supply or resources that society is willing to provide..."13

--Dr. David Korn, an AAMC scholar-in-residence

What does this mean for medical students?
As clinical revenues decline, medical schools will face two challenges: They will need to find additional sources of revenue and decrease existing expenses. AMCs might be able to make up some ground, for example, by concentrating on developing products for the marketplace, like patentable research or profit-making continuing medical education programs. UCSF and several of the prestigious Boston hospitals are aggressively pursuing this path already. However, this may not be a workable strategy for most institutions.10

According to a recent review by the AAMC, estimates of the direct costs of instruction in medical education range from $40,000 to $50,000 per student per year, while the total costs (which include opportunity costs) range from $70,000 - $100,000 per student per year.8 Clearly, even for the more expensive private university programs, teaching medical students is unprofitable.

What Can Students Do?

1. Educate yourself about the American health-care system, and especially about managed care and medical education. You can not wait for your professors to tell you everything you need to know about the world outside of the classroom. There are many resources available that can give you a good overview of the financial, political, and social forces that impact health care in this country. Here are a few of them:

• Understanding Health Policy - A Clinical Approach. By Thomas Bodenheimer and Kevin Grumbach. Appleton and Lange, 1995. This short book costs about $36 and is a very simple way to cover a lot of ground, especially if you don't know a POS from a DRG.
• "The American Health Care System" series, as published in the New England Journal of Medicine, by John Iglehart. Published between 1992 and 1993, Dr. Iglehart gives good overviews of many topics, including Medicare, Medicaid, and community and teaching hospitals. Start with NEJM 1993; 329:1052-1056 (There is a complete listing of the pieces in the series in the references on page 25). Also see "Rapid Changes for Academic Medical Centers," Parts 1&2, NEJM 1994;331:1391-1395 and 332:407-411.
• The September 4, 1996 issue of JAMA is dedicated entirely to the impact of managed care on medical education, as is the August 1996 edition of Academic Medicine (a great journal for issues affecting medical education all around). Information from these journals form a substantial portion of the information in this Project-in-a-Box.
• The Financing of Medical Schools report released this year by the Association of American Medical Colleges (AAMC) is a crucial document for anyone interested in this issue. It can be obtained free of charge by calling (202) 828-0475, or by writing to AAMC, Division of Institutional Planning and Development, 2450 N St. NW, Washington DC 20037.
• For those who prefer a quick and dirty introduction to managed care, GPIT produced a primer on the subject earlier this year called Managed Care 101. Call the AMSA national office at (703) 620-6600, ext. 256 to receive a copy, or look on the AMSA Web site at <http://www.amsa.org> for the on-line version. Be sure to ask about other titles in this Project-in-a-Box series.

2. Get involved with your curriculum committee and work to get more information like this incorporated into your classes. Most schools have some mechanism for medical students to give feedback to teachers about their education. Some even have official student representatives to the curriculum committee itself. Find out how the process at your school works and get involved.

3. Learn about your congressional representative's view on medical education funding. The best way to contact your congressional representative and senators is to write a handwritten letter explaining why you think medical education is important. If you don't know who your representatives are, check out the AMSA Health Policy web pages. For more tips on the best ways to reach your legislative representatives, call for a copy of the Project-in-a-Box called "Legislative Skills for Future Generalists," (703)620-6600, ext. 256.

4. Write to representatives of the for-profit hospital industry and managed-care organizations and express your concerns. The Federation of American Health Systems describes itself as "the voice of the investor-owned hospital industry in communicating with Congress, the executive branch, the media, the academic community, and the general public, representing more than 1,700 for-profit hospitals throughout the US" If you are concerned about the potential impact of for-profit ownership on medical education, then these are the people to contact. Letters should be directed to Chairman Tom Scully, or to the chair of the Legislative Committee or the Health Financing Committee, at 1111 19th St. NW, Suite 402, Washington, DC 20036. Call (501) 661-9555 to get information on this organization.

The American Association of Health Plans is the Washington-based lobbying group for the managed-care industry. They advocate for a medical school curriculum that will better prepare graduates for the managed-care environment. If you want to learn more about what they are doing, they can be contacted at (202) 778-3200.

5. Work with the administration to educate students and residents about the financial and strategic situation at your school. As a tuition-paying student, you have a right to know if the financial basis of your school is solid. Is a merger in the works? Is the hospital going to be sold? Is tuition going up, and if so, why? Work through your local AMSA chapter and student government representatives to organize a meeting at which the dean of the school, the CEO of the hospital, and the person in charge of the faculty practice plan can explain to you and your classmates how your academic medical center functions and how they intend to meet the challenges outlined in this Project-in-a-Box.

What does this mean for residents?
Federal programs support 40% of graduate medical education (GME), or residency, while private-insurance revenues cover the remainder.26 The Medicare program makes payments directly to teaching hospitals (not to medical schools) on a per-resident basis for the support of salaries and education. In 1995, this support measured approximately $70,000 per resident per year.7,26 In addition to this direct medical education (DME) support, Medicare has traditionally reimbursed teaching hospitals at a higher rate than those not involved with education. Indirect medical education (IME) support actually exceeded DME in 1995, totaling $4.5 billion.7 Additional funding has been derived from hospital profits, which have been supported by the private insurance industry's willingness to pay up to 20% more for academic-center services (compared to community rates).

While DME is not directly threatened at the moment, the fear held by many program directors is that it may be eliminated as part of an effort to prevent the much-anticipated bankruptcy of the Medicare trust fund early in the next century.32 And the support provided by IME is not as generous as it sounds for two reasons. First, even when IME is factored in to Medicare payments, the levels of reimbursement are still below the costs of service. Academic centers are therefore merely losing less money treating Medicare and Medicaid patients than private practitioners do. Second, many states have already begun to enroll Medicare and Medicaid patients in capitated HMO contracts; IME money intended for residency support is frequently rolled into these payments, thus diverting it to private corporations which have no obligation to use it to support GME.7

When the state of Tennessee enacted TennCare, many academic medical centers did not compete effectively enough to maintain access to large numbers of their former patients. This directly resulted in one program eliminating 40 residency slots in a single year. Another program cut 10% of its housestaff slots across the board.30 Many programs are still struggling to make up the loss in that state. The majority of states are already running Medicaid HMO demonstration projects, and Medicare HMO plans are on the drawing boards across the country.

What does this mean for primary care medical education?
The managed-care revolution will require physicians to master a new set of skills - and that will necessitate the most significant change in the medical curriculum since the Flexner Report in 1910, which recommended universal adoption of the four-year biomedical program still in use today.

On the positive side, the managed-care philosophy calls for a greatly expanded role for primary care providers. They promise to build systems which emphasize preventive, population-based medicine and require primary-care providers to coordinate care. As patients move from hospital to clinic, students will have the opportunity to see more patients in the outpatient setting. The potential for a primary care renaissance in academia is palpable.

However, the decline in discretionary funds available to medical schools is a major obstacle to curricular reform. Money spent on developing new outpatient teaching methods or designing course work on managed-care topics is money that is no longer available to fund promising new research projects, which might bring in additional federal grants, or to invest in strategic initiatives, such as purchasing primary care practices or forming integrated delivery systems, that increase the competitiveness of the institution. The potential for conflict between the interests of students and the needs of their institutions is undeniable.

A word about mergers and partnerships
In metropolitan areas which support more than one AMC, administrators are pursuing a business strategy new to academia. Seeking to eliminate duplication of services, streamline administrative functions, and "beef up" their leverage when negotiating with insurers, some of the most respected medical schools in the United States have merged their hospitals, FPPs, and even their faculties and medical classes. UCSF-Stanford, MCP-Hahnemann, Cornell-Columbia, and Brigham-Women's have all done so to some degree, while NYU-Mount Sinai have just backed away from a similar deal.

Other schools are moving in the opposite direction. University-owned hospitals have been sold to large for-profit hospital chains across the country. Columbia/HCA, the largest such corporation in the world, owns 80% of the Tulane University Medical Center. Last year, George Washington University sold its hospital to the OrNda corporation, which was in turn bought by Tenet Healthcare, the second-largest hospital management company in the United States and owners of both the USC University Hospital and Saint Joseph Hospital at Creighton. The University of Minnesota has also very recently joined this group by selling its University Hospital to a for-profit chain that already claimed 25% of the Twin Cities inpatient market.

While the impact that these mergers will have on the clinical education of medical students and residents is unclear, the trend is certainly one that deserves close scrutiny.

The overarching challenge is to develop strategies that will preserve the clinical academic mission; but...more often, the effort seems to be to preserve the clinical academic enterprise, and the two are neither congruent nor necessarily compatible."

--Dr. David Korn, former dean of Stanford Medical School

References

1 Lin J, ed. The consolidation of academic medicine: effects on medical students. JAMA. 1996 (Pulse); 276: 1767-1773.

1 Tenn. Firm to Take Over GWU Hospital. Washington Post. October 26, 1996: A01.

2 Personal experience of author while enrolled at Tulane University.

3 Phone communication and follow-up documentation graciously provided by Tenet Healthcare Corporation, Santa Barbara CA.

4 Veloski J et al. Medical student education in managed care settings - beyond HMOs. JAMA. 1996; 276: 667-671.

5 Lurie N. Preparing physicians for practice in managed care environments. Academic Medicine. 1996; 71: 1044-1049.

6 Council On Graduate Medical Education. Managed Health Care: Implications for the Physician Workforce and Medical Education. 6th Report to Congress and the Health and Human Services Secretary. Rockville, Md: Health Resources and Services Administration, 1995. HRSA-P-DM-95-2.

7 The Financing of Medical Schools: A Report of the AAMC Task Force on Medical School Financing. Washington, DC: Association of American Medical Colleges, Division of Institutional Planning and Development, 1996.

8 Carey R, Engelhard C. Academic medicine meets managed care: a high-impact collision. Academic Medicine. 1996; 71: 839-845.

9 Blumenthal D, Gregg S. Academic health centers in a changing environment. Health Affairs. 1996; 15(2): 200-215.

10 Cohen J. Finding the silver lining without the golden eggs. Academic Medicine. 1995; 70: 98-103.

11 Starr P. The Social Transformation of American Medicine. USA: Basic Books, 1982.

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13 Council on Graduate Medical Education. Improving Access to Health Care Through Physician Workforce Reform: Directions for the 21st Century. 3rd Report to Congress and the Health and Human Services Secretary. Rockville, Md: Health Resources and Services Administration, 1992.

14 Bently J, Chusid J, D'Antuono GR, Kelly J, Tower D. Faculty practice plans: the organization and characteristics of academic medical practice. Academic Medicine. 1991; 66: 433-439.

15 Iglehart J. The American health care system: teaching hospitals. N Eng J Med. 1993; 329: 1052-1056.

16 Krakower J, Ganem J, Jolly P. Review of US medical school finances, 1994-1995. JAMA. 1996; 276: 720-724.

17 Jones R, Sanderson S. Clinical revenues used to support the academic mission of medical schools, 1992-93. Academic Medicine. 1996 (AAMC Paper); 71: 299-307.

18 Fox D, Wasserman J. Academic medical centers and managed care: uneasy partners. Health Affairs. 1993; 13(1): 85-93.

19 Solit R, Nash D. Academic health centers and managed care. In: Kongstvedt P, ed. The Managed Health Care Handbook, 3rd ed. Gaithersburg, Md: Aspen Publishers, Inc; 1996.

20 Lazarus G. A view from the future: the challenge for academic medicine in Northern California. Academic Medicine. 1995; 70: 87-89.

21 Iglehart J. Academic medical centers enter the market: the case of Philadelphia. N Eng J Med. 1995; 333: 1019-1023.

22 Iglehart J. Rapid changes for academic medical centers: second of two parts. N Eng J Med. 1995; 332: 407-411.

23 Culbertson R. How successfully can academic faculty practices compete in developing managed care markets? Academic Medicine. 1996; 71: 858-870.

24 Reinhardt U. Spending more through "cost control": our obsessive quest to gut the hospital. Health Affairs. 1996; 15 (2): 145-154.

25 Epstein A. US teaching hospitals in the evolving health care system. JAMA. 1995; 273: 1203-1207.

26 Moy E, Valente E, Rebecca L, Griner P. Academic medical centers and the care of underserved populations. Academic Medicine. 1996; 71: 1369-1377.

27 Iglehart J. Rapid changes for academic medical centers - first of two parts. N Eng J Med. 1994; 331: 1391-1395.

28 1996 HCFA Statistics. Washington, DC: Bureau of Data Management, Health Care Financing Administration, 1996. Department of Health and Human Services publication HCFA publication number 03394.

29 Meyer G, Blumenthal D. TennCare and academic medical centers: the lesson from Tennessee. JAMA. 1996; 276: 672-676.

30 Kassebaum D, Szenas P, Schuchert M. On rising medical student debt: in for a penny, in for a pound. Academic Medicine. 1996 (AAMC Paper); 71: 1124-1134.

31 General discussion, Session III: Training Health Care Professionals for the 21st Century. In: Snyderman R, Saito V, eds. The Academic Health Center in the 21st Century. Published on the Duke University Medical Center Web site @ <www.duke.edu>, 1996.