Where is the money for education and research? - medical education - The State of Health Care in America - Industry Overview

Business & Health, Annual, 1996 by Julie Rovner

Will today's cost constraints stem the tide of medical progress? As they struggle to adapt to changing times, the hospitals responsible for producing medical innovation and training new physicians Face this and other difficult questions.

Like a stone dropped into a still pond, managed care spread its ripples ever further last year, finally reaching the last bastion of cost-plus care, the exalted academic medical centers. These 400 or so major teaching hospitals include some of the most respected names in all of heath care: Johns Hopkins, the Mayo Clinic, Columbia-Presbyterian. And their reach has been unprecedented. Mitchell Rabkin, MD, president and CEO of Boston's Harvard-affiliated Beth Israel Hospital, is barely exaggerating when he says that "half of [the average person's] doctors were trained at one tune or another in Boston, and the medical knowledge that all of his doctors have has come of out labs in Boston or San Francisco or someplace like that."

But today academic medical centers are under pressure as never before. For decades, they have relied on government subsidies as well as patient care revenues to fund education and research. But managed-care-driven price competition and the systemwide decline in the use of inpatient hospital care are squeezing patient-generated revenues. At the same time, the federal government is moving to reduce subsidies paid through Medicare and Medicaid, leaving these institutions with what Kevin Sexton, vice president of the Fairfax, Va., health-care analysis group Lewin-VHI Inc., describes as "almost a triple whammy."

Not surprisingly, the leaders of medical academia warn that short-shrifting their institutions will have dire consequences. "I think the threat is very real," says Jordan Cohen, MD, president of the Association of American Medical Colleges (AAMC) in Washington, D.C. "Over a very short period of time, virtually every single source of revenue for supporting quality education and research is undergoing intense downward pressure," he says. "In this environment, every academic medical center faces real questions about sustaining its academic mission at its current level of quality."

But others say academic medical centers, themselves part of the nation's health-care woes, are guilty of a litany of sins ranging from training too many specialists to encouraging costly, high-tech inpatient care at the expense of health promotion and disease prevention, the very activities most needed to lower the nation's health bill and improve its citizens' quality of life. "Everybody in health care is downsizing, and [academic health centers] shouldn't think that they are above that," says Carmella Bocchino, vice president for medical affairs for the Group Health Association of America (GHAA). Indeed, a November report from the Pew Health Professions Commission, a project of the Pew Charitable Trusts, called for the closure of some of the nation's 125 medical schools to reduce by as much as 150,000 the number of new doctors trained by the year 2005. Merely reducing the number of students admitted, said the commission, "will only render the over-built educational institutions less efficient across the board." (See chart, page 23, on the 50-year growth in the physician supply.)

While they reject that dire a proposal, the nation's teaching hospitals are not sitting around waiting to be rescued. In an effort to preserve their patient base, they are aggressively partnering with managed care companies, or in some cases, starting their own managed care plans. They are joining with their affiliated medical schools and managed care organizations to redesign educational programs to emphasize both teamwork and primary, non-hospital-based care. And they are joining with pharmaceutical and other companies to develop new lines of business to produce revenues that will help support research.

Individually, the nation's academic medical centers face a rather tenuous future, Even so, no one questions their basic mission: Someone has to train the next generation of doctors and perform the clinical research that will advance medical practice--and someone has to pay for it. "Somebody's got to take the responsibility to ensure that education and research don't become casualties to a more cost-effective health system," says Mary Wooley, president of Research!America, an advocacy group for health research funding. To some extent, all the players also agree that since education and research benefit everyone in society, everyone shares some responsibility for their costs. What remains unresolved, however, is who should pay, and more importantly, how.

A system that just grew

The current system for funding medical education and research is the legacy of what Beth Israel's Rabkin calls the post World War II "national feeling that emanated out of the work on the atom bomb--that if you assemble enough scientists and position them to focus on some challenges, you'll wind up with some really useful information." Medical students and residents were trained almost exclusively in teaching hospitals, where they received subliminal as well as overt incentives to seek careers as specialists, as opposed to the less prestigious--and less lucrative--primary care disciplines.