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By Mark Moran
Anybody got $2.4 billion to spare?
That's the estimated amount of money generated by clinical programs at the nation's academic medical centers to support medical student and resident training as well as basic and clinical scientific research.
The figure, a conservative estimate derived from a 1994 study of medical school financing by the Association of American Medical Colleges (AAMC), suggests the degree to which teaching and research--the infrastructure, or foundation, of American medicine--is dependent on revenue generated by academic medical centers.
That foundation is seriously jeopardized, according to an AAMC report titled "The Financing of Medical Schools" released last month, as clinical revenues and other sources of funding traditionally used to support teaching and research are severely restricted by the growth of managed care, the consolidation of providers, and rampant price competition.
It is a crisis little recognized or understood by the general public, yet one that may pose a profound threat to the very source of American medical know-how: training physicians in the latest diagnostic and treatment methods, development of innovative therapies, and the accumulation of scientific and medical knowledge through basic and clinical research.
"[T]he escalating erosion of the infrastructure, the declining academic workforce, the diminishing of quality and access as a result of the marketplace forces, and the widening process of starving the medical schools and teaching hospitals could insidiously destroy [academic medical centers]," said former APA President Herbert Pardes, M.D., dean of Columbia University College of Physicians and Surgeons, in an address to the AAMC in November.
"The rise of managed care and the reduced revenues from virtually every stream of funding threaten this enormously successful medical research and medical education system. To let the process of erosion proceed without taking strong action against it could lead to a national disaster."
Academic departments of psychiatry have been deeply affected by the threats to academic medicine, say a number of department chairs interviewed by Psychiatric News.
"A real crisis" is how Allan Tasman, M.D., chair of the department of psychiatry and behavioral sciences at the University of Louisville, characterized the situation for psychiatry departments in an era of managed care.
Tasman and others underscored a principal finding in the AAMC report: that funding for teaching and clinical research has traditionally been "cross-subsidized" by revenues generated from faculty practice plans--revenues that are likely to diminish as academic departments compete for managed care contracts.
"Many psychiatry departments have been able to provide seed money [for teaching and research] with revenues from clinical services," said Tasman, who is also an APA vice president and president of the American Association of Chairmen of Departments of Psychiatry. "As that has decreased, the amount that departments can use to subsidize teaching and research has decreased."
John Talbott, M.D., chair of the department of psychiatry at the University of Maryland and a former APA president, echoed Tasman.
"Where medical school growth has come from in the last couple of decades has been from faculty practice plans," Talbott told Psychiatric News. "There has been some research growth, but the practice plan growth has been astronomical. . . . What medical schools have done is to use clinical income to offset costs of basic research and teaching."
The AAMC report notes that among the 11 medical schools located in areas of highest penetration by health maintenance organizations, revenues from faculty practice plans have declined precipitously since 1991.
"These trend lines depict as-yet-modest effects of the growth of managed care on medical school faculty practice plan revenues, but their direction is indeed ominous," the AAMC report states. "The experience of schools in areas of high managed care penetration provides a leading indicator of the more severe problems all medical schools may face in the years to come."
Talbott summarized the dilemma faced by academic medical centers and departments of psychiatry in an era of managed care: "If you are an insurance company or a managed care company, you are going to find cheaper care in the community hospitals than in academic medical centers, which tend to be in inner-city locations, where you have a sicker population and the increased costs of teaching."
To survive, then, academic medical centers and the departments of psychiatry within them have been called upon to compete for managed care contracts by downsizing, creating efficiencies, and forming partnerships with integrated, multispecialty systems of care. It is a phenomenon that parallels the experience of physicians and hospitals throughout the American health care system in the last five years.
"We will see many more medical schools become part of large integrated systems of care," said Tasman. "They will have to in order to survive."
Inevitably, academic departments must "do more with less," Tasman said, a situation that has placed a strain on full-time and voluntary faculty.
"We have got to realize we are in a competitive situation," said Sheldon Miller, M.D., chair of the department of psychiatry at Northwestern University School of Medicine. "The days in which academic medical centers didn't have to worry too much about the competitive marketplace are over."
The tumult in the health care marketplace has also resulted in what Randy Hillard, M.D., chair of the department of psychiatry at the University of Cincinnati, called "health care merger mania."
"Medical schools will increasingly seek to collaborate with neighboring schools as a way to become more efficient," according to the AAMC report. "Medical school collaboration can be thought of as a continuum, from joint program planning on the one end to outright merger on the other."
The AAMC report cites the merger of the Medical College of Pennsylvania and Hahnemann University School of Medicine in 1993, predicting that the merger will not be the last.
The New York University Medical Center and Mount Sinai Medical Center have formed a collaborative agreement, as have the University of California, San Francisco, and Stanford University.
The AAMC report states: "Other medical schools and their associated hospitals and clinical organizations are actively discussing these matters, with the eventual outcomes still uncertain, but more mergers and consolidations like these can be predicted with certainty."
What remains unclear is how teaching and research will be paid for.
"The underlying philosophy of managed care has been that companies will cover medical care, but not anything else," Tasman said. "One thing we know is that no one wants to subsidize education."
Compounding the problem is the likelihood that federal funding for graduate medical education--currently part of the Medicare program--will be slashed.
A solution popular among leaders of academic medicine is the "all-payer" scheme, whereby all public and private health plans are assessed a percentage of revenues to fund education for medical students and residents and clinical research.
First unveiled as part of the ill-fated Clinton Administration health reform proposal, the all-payer plan has been resurrected in revised form in legislation currently sponsored by Senator Daniel Patrick Moynihan (D-N.Y.).
Pardes, in his remarks to the AAMC last November, cited the Moynihan bill and the need for "shared responsibility" in funding teaching and research at the nation's academic health centers.
"If the nation values medical schools, teaching hospitals, medical research, and top-quality American medical care, it must supply the revenue streams to support those efforts," he said.
In an interview with Psychiatric News, Pardes added that he is the chair of the AAMC's "Shared Responsibility Advocacy Committee," a group of 21 leaders of academic medicine whose mission is to seek alternative ways of funding teaching and research.
While attractive to academicians struggling with stringent budgets, the "all-payer" solution faces an uphill battle politically. An assessment on private insurance plans would ultimately mean higher premiums for individual citizens. Making a case for the all-payer solution is complicated by the fact that many Americans have little understanding of the role of academic medical centers in supporting the American health care system.
"I am skeptical about our ability to sell [the all-payer solution] to the public," said Randy Hillard, M.D. "It's hard to explain what we are doing with all the money in academic medicine.
"We do have a product to sell--a research and clinical health care system that is the envy of the entire world," Hillard added. "But in the past we have had a blank check from society, a blank check that won't go on forever."
Hillard suggested that the pressures confronting academic medical centers today are overdue, forcing accountability and efficiency where traditionally there has been waste.
He questioned, for instance, whether every medical school needs to do research.
"In my opinion we have blown our credibility with the public by denying there was fat in the system for so long," Hillard said. "It could be that we have cried wolf so many times that eventually, when we really start to suffer, no one will believe us."
Yet the academic medical center is not without a future in the evolving American health care system, Hillard and others believe. That future, still theoretical, was described by Talbott.
"In an academic medical center you have the potential for an integrated system of care with one-stop shopping and the possibility of providing everything the patient needs," he said. "You also have the potential, if you are doing a good job, to really discover illness early and treat it with the most modern techniques, which are only available in academic medical centers."
Ultimately, it seems, academic medical centers and the departments of psychiatry within them are fated to downsize, becoming leaner and more efficient. At the same time, academic medicine must make a case to the American people for funding education and research.
Pardes, in his remarks to the AAMC, noted that American medical science has produced sensational advances in organ transplantation, care for low-birth-weight babies, treatment of heart disease and cancer, and breakthroughs in treatment of psychiatric illness.
"Is it worth it?" he asked. "I would like somebody to tell me what other enterprises are better or more important for our society. I believe academic medicine and its colleagues can make a powerful case for our value to society. If we summon the will to do so, I believe society will sustain this enterprise with all the benefits it brings to the American people." (Psychiatric News, February 7, 1997)