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Academic health centers--can they afford to relax?

DURING the last years, the leadership of the nation's medical schools and their principal teaching hospitals has been fighting a rearguard action to prevent Congress and the Administration from undermining their financial position as a result of radical changes in reimbursement for Medicare beneficiaries (diagnosis related groups [DRGs]) and payment for graduate medical education (GME); failure to take sufficient account of the intensity of care that they provide and their disproportionate load of partial- and no-pay patients; and proposed revisions in the treatment of capital costs. Similarly, these leaders have waged an annual battle to maintain—if possible, to expand—the National Institutes of Health budget for biomedical research. 1 The concerns of the academic health center (AHC) leadership have been intensified by its assessment of unfavorable developments in the external environment. These include the leveling off and decline in hospital utilization; the perception that the physician shortage is turning into a