Despite dire predictions in the early 1990s, the nation's teaching hospitals have weathered an intensely competitive market by cutting costs, improving efficiency and developing a more flexible decisionmaking process, a new report asserts.
Just five years ago, according to a study released last week by the Association of American Medical Colleges, the cost of care at teaching hospitals was as much as 35% higher than that at community hospitals for comparable cases. Now many teaching hospitals have reduced that glaring cost difference by two-thirds or more.
The AAMC's 74-page report, released at the group's annual meeting in Chicago, charts the dramatic new policies established in America's complex, rapidly changing healthcare marketplace by 14 selected medical teaching institutions across the country.
Released at a time when many teaching hospitals are lobbying Congress for more Medicare and Medicaid funding, the report demonstrates the "many stresses that medical schools and teaching hospitals face" in the next several years, said Lynn Nonnemaker, an AAMC official who helped compile the document.
She said it helps define those challenges and underscore several strategies to help teaching hospitals survive and prosper.
"Our report says, `These are the ways that teaching hospitals are surviving,' " she said. "I wouldn't say it's all positive. It's realistic in saying there are lots of challenges out there."
The schools and teaching partners studied by the AAMC--including the University of California at Los Angeles School of Medicine, the Northwestern University Medical School in Chicago and the Georgetown University School of Medicine in Washington--became part of a network called the Center for the Assessment and Management of Change in Academic Medicine. Dozens of site visits and scores of interviews were held during the five-year study period.
In addition to cutting costs--through staff reductions, outsourcing and better training, among other strategies--teaching hospitals have improved their financial planning, their executive leadership and their responsiveness to "customers," the report said.
Despite the optimism over new strategies, the average operating profit at major teaching hospitals fell to slightly less than 2% in 1998 from about 3.2% in 1994, the study found.
The AAMC report also charted the skyrocketing growth in the budget and staff of America's 125 accredited medical schools. The number of schools increased by 39 between 1960 and 1995, and during that period the number of faculty jumped from 11,000 to more than 90,000.
In 1960, the average medical-school budget was just $5 million per year. By 1999, that figure had grown to about $300 million, the report said, forcing many schools to create a more effective, nimble management team. And the bulk of the steep rise in revenue came from increases in patient care and a huge influx of research grants and contracts.
