In his recent review of Ludmerer's Time to Heal,1
Steven Schroeder, MD, concludes that Ludmerer's book "presents a powerful
case that academic medicine's self-serving behavior has jeopardized its
unique public trust."2
Remarkably, Schroeder, a distinguished medical educator and current
president and chief executive officer of The Robert Wood Johnson
Foundation, does not take exception to this harsh indictment. One suspects
that he may concur.
A permanent loss of public trust in academic medicine would be tragic.
As Schroeder notes, "for most of the twentieth century academic medicine
was the jewel in the crown of the US health care system."2
Most students of US health care, and certainly I, would agree.
Fortunately, the past tense used in Schroeder's sentence may be premature.
The many contributions of academic medicine are the reason that the US
health care delivery system (as distinct from its health insurance system)
is still widely regarded as unrivaled anywhere on the globe. It will be
difficult, however, to maintain that lofty position without trust on the
part of the public that the leaders of academic medicine will use the
resources entrusted to them effectively.
It may be asked how the leaders of academic medicine, surely among the
most intelligent members of society, could have lost something as precious
as public trust in the first place. For the most part, it was not these
leaders' fault. They have become victims of rapid changes for which no one
in society had prepared them. Indeed, it can be argued that the leaders of
academic medicine continue to be victims of an utterly confused US public
that simply cannot decide what the social role of health care should be in
this country. From academic medicine, that confused public now demands the
impossible, namely, that academic medicine pursue its traditional,
altruistic mission of providing cutting-edge patient care, performing
world-class basic and clinical research, and educating the physicians of
the future after having been thrust into a harsh, price-competitive
marketplace. Academic medicine is expected to play nicely in an
environment where nice folks finish last.
Until the early 1990s, no one actually had ever asked academic medicine
to be accountable for the resources it claimed from society. There were at
least 3 reasons for this arrangement. First, private insurers passively
paid whatever charges for health care were billed to them by academic
medicine, blindly trusting that "one gets what one pays for" and, in any
event, it was expected that whatever profits academic medicine might
extract would be redeployed in the public interest. Private insurers had
nothing to lose by their generous posture because their sources of
revenue
private
employersevidently were willing to absorb annual premium increases in the
high double digits, year after year. Private employers, in turn, stood
ready to absorb these premium increases, because they knew what every
economist knows: that, in the long run, the cost of fringe benefits comes
out of workers' paychecks rather than out of profits.3
Second, Congress stood ready to grant academic medicine generous
support through the budget of the National Institutes of Health and
through sundry subsidies built into Medicare's payments to teaching
hospitals. This period coincided with academic medicine's increasingly
well-developed skills at public lobbying. Few members of Congress ever
actually questioned academic medicine's questionable assertion that
undergraduate and graduate medical education are inherently public goods,
the production of which warrants generous public subsidies.
Third, Congress also asked academic medicine to help cover up one of
Congress's glaring moral shortcomings: its failure to ensure equitable
access to timely health care to millions of uninsured Americans. Unwilling
to legislate universal health insurance up front, Congress preferred to
funnel indirect subsidies to institutions willing to treat the uninsured.
In the process, academic medicine has become a major source of
catastrophic health insurance for the nation's uninsured. This is why
leaders of academic medicine have successfully argued that the same
graduate medical education of a resident warrants as much as 5 times the
public subsidy in one place (eg, New York) than in another (eg, North
Carolina).
Given this genteel budgeting environment, one cannot really blame
academic medicine for developing certain irresponsible managerial habits
of mind. What incentive did the leaders of academic medicine have in such
an unconstrained environment to demand fiscal discipline and
accountability from their colleagues? It is similarly unsurprising that
academic medicine failed to put in place complex and expensive management
information systems capable of linking dollar flows to distinct
activities. Indeed, it is difficult to imagine what practical purpose
these systems might have served. Fein4
recently pointed out that "The long-run advantages of transparent
bookkeeping [for academic medical centers] were ignored, even though those
connected with the enterprise understood that the financing system made
little sense and, therefore, was vulnerable to actions that might be taken
without recognizing potential adverse effects."
As Fein suggests, this cozy arrangement was vulnerable to several
external threats. Sometime in the late 1980s, the ever larger share that
the US health system in general took from the treasuries of private
employers made it impossible for them to raise their employees' take-home
pay, even though total payroll costs continued to climb. At that point,
private employers embraced in earnest an idea put to them decades
earlier5-7:
fierce price-competition among insurers who then imposed externally
"managed care" on physicians and hospitals. Thrust into this harsh new
market environment, academic medicine was also forced to compete for
patients on the basis of price and to justify its use of resources to
external monitors. Inevitably, these pressures moved the behavior of
academic medicine ever closer to those of purely commercial entities.
Ludmerer1
deplores this development as an abandonment of academic medicine's
traditional altruism and social mission for the sake of self-interest. For
better or for worse, however, that is exactly what society has ordered the
(academic) physician to do. As I have argued elsewhere,8
after being shoved into the pressure-cooker of this new market, academic
medicine's only sensible recourse was to delineate clearly its several
distinct "product lines" (eg, undergraduate and graduate medical
education, basic research, applied clinical research, medical care, and
health care of last resort). Next, academic medicine had to put in place
sophisticated cost-accounting systems capable of linking money flows to
these distinct product lines. With that information in hand, academic
medicine could then compete vigorously, on commercial principles, in the
markets for those products that are in the nature of private goods. At the
same time, it would have to demand public subsidies for product lines (eg,
research and health care for the uninsured) that are clearly in the nature
of public goods. (In making the latter case, it would be particularly
wholesome if the leaders of academic medicine put policy makers on notice
that, henceforth, they will no longer drive their clinical colleagues to
exhaustion and disillusionment to fund a catastrophic health insurance
system for which the financing is properly the responsibility of the
Congress.)
If, in retrospect, society does not like academic medicine's diversion
from its erstwhile pursuit of a social mission to this seemingly
self-interested commercial behavior, there is always time to negotiate a
more congenial social contract. Whatever such a new, improved social
contract might turn out to be, however, it is a safe bet that society
would expect from academic medicine more open accountability, at least for
the resources it claims from the public sector.
In this issue of THE JOURNAL, Krakower and colleagues9
present annual data from the Association of American Medical Colleges
(AAMC) of total revenue flows, by source of funding, for all 125 US
medical schools combined. As in previous years, these authors make no
attempt to relate these revenue flows to any measure of medical school
activities, such as the number of medical students taught or the number of
full-time clinical or basic faculty. This, as I have argued, is the way
that leaders of academic medicine have traditionally approached budgeting
in their discourse with society. The underlying assumption is that it
would be catastrophic for any institution's budget not to experience a
constant and sustained growth in each succeeding year. As long as this
line of entreaty was successful, displays of revenues supporting medical
school activities (such as those in Table 2 of the article by Krakower et
al) might be expected to trigger a sympathetic reaction from the media and
from public and private payers if the actual increase in revenues fell
below the desired target, let alone if they actually decreased.
Alas, this approach is rapidly becoming anachronistic, as society will
increasingly demand that budgets be defended not simply in terms of dollar
flows per unit of time, but rather in terms of dollars spent per unit of
activity. Thus, the leaders of academic medicine, perhaps through the
research arm of the AAMC, should develop and publish normative standards
on what the education and training of a US physician ought to cost in an
efficiently operated system. Fein4
argues that "In the absence of a fit between the activities of the AHCs
[academic health centers] and the sources and patterns of funding
(including federal funding), AHCs rest on a weak foundation whose
fragility has long-term implications." Granted, standard costing for
medical education is not quite as straightforward as it is for industrial
products like automobiles. Nevertheless, the argument that medical
education is too complex for capture by standard costing is no longer
convincing, and in fact, never was. After all, the entire diagnosis
related group system for hospital care is nothing other than standard
costing.
Next, academic medicine must steel itself to defend, through more than
repetition, the mantra that undergraduate and graduate medical education
is inherently a public good ipso facto entitled to public subsidies.
Although, so far, the mantra has convinced Congress, few economists would
vouch for its validity. Equipped with persuasive theory and empirical
support, policy makers sooner or later will drag academic medicine into
the public forum to debate the issue openly. To prevail in that debate,
academic medicine would have to do more than offer the claim that the
validity of its proposition is self-evident. In fact, the debate may be
unwinnable.
Finally, academic medicine will have to come to terms with the idea
that in a dynamic market environment, revenue flows will ebb and rise. It
means, for example, that the data on declining salaries for certain
departments of medical faculty reported by Studer-Ellis and colleagues10
in this issue of THE JOURNAL are to be expected from time to time.
Furthermore, academic medicine must come to terms with the possibility
that not every academic health center will survive in the years ahead.
Although I remain unconvinced that the nation suffers from a huge
physician surplus,11
that thesis remains the conventional wisdom in the policy arena. If it
were truly so, then it would be difficult to argue before Congress that
all of the producers of this surplus human capital should survive. It
would be equally difficult to argue that the production of this surplus
human capital warrants continued, generous public subsidies. Getting the
story straight on the physician surplus therefore should have a high place
on academic medicine's research agenda.
Editorials represent the opinions of the authors and THE JOURNAL and
not those of the American Medical Association.
