Managed Care and Medical Education

After a quarter century of relative plenty, academic medical centers find themselves in a serious financial squeeze that is beginning to compromise their triple mission of teaching, research, and clinical care. This squeeze reflects competitive pressures to reduce costs in a managed-care environment, intensified by Medicare cuts mandated in the 1997 Balanced Budget Act.1 Teaching hospitals are no longer able to bill at rates that reflect the extra costs of their academic role — traditionally representing a premium of about 30 percent.2 Most have sought to make up in patient volume what they have lost in income margins. This survival . . .