Medical School Funding

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Science  28 Mar 1997:
Vol. 275, Issue 5308, pp. 1861-1865
DOI: 10.1126/science.275.5308.1861e

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Although medical schools might appear to be robust enterprises, with aggregate annual expenditures in 1995 of more than $30 billion, the fact is that on average only about 10 to 20% of their annual revenues comes from such secure sources as tuition and fees, endowment earnings and gifts, or (mainly for the public schools) state support. About 20% of their annual revenues comes from the NIH (National Institutes of Health), nearly 35% from fees generated by the faculty physicians' practice of medicine, and another roughly 15% in direct payments from teaching hospital partners. In other words, about 50% of the schools' aggregate revenues is derived from the provision of medical care; these revenues have provided surpluses that have been used by the medical schools as flexible funds for academic investments. In fiscal year 1994, the Association of American Medical Colleges survey indicated that revenues from the faculty physicians' practice alone contributed $2.4 billion to medical schools for support of education and research. Although the majority of the funds were expended for clinical education and research, not all of them were, and the fact that the funds were discretionary is their critically important feature. It is these clinical surpluses that are being wrung out of the health care system by a managed care enterprise that has demonstrated little willingness to contribute to the costs of education and research. And just as the teaching hospitals are threatened by this new environment and require additional stabilization funds, so, too, are the medical schools.

The purpose of a new Medical School Fund (K. I. Shine, Editorial, 3 Jan., p. 9) is to replace these clinical revenues and provide the schools with flexible funds for the support of their academic objectives. Some of the new funds would go toward the support of curricular innovation, others to the support of the research infrastructure (or capacity) that enables the medical schools to partner with NIH in sharing the costs of sustaining the world's leading biomedical research enterprise. A good fraction of the funds would undoubtedly go to the support of clinical research, but that should be by choice and not by mandate. The schools must certainly be held accountable for the expenditure of any monies that might be received from a new public fund, but the overriding need of the medical schools at this time of convulsive change is for new monies that are flexible, not earmarked by prescription to overly specific applications.

There is an old adage in medical school lore which says that any policy that would gratuitously restrict a previously unrestricted source of funds is bad policy. From this perspective, and with deeper understanding of the schools' historic dependence on flexible clinical revenues to support a broad array of educational and research objectives, one should oppose the suggestion by Shine that funds to be raised from a new all-payer assessment be restricted by policy to support clinical investigation.

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