Academic Medical Centers: Part I

 

Dr. Emrick's Books and Articles

 The Crucial Role of Academic Medicine

PART I:

Over the next week, I will provide a three-part narrative and synthesis based on my own experiences and those paralleling a study by Levine et al. (2024) concerning the complex world of Academic Medicine. The general public must be aware of the vital role Academic Medicine Centers (AMCs) play in the future of the healthcare ecosystem. Every day, academic medical centers bring together professionals to educate the next generation of healthcare providers. Professionally, I have witnessed firsthand how these institutions serve as the backbone of innovation and education in the healthcare sector. Each morning in the department, seasoned clinicians and trainees gather around complex imaging cases referred from across the region—scenes that epitomize how academic medicine fuels clinical discovery, trains the next generation of physicians, and delivers high-quality care for the most challenging patient conditions. AMCs do more than provide advanced diagnostics and treatments; they cultivate new knowledge and skilled professionals, sustaining a pipeline of expertise that benefits the entire healthcare ecosystem. This dual commitment to cutting-edge care and scholarly mission gives academic institutions a special place in the system. Nevertheless, policymakers and healthcare leaders must become acutely aware of the growing pressures that threaten their mission in today’s climate.

Over the past several years, academic health centers have faced mounting financial and operational strains that temper the optimism born of their lofty missions. Even though many AMCs expanded in scope and revenue, median operating revenue grew only by 5-7% from 2017 to 2022; their financial margins have thinned dramatically. Rising expenses and operational complexities are outpacing reimbursement gains, resulting in a significant decline in operating margins (from a median of 3.7% in 2017 to 1.5% in 2022). In practical terms, an academic center that might generate $7 billion in revenue now must scramble to find an additional $150 million to reach its pre-pandemic profit level. Over one-third of leading AMCs ended last year in the red financially (Levine et al., 2024).

The stakes of this financial crunch extend far beyond balance sheets. When an academic medical center falters financially, its core missions of education and research are often the first to face cutbacks. Disturbingly, approximately 31% of AMC leaders in a recent survey reported anticipating a need to decrease funding for education and research over the next three years. From my vantage point, this is a profoundly alarming prospect: it could mean fewer residency slots, scaled-back research trials, or the loss of innovative programs that do not turn an immediate profit. Such retrenchment threatens not only the academic radiology community—where research in areas like AI-driven imaging or new therapies might be slowed—but also the national pipeline of physicians and medical breakthroughs. In this sense, the financial sustainability of academic centers has become a broader issue of national healthcare strategy and policy. These institutions are national assets – they train the majority of specialists, advance medical science, and often serve as safety-net hospitals for our most vulnerable populations. If they are financially jeopardized, the ripple effects will touch rural clinics seeking specialist advice, policymakers tackling physician shortages, and community hospitals that rely on academic centers for cutting-edge referrals. Ensuring their vitality is therefore not just an institutional concern but a national imperative.

Responding to this precarious moment will require both introspection and bold action from within academic medicine itself. The study by Levein et al (2024) titled “Ensuring the Financial Sustainability of Academic Medical Centers”  explicitly highlights the urgency of this situation and the path forward. The authors found that virtually all AMCs are pursuing performance improvement initiatives, yet 88% of leaders believe there are substantial opportunities to go further. Crucially, many of these opportunities involve changes that can only be effectively driven by clinician leadership, such as redesigning care to reduce hospital length of stay, improving operating room efficiency, and enhancing physician productivity. In other words, clinician engagement and clinician-led change are considered essential to achieving longer-term success (Levine et al., 2024). The same report offers guarded optimism: while two-thirds of AMC executives expect profit margins to remain flat or worsen in the near term, there are glimmers of hope in examples of transformative change. Some academic centers have managed to increase their margins by 5–8% over a few years by embracing comprehensive operational reforms, without sacrificing their academic missions. These cases – where leaders set ambitious goals, aligned teams across silos, and invested in efficiency – demonstrate that turnaround is possible even in today’s challenging environment.

Optimistic but guarded aptly describes the tone of this moment. I am inspired by the resilience and creativity I see in AMCs and others around the United States. The present financial challenges, daunting as they are, present an imperative and an opportunity to innovate in how AMCs operate and advocate for support. The goal is clear: to ensure that our nation’s academic medical centers not only survive this era of fiscal uncertainty but also emerge stronger, continuing to train the next generation, drive discoveries, and provide exceptional care for generations to come.  

In part two, I will present a narrative on solutions and strategies that can help safeguard the promise of academic medical centers, from clinician-led efficiency initiatives to policy reforms and renewed investment in the academic mission. I will investigate how AMCs can translate recognition of the problem into action. The goal is clear: to ensure that our nation’s academic medical centers not only survive this era of fiscal uncertainty but also emerge stronger, continuing to train the next generation, drive discoveries, and provide exceptional care for generations to come.

Levine, E., Malani, R., Odden, A., & Schulz, J. (2024, April 4). Ensuring the financial sustainability of academic medical centers. McKinsey & Company. https://www.mckinsey.com/industries/healthcare/our-insights/ensuring-the-financial-sustainability-of-academic-medical-centers