Why Some People Think Universities Should Exit the Hospital Business

The Right Fit MD is a subdivision of Medelita’s blog Enclothed Cognition which aims to be a resource for medical or nursing students, interns, residents, fellows, and everyone in between.

Many of the top universities in the nation have their own medical centers as a way to provide quality care to the community, and to serve as an academic teaching center for medical students.  The facilities often offer innovative techniques and the latest technologies, as aspiring doctors are conducting research and undergoing training. With such a mutually beneficial partnership, it makes you question why some facilities have recently decided to sever ties with their affiliated universities.

“It’s a little like you’ve got to let your children go in order for them to succeed.” Jeffrey R. Balser, VUSM Dean, President of VUMC

Vanderbilt University Medical Center is the most recent facility to end its contract with the parent university, but the decision did not come without taking several factors into consideration. Though VUMC no longer has the legal or financial backing that it did from Vanderbilt University, officials from both entities present multiple arguments as to why the separation is mutually beneficial:

• Healthcare reform has impacted hospitals in terms of administrative costs, coverage, and their overall model of care. The Affordable Healthcare Act has medical providers and facilities working to improve their cost effectiveness and reduce high overhead costs while providing the highest level of care. Universities have completely separate challenges, and trying to address both entities best interests can lead to some issues falling to the wayside. Separation allows medical centers to focus and better adapt to changing healthcare industry standards.

• The cost of the VUMC buildings was $727 million, not including land or the actual equipment within the property. It is common for medical centers to serve as an enormous expense to their universities, with some schools stating that half of their fiscal budget is dedicated to maintaining the medical center. While normally profitable, universities are also aware of the potential risks if the market fails.

• For the reasons mentioned previously, universities can sometimes become reliant on their medical centers. Profits from the hospital often go directly into programs and other needs of the university, which can create a sense of reliance and stress on the university to make sure that the hospital succeeds. Robert M. Wachter, Department of Medicine at UCSF described the relationship as follows, “They’ve spun off resources that have allowed other parts of the university to survive. That’s part of what’s catalyzing attention. Like addiction to football teams, some universities have addictions to medical centers.”  

Even as the contractual agreement ends, most medical centers are still have relationships with the university in many ways.  Vanderbilt still owns the land that VUMC is housed on, and the medical center will still carry on the Vanderbilt name. Academically, research and training for university students will still continue at the hospital.