Academic health centers and the changing health care market

Academic health centers (AHCs) have supported their mission of patient care, education, and research through a complex system of cross-subsidies, many of which originate from patient care activities. The proliferation of managed care and health care reform initiatives, however, are threatening this traditional method of financing. This article begins by describing the financing of AHCs and the web of cross-subsidization that occurs at these institutions. The article then reviews the literature on the threats that AHCs are facing in the current health care market, how these threats are affecting their mission-related activities, and how they are responding to and managing these threats. The article concludes with a summary of our current understanding of AHCs and presents a research agenda of issues in need of further study.