Can academic medical centers compete in a managed care system?

The authors review characteristics of successful group practices, health maintenance organizations, and integrated service networks and then identify the critical actions that academic medical centers must take in order to compete with such service-oriented community providers. Centers must (1) form the clinical faculty into a competitive medical group that offers more price-competitive and user-friendly services; (2) restructure clinical training to be more relevant to the emerging practice situation; and (3) clearly delineate funding streams and identify the cross-subsidies taking place in the teaching, research, and patient care enterprises. These changes have the potential to strengthen clinical training and improve the financial positions of both the faculty and the university hospitals. The authors maintain that centers can make these and other necessary changes while still providing high-quality care and maintaining their educational and research functions; they cite organizations that have succeeded in these ways. However, as with all complex, large-scale organizations, public and private alike, the major factor limiting centers' ability to make the organizational changes required to successfully compete in the new health care environment is the lack of political will. It will be very difficult for academic medical centers to unite their powerful internal interest groups and take action without first experiencing a rather severe external jolt. The challenge for the leaders of academic medical centers is to prepare for the managed care jolt so that they can then guide their institutions to a new, more competitive position.