Government still owns most academic medical centers

Teaching hospitals move to privatization: government still owns most academic medical centers

Jennifer Silverman

SARASOTA, FLA. — Most academic medical centers in the United States are still government owned, though a number of teaching hospitals have made the conversion from public to private ownership, Dr. John A. Kastor said at a meeting sponsored by the Association of Professors of Medicine.

Of the 126 academic medical centers in the United States, 60% are owned by government entities, and 40% are owned by private, not-for-profit corporations or foundations, said Dr. Kastor, professor of medicine at the University of Maryland, Baltimore, and author of “Governance of Teaching Hospitals, Turmoil at Penn and Hopkins” (Baltimore: Johns Hopkins University Press, 2003).

“No schools are owned by profit-making organizations, as there’s no profit to be made,” he quipped.

A fair number of teaching hospitals have transferred from government-owned to private over the last 30 years for a variety of reasons, either to operate more efficiently, or most recently, to protect universities from hospital losses, Dr. Kastor said.

The move to privatization is attractive because it removes the hospital from state government bureaucracy, makes it easier to negotiate for purchases, and improves incentives for collecting and saving money. Most medical schools and teaching hospitals are separately governed, he said. This is true for 75% of the private schools and 61% of the government-owned schools. “In these academic medical centers, university officials do not direct the resources of hospitals.”

The potential combinations of leadership and governance in these medical schools can vary widely, Dr. Kastor said. For example, in one of the most common arrangements, there’s different ownership of the private medical schools and private teaching hospitals. This means that the school and hospital are separately owned; the connection between them is “one of good will,” Dr. Kastor added.

A total of 33 schools are government-owned but have privately owned teaching hospitals, while 13 others are government-owned, but their teaching hospitals are owned by other governments. For example, East Carolina Medical School’s teaching hospital, Pitt County Memorial, is owned by the county, not the state.

In 18 schools, there’s common ownership by governments of medical schools and teaching hospitals, yet the head of the hospital reports to a university official. In some cases, it’s the dean who’s in charge. For three schools, “there’s common ownership of a private medical school and teaching hospital by one corporation, but the head of the hospital reports to the dean,” Dr. Kastor said.

The type of governance an academic institution has shouldn’t affect its ability to get research money from the National Institutes of Health, he said. At least to date, “NIH success is not related to common governance, university dominance, or whether the CEO reports to the dean.”


Associate Editor, Practice Trends

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