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University Hospitals Struggle

Through a confluence of events, academic medical centers could lose 10 percent of their revenue in the coming years.

By | March 22, 2012

image: University Hospitals Struggle wikimedia commons, Tomasz Sienicki

WIKIMEDIA COMMONS, TOMASZ SIENICKI

A new report issued by the Health Research Institute at PricewaterhouseCoopers says that teaching hospitals, which already operate on tight margins, could lose about 10 percent of their revenue, reported The Chronicle of Higher Education.

The combination of a number of factors creates this situation: a reduction in research grants, less state funding, and healthcare reform, which may change the demographic of patients coming into the hospital from those with private insurance, which pays hospitals higher rates, to those with Medicaid which pays less. "Academic medical centers run very tight operating margins, and any significant revenue change can be devastating," Alicia Harkness, a partner with the Health Research Institute told The Chronicle, with some hospitals barely breaking even.

While there are several difficult measures hospitals can consider to improve the situation, such as mergers with other hospitals, or translating their research into therapy, the report says that a number of factors work against the hospitals as well. Their organizations are often decentralized, with a medical school, several hospitals, and faculty practices working semi-autonomously, making it more difficult to institute cost-cutting measures across the board.

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