Innovative approaches to care at academic medical centers

No sector of the healthcare industry has been spared from the effects of healthcare reform over the past decade. Academic medical centers (AMCs) have been particularly vulnerable to changes in healthcare delivery, due to the high cost and innovative care these centers provide.

What are academic medical centers?

Academic medical centers are hospitals that have integrated with medical schools to provide primary education for medical students and residents. Like teaching hospitals, these facilities also conduct frequent medical, academic, and commercial research with their patient populations to pioneer the most cutting-edge treatments.

How many academic medical centers are there in the U.S?

According to the Definitive Healthcare HospitalView product, there are about 216 hospitals classified as academic medical centers in the United States. Most of them are large, non-profit acute care facilities, with an average of 526 staffed beds and 26,000 annual discharges, according to data from 2022.

Top academic medical centers by number of staffed beds

Fig. 1: Data from the Definitive Healthcare Hospitalview product. Accessed September 2022.

Challenges facing academic medical centers

In addition to advancing medical education and research, academic medical centers primarily treat underserved communities, with many patients who are uninsured, underinsured, and experiencing poverty. This type of care often comes at a significant cost to a hospital’s financial performance. However, Definitive Healthcare data shows that, while AMCs face some disadvantages on this front, new strategies may be able to help.

Lower-income patient populations are at higher risk of developing chronic illnesses and delaying care—resulting in complications and unfavorable care outcomes. This trend generally puts downward pressure on hospital finances, and data shows that AMCs have been suffering declining margins compared to the national median.

Rising healthcare costs and increased consumerization have contributed to the financial decline of AMCs. According to a study from PricewaterhouseCooper, half of surveyed patients said they would not pay more for specialized care offered by AMCs and similar medical centers. In response, many academic institutions and healthcare organizations are consolidating in order to lower overhead costs and remain operational.

In addition to operating and care costs, medical research and education are also significant investments. These goals further decrease profit margins, as they must often be subsidized by income from clinical operations. As far back as 2000, analysts have pointed out the struggles of academic medical centers to remain operational.

Academic medical centers are developing new operational strategies

Though research and education often carry significant costs, they also yield impressive benefits when properly leveraged. A strong clinical reputation—not driven by quality scores alone, but by innovative clinicians acting as pioneers in their field—can make an academic medical center an attractive destination for patients seeking specialty care.

The CEO of Banner University Medical Center (BUMC), an AMC in Arizona, described their unique approach. Hospital leaders at BUMC reorganized their clinical departments into “institutes” - interdisciplinary groups of providers that focus entirely on specific conditions.

The idea was to unify personnel from multiple areas of the hospital to coordinate care for a single illness, rather than keep physicians, educators, and researchers in distinct silos. This approach was a major undertaking, and the hospital had to hire a team of data analysts and engineers to oversee the transition. Today, BUMC is still operating via specialized institutes, indicating that it may be a promising solution.

Affiliations and partnerships have been another common method among AMCs to strengthen their positions, just as they have been for other types of hospitals. These centers can improve their competitive edge and position themselves as ideal partner in their market by offering the expertise of their providers at other hospitals.

Though some financial indicators for AMCs as a whole look bleak, it’s unlikely that the overall number of centers is going to see a significant decline. Most AMCs are simply too vital as both community providers and training grounds for future physicians. These facilities will continue to be in high demand as the healthcare staffing shortage progresses.

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