Reductions in federal funding for medical research, education, and public health could hinder the ability of academic medical institutions to deliver care, train healthcare professionals, and develop new treatments, according to the Association of American Medical Colleges (AAMC).
Since the start of the year, the Trump administration has terminated more than 2,200 National Institutes of Health (NIH) grants designated for medical research at U.S. institutions, with nearly 1,200 designated for U.S. medical schools and hospitals specifically. The administration has also frozen funding for more than 1,500 additional grants.
Almost two-thirds of the terminated grants were marked for research and development, while more than a third were set aside for research training and career development.
The terminated grants include at least 160 intended to fund clinical trials on a wide range of therapy areas including cancer, HIV/AIDS, addiction, behavioral health, and chronic disease, according to a June report from the AAMC, an organization representing 173 North American medical schools and nearly 500 teaching hospitals and health systems.
The AAMC says the cuts, which comprise about $2 billion in funding for U.S. medical schools and hospitals, “represent an existential threat to the nation’s medical schools, academic health systems, and biomedical research institutions.”
But the funding changes to date are a fraction of the divestments from public health and medical research and education proposed by the executive administration for the FY 2026 budget.
What’s included in the proposed budget cuts?
The administration, in a letter to the U.S. Senate’s Committee on Appropriations, recommended that nearly $18 billion be cut from the NIH budget for next year—a 40% decrease. Altogether, the proposed budget would downsize federal spending in 2026 by nearly $140 billion across agencies, with other healthcare-focused reductions including:
- $3.5 billion from the Centers for Disease Control and Prevention (CDC)
- $1.7 billion from the Health Resources and Services Administration
- $674 million from Centers for Medicare and Medicaid Services (CMS) Program Management
- $129 million from the Agency for Healthcare Research and Quality
While Congress remains in the process of finalizing government funding for FY 2026, several considerable changes to healthcare spending were codified with the One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025.
The most notable changes include an estimated $1.06 trillion in cuts to Medicaid and Health Insurance Marketplaces to be made over the next 10 years, primarily through the implementation of work requirements, the freezing of Medicaid provider taxes, and reduced funding for state-directed payments.
OBBBA also established changes that will impact some medical students. The law sets caps on unsubsidized loans for medical students at $50,000 annually and $200,000 total and eliminates Grad PLUS loans.
These shifts in student loan policy—along with proposed restrictions on Public Service Loan Forgiveness eligibility—could affect nearly half of all U.S. medical students, according to the AAMC.
Which academic hospitals will be affected?
Wide-ranging cuts to NIH, CMS, the CDC, and other key health organizations will likely be felt across medical academia and the healthcare landscape to varying degrees.
The previously outlined changes to student loan policy, for instance, reduce the number of students enrolling in—and thus funding—the medical programs associated with academic hospitals around the country. With fewer care professionals entering the workforce, those hospitals could also see downstream staffing pressures that compound ongoing healthcare labor shortages.
Several of the country’s largest academic medical institutions have announced changes to their operations and research activities because of the grant terminations and proposed budget changes:
- The University of Rochester (associated with Strong Memorial Hospital) lost more than 20 federal grants representing about $9 million and received a stop-work order.
- Vanderbilt University Medical Center says it plans to lay off 650 employees and reduce operating costs by $300 million in response to the cuts.
- Stanford University, the University of California, Harvard University, and the University of Pennsylvania all announced staff hiring freezes following the budget proposal.
- New York-Presbyterian Weill Cornell Medical Center says it plans to cut 2% of its workforce, or about 1,000 healthcare workers.
These are just a few examples. While they haven’t all released statements about their financial decisions, every one of the institutions on our list of the 25 largest academic medical centers has had at least one NIH grant terminated this year.
For instance, New York-Presbyterian Weill Cornell Medical Center lost at least eight grants and New York University (affiliated with Tisch Hospital) lost 11, according to Department of Health and Human Services (HHS)-reported data from the Grant Witness project.
HHS has reported the termination of NIH grants at more than 300 medical institutions, and researchers at another 20 institutions have reported grant terminations to Grant Witness that haven’t been confirmed by HHS.
These grants generally cover the direct costs of research (like experiment materials and personnel) as well as the indirect costs (like related infrastructure, lab maintenance, and regulatory compliance).
In February, the NIH set a cap on funding for indirect costs at 15%, which would cut more than $6 billion from research efforts at U.S. research institutions. However, a federal judge permanently barred the move in April, giving researchers at least some time to prepare ahead of a likely appeal.
How can academic hospitals respond to cuts?
In the very short term, medical schools and academic hospitals can lobby Congress before the FY 2026 budget is fully approved (most likely by October) and advocate for the value of medical and scientific funding.
A bipartisan Senate appropriations committee voted on July 31 to reject the current administration’s proposed $18 billion cut to NIH. The committee’s version of the bill would instead increase the agency’s funding by $400 million.
While the bill still needs to clear the Senate and be reconciled with its counterpart in the House, its initial passage suggests that medical research has some support in the legislature. It’s also worth noting that, earlier in July, another committee voted to keep funding for the National Science Foundation (NIH’s counterpart for non-medical scientific research) flat in the face of the administration’s proposed 57% cut.
Barring legislative intervention (or state-level funding boosts), most academic medical organizations affected by funding cuts will need to assess their institutional goals, consider the needs of their patients and students, and make budgetary decisions that best serve every stakeholder. As evidenced by the examples above, that could include hiring freezes, staff reductions, or operational adjustments.
Medical schools and academic hospitals may have some leeway when it comes to NIH funding in particular. In June, a federal judge ruled that hundreds of NIH grant terminations were “void and illegal,” offering temporary relief to some of the grant recipients.
Additionally, the Government Accountability Office, an independent congressional watchdog, just issued a report finding that the grant terminations violated a 1974 law that prevents presidents from blocking Congress-approved funds.
Reduce variables to gain resilience
Of course, shifting Congressional positions, pending legal appeals, and nonbinding accountability reports don’t make a sturdy foundation for an effective operational strategy. Whether you’re working for a medical school, an associated academic hospital, or partnering with one to conduct research, the right data and analytics can help you find certainty in an uncertain financial climate and make your budget go farther.
Definitive Healthcare data solutions offer a clear view of the patients, providers, and facilities you need to know to recruit for trials, understand population health trends, and find the best candidates for your team. Sign up for a demo today.
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