An Integrated Budget Model for Medical School Financial Planning

Abstract

This paper presents a financial planning model for medical school departments that integrates manpower and funding elements with the school's teaching, research, and patient care activities. The model tracks revenue, expense, and faculty effort in each of the three primary medical school activities and estimates, for any given change in the amount or configuration of faculty effort among these activities, the associated financial effects on both the institution and the individuals themselves over a one- to five-year planning horizon. One innovative feature of the model is that it incorporates economically based functions that capture the effect on revenue of factors such as faculty “effort,” price increases, demand elasticity, market saturation, and changes in number of faculty members. We describe the implementation of the model for a major department at Stanford University Medical School (SUMS), and explore a number of sample policy issues, using data from that department as well as from another department at SUMS. We also describe the implementation of the model in evaluating the financial effects of a proposed organ transplantation program at SUMS.