Abstract

Over the last 50 years, the nation's academic health centers (AHCs)--defined here as the 125 institutions that include at least a medical school and its closely affiliated clinical facilities and faculty practice plans--have come to serve a unique set of functions in the nation's health care system and in their communities. The AHCs produce a variety of health-related goods and services that have value, but tend to be undervalued and undersupplied in competitive markets. These goods and services include basic and clinical research, the training of health professionals, certain highly specialized clinical services, and continuous innovation in health care services. In the balance of this paper, we refer to these functions as the social missions of AHCs. (Though some AHCs, especially the publicly owned centers, also consider care for the indigent a vital mission, not all AHCs are disproportionate providers of indigent care. Therefore, this paper does not deal specifically with the indigent care mission of AHCs.) A number of commentators 1-3 have suggested that the evolution of the US health care system into a more market-competiti ve system could have dramatic consequences for the ability of AHCs to discharge their missions. Providing these goods and services requires resources. Until recently, AHCs and other teaching institutions financed a significant proportion of these costs through

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