Academic
Health Centers and the Provision
of Collective Outputs: The Financing Dilemma
Burton
A. Weisbrod
Abstract
This paper examines the inherent and growing tension
between the social mission of Academic Health Centers (AHCs), to
provide collective-type services, which cannot be sold profitably,
and the means of financing those services, which involves provision
of saleable private-type services. It finds that increased fiscal
stringency of AHCs, resulting largely from public and private policies
to rein in health care costs, has cut the ability of AHCs to finance
provision of basic research, indigent care, and medical education
out of profit from patient care. This, in turn, is driving AHCs
to become increasingly commercial in seeking out new revenue sources.
The commercialization, while generating revenue, and in that sense
aiding achievement of the social mission, also conflicts with mission
achievement because of the interrelations between the social and
private outputs. Public policy should recognize that its efforts
to contain health care costs are having unintended side effects,
the author concludes. These actions are forcing AHCs to become increasingly
like private firms and producing a variety of problems in the process,
whether the commercial activities bring competition with private
firms or collaboration with them.
Burton A. Weisbrod, Department
of Economics, Northwestern University
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