Governance of Teaching Hospitals: Turmoil at Penn and Hopkins (review)

This history of events at two universities in the 1990s is a welcome contribution to the sparse literature on the governance of academic medicine. John Kastor reports, with admirable concern for accuracy, the results of almost three hundred interviews. He finds three causes of the turmoil experienced by many people associated with academic medicine at Penn and Hopkins: "governance structure, current events," and "internal conflicts produced by leading personalities" (p. 279). He concludes that "people and money more than structure dominated what happened in Philadelphia," while money was a lesser issue at Hopkins than "conflict between two leading executives" (p. 293). In assigning causes, he refers only in passing to comparable events at other academic health centers in the United States (though in an appendix he helpfully compiles information about how each of them is governed).

Kastor ignores issues of considerable interest to persons in academic medicine, those in the public and private organizations that finance its missions, and historians of health-care institutions. The underlying cause of recent turmoil in academic medicine in the United States has been painful institutional adaptation to profound changes in the organization and financing of health services. For several decades before the 1990s, academic physicians and the teaching hospitals in which they practiced had gradually lost local (and often regional) monopolies on services that were the most technologically advanced and met the highest standards of quality. Medical school faculty members facilitated the loss of monopoly by devising new technologies and training increasing numbers of specialized physicians to use them.

The general public contributed generously to the simultaneous growth of academic medicine and its competitors. Public and private purchasers of care subsidized the costs of training (including inefficient production of services) and the diffusion of new technologies. Public agencies funded most of the science on which new technology was based.

As the costs of health care continued to grow at a rate that exceeded inflation in the American economy as a whole, public and private purchasers became increasingly reluctant to subsidize teaching hospitals and the faculty members who practice in them as generously as they had for a generation. Many institutions, Penn and Hopkins among them, tried to compensate for their loss of monopoly and reduced subsidy by purchasing community hospitals and medical practices in the hope of assuring their supply of insured patients. They aspired to create "integrated delivery systems" without sustained attention to lessons from the few successful integrated systems in the United States (for instance, Kaiser Permanente). In order to create these systems, moreover, leaders of medical schools and teaching hospitals tried to impose vigorous central management on the decentralized departmental culture of academic medicine. Turmoil was a predictable result of these changes in financing and organization.

Events at Penn were, in many ways, more dramatic than those at Hopkins as a result of public policy in their two states, as much as of the personalities involved and of a governance structure in which the funds of the medical center were part of the general university budget. In the regulatory environment of Pennsylvania, the medical school, hospital, and university for a few years enjoyed surpluses from payments for care by public and private insurance; then they shared losses on the downside of the insurance cycle and of the economy. In Maryland, in contrast, where hospital rates are tightly regulated by the state in the nation's only surviving all-payer system, big wins and losses are not possible.

This book contributes vivid information about the governance and financing of academic medicine, rather than about the "governance of teaching hospitals" alone. Because of Kastor's focus on hospital governance, however, he misses a striking commonality in the results of the events at Hopkins and Penn, as well as similar events at other institutions. That commonality is that clinical medical faculties almost always win their battles with teaching hospital managers and university presidents. The open question is whether the...