When it comes to organizational complexity, even mega-corporations like Microsoft and General Motors are leagues behind academic medical centers. Despite large corporations' employee counts and the fact that they operate in multiple national and international locations, they tend to have a single, far simpler mission than AMCs do, suggests Brian Strom, M.D., MPH, associate vice dean of the University of Pennsylvania School of Medicine and associate vice president of University of Pennsylvania Health System.

"Academic medical centers (AMCs) are extraordinarily complex organizations. I don't know that any organizations are more complex," Dr. Strom says. "Compared to private industry - and even to the federal government - AMCs make those organizations look simple."  For example, a medical school might or might not be owned by a parent university, and the ownership structure can add another layer of complexity on to an already dauntingly confusing network of health sciences schools, affiliated physician practices, specialty-designated research institutes and patient-care enterprises.

Why are AMCs so complex and what does that complexity means for faculty members? Simply put, AMCs have multiple missions: teaching, research, patient care and, to varying extents, charity care as well. Some of those missions both conflict and compete with each other at times, and the faculty member who gets caught in that tug-of-war might not understand the dynamics at play. That tension-fraught interrelationship may be compounded by the limited resources within AMCs and, of late, the increasingly difficult economic position in which centers find themselves because of health care marketplace and research funding issues.

"Academic centers have mixed, conflicting missions and they can't let any of them go. In business, if you have a piece of the organization that's not making money, you jettison it. You can't do that in academic medicine," Dr. Strom says. For example, if an AMC's Otolaryngology department doesn't bring in the requisite patient-care professional services revenues to support the costs of operating it, the fact that the department maintains responsibility for teaching residents and fellows means it will remain in place even if subsidization from other areas is needed. That, in turn, might mean that a department or division that doesn't have a solid profit & loss statement or whose research funding is inadequate might have a more difficult time, at the institutional level, obtaining the support it needs to maintain or expand programs and services.

The relationship of a teaching hospital to a parent institution also affects how departments and governance are organized, as well as how well or poorly the AMC fares in the big picture of financial strength. "It is a huge advantage to have a hospital owned by the medical school because the money in medicine today is very much on the technical side, not the professional side," suggests David Kennedy, M.D., vice dean for professional services at the University of Pennsylvania School of Medicine. "By having a hospital, AMCs can feed those technical dollars back into the professional side - and that ownership structure also helps the system as a whole to set goals." Dr. Kennedy allows that UPenn's model is not the predominant one these days; most AMCs operate through separately owned hospitals by virtue of negotiated agreements.

A little history elucidates the complex interrelationships and the evolution of AMC organizational structures. AMCs, which begun operating in the United States about a century ago, were intensely research-focused organizations through the mid 1960s and were supported primarily through federal funds. The passage of Medicare legislation in 1965 changed the landscape, heralding a new era of clinical focus and vastly expanding the patient base of AMCs. While the organizations had historically had treated patients on a charity-care model, AMCs gained a large new source of paying patients whose care was covered through Medicare and Medicaid benefits.

That development in turn spawned the creation of faculty practice plans, whose patient-care revenues increasingly supported AMCs' research and teaching missions. That heyday, however, was relatively short-lived. In the early 1980s, market forces intervened and governmental policies tilted toward deregulation to create more efficiency (and lower costs) in the health care delivery system. AMCs soon found themselves both under the policy microscope and competing with nonteaching hospitals to maintain a stable patient base and secure contracts with managed care and government payers. Those market mechanisms eventually threatened the affordability and even the viability of AMCs' teaching and research missions through the late 1990s, when the National Institutes of Health pledged to double its research funding budget. (Editors Note: For a thorough review of the evolution of the US medical system, please see Pulitzer Prize winning book "The Social Transformation of American Medicine" by Paul Starr).

That funding commitment stabilized AMCs generally, but it did not directly address the market forces that dictate, to a large extent, where patients receive care. Costs of care tend to be higher at AMCs than at nonteaching facilities, and insurers increasingly are less willing to absorb those higher costs or to compensate AMCs at a level that covers their costs. That means AMCs continue to experience financial challenges in light of the more competitive market and more restrictive reimbursement. To counter those effects, AMCs have employed such strategies as expanding the specialty services that have historically differentiated them from community hospitals and launching standalone community facilities' adding further complexity to their structures.

All of that wrangling on the outside has an effect on both organizational structures and on faculty members' positions and responsibilities within their organizations. For example, departments today function very much as business units, with their own profit & loss statements. That may translate into greater pressures for clinical faculty members to increase their patient-care loads, leaving relatively little time for other activities. 

"The junior faculty today member needs to recognize that their clinical time must work like that of a private-practice doctor - and in a well-run department even a junior faculty member would be aware of where they stand in terms of the financial picture," says Dr. Kennedy. On the research side of the equation, junior faculty members may face the expectation that they will become fully self-supporting, through grants, in a much shorter time than they might have a decade ago.