On January 18, 1995, the University of California convened a special meeting to discuss the business operations of its five academic medical centers in San Francisco, Sacramento, San Diego, Los Angeles, and Irvine. Because of the rapid developments occurring in the maturing and competitive managed care market in California, the academic medical centers are facing unprecedented financial pressures. Charles Townsend, of the accounting firm KPMG Peat Marwick, stated that the medical centers' staff would need to be cut by at least 2500 full-time equivalents, including physicians and nurses, by the year 1999. William Kerr, Director of the University of California San Francisco Medical Center, forecasted a comprehensive restructuring and streamlining of services. Jordan Cohen, president of the Association of American Medical Colleges, described the challenges facing these five academic medical centers and others like them as "truly seismic."1
The rise of managed care medical systems during the last 5 years has led many researchers to question whether the academic medical center will survive in its current state.2-6 Market forces are changing the provision of medical care at an extremely fast pace. By 1998, an estimated 60% of people living in US cities will be covered by managed care health plans. Fewer hospital admissions, shorter hospital stays, and decreased reimbursements associated with managed care have decreased hospitals' operating gains. Academic medical centers, such as those in California, are facing pressure to lower health care delivery costs. The probable decreases in Medicare and research funds under the current Congress also threaten the financial revenues of academic medical centers.
Effects of the growth of managed care on academic medical centers and graduate medical education
