Is It Time for Universities to Get Out of the Hospital Business?

  • Dr. Stephen Klasko, President and CEO of Thomas Jefferson University and Jefferson Health

Is It Time for Universities to Get Out of the Hospital Business?

A couple of years ago, the leaders of Vanderbilt University faced a difficult decision: Their academic medical center was successful, a hub of research and life-saving treatment. But the health industry was in turmoil, and the changes presented new risks to the university, whose vast medical operation approached four-fifths of Vanderbilt’s entire budget. And that number was projected to grow.

The Affordable Care Act, passed in 2010, was accelerating changes already underway. Research financing was tight. Mergers were rampant among hospitals, insurers, and drug companies. The vast sums of clinical income that prestigious university hospitals had used to buttress themselves — and often the university’s other missions — seemed likely to dry up. Everything was up for reinvention. Did Vanderbilt open itself up to such risks?

No, the leaders decided. And so last month Vanderbilt University Medical Center completed its separation from its parent. The hospital is still located on the campus and is tightly affiliated with the medical school, but now the university’s trustees will have to spend less time studying the intricacies of, say, disproportionate-share hospital payments, or lobbying the state legislature to expand Medicaid access.