Let’s face facts: even though folks who read this magazine presumably hold the research process in high regard, the phrase “academic research hospital” probably doesn’t sound as exciting as, say, the mow-down spirit of Wall Street or the Tyson-Holyfield match. But think again. In today’s free-for-all health-care market, academic hospitals-which conduct the research that undergirds high-tech medicine, educate new doctors about the latest techniques, and apply those tools and methods to rich and poor patients alike-are battling to maintain their financial strength in the face of competition from for-profit hospitals. Exciting?

“A little too exciting,” says Samuel O. Thier, president and chief executive officer of Partners HealthCare System. That nonprofit Boston-based organization includes two of the largest and most respected teaching hospitals in the country, Massachusetts General and the Brigham and Women’s, as well as three other teaching hospitals and a network of more than 750 separate primary-care doctors. “You have to remember that this isn’t a game; we’re talking about health care for people.”

Thier, former president of the National Academy of Science’s Institute of Medicine, spent three years as president of Brandeis University before taking the reins of Massachusetts General and creating the Partners system, which had revenues of $2.1 billion in its fiscal year 1996.

Technology Review senior editor Laura van Dam recently asked Thier whether-and how-to maintain the traditional missions of academic hospitals.

TR: Some critics say that the competition among hospitals today stems from rising health-care costs that in turn have partly come about because every hospital has felt obliged to acquire and use high-priced medical technologies such as MRI (magnetic-resonance-imaging) machines. Does the development of new technologies help or hurt financially?

THIER: To assume that technology raises health-care costs is silly. Depending on the particular technology and its use, it can cost more, save money, or be neutral. Look at the lithotriptor, a shock-wave machine that costs $1.5 million and blows up kidney stones. Previously surgeons had to remove kidney stones from patients who then might stay in the hospital four or five days and could be out of work for a month. With lithotripty patients go home the same day and are back at work in two days. That means major savings to the economy.

Partners HealthCare has just formed the Center for Innovative Minimally Invasive Technology, which is developing ways to improve diagnoses and treatments with less trauma to the patient. That can translate into fewer medical problems, which in turn can reduce the time patients have to spend in hospitals. Whereas we used to open the abdo-men to remove somebody’s gall bladder, with minimally invasive technology we can now take the gall bladder out through a little tube called a lapar-oscope. We’re also doing research with a new MRI unit that lets surgeons operate on the brain while they’re looking at MRI images. Previously surgeons couldn’t do both tasks at once. That made brain surgery trickier and sometimes longer.
Maintaining the level of medical-technology research we’ve had is important in this era of managed care. Already, physicians in the regions with the highest penetration of managed-care facilities show a fall-off in clinical-research publications and grants. This suggests that doctors are being pulled away from those responsibilities to see more and more patients.

I’m not saying managed care is bad-in fact, Partners is all for it and very much takes part in it-but it should not be used to promote the lowest-cost care at the expense of research on better treatments.

TR: Should academic hospitals also continue to provide health care to anyone who needs it?

THIER: Yes. Both academic and community nonprofit hospitals play critical roles in providing care for the 40 million people-two-thirds of whom are working-who don’t have private insurance or governmental medical assistance for at least part of the year.

Unfortunately, as the for-profit motive in health care continues to play out we are going to end up with patient populations that are not served. Nonprofit hospitals are not going to do well compared with for-profit institutions should the nonprofits continue to provide care for those who lack any insurance. If a for-profit institution takes over a nonprofit hospital and sends the indigent who once used that facility to us, the number of people we serve at no cost rises. Economically, in this situation a private organization purchases a public asset without maintaining the public re-sponsibility of the formerly nonprofit hospital.

TR: So how can academic hospitals continue to compete with for-profits?

THIER: Partly by stressing quality. Toward that end nonprofit hospitals-particularly the academic ones-can strengthen their market position by improving their “outcomes” research.

Studies of how patients fare from their treatments indicate the quality of hospitals’ services. Because of their broader array of specialized services and pool of newly trained doctors who are up-to-date on the latest medical knowledge and techniques, academic hospitals should offer better quality than for-profit hospitals. In fact, a study of 30 hospitals in Ohio-which was recently published in the Journal of the American Medical Association-found that major teaching hospitals had lower death rates, after adjusting for the severity of patients’ illnesses upon arrival, than nonteaching and small teaching hospitals.

If you are a major employer, you can look at the outcomes research coming from the three or four health-care systems in your region and decide which system, including which hospital, offers the best quality for your employees.

TR: Aren’t employers going to base their decisions primarily on cost?

THIER: No. General Motors offers a good example. This year that company began to pay a significant amount of the cost for its employees to belong to the managed-care provider GM thinks upholds the best-quality standards on factors such as health outcomes, doctors’ and nurses’ qualifications, facilities, and convenience. GM employees can still purchase services from other groups, but they have to pay a larger percentage of the costs charged by those insurers.

TR: Could GM’s interest in quality of care be an exception?

THIER: Other entities are starting to show interest. The Cleveland business community has banded together and demanded that hospitals provide information on their complications and death rates related to medical procedures.

TR: But aren’t academic hospitals such as those in the Partners system, like many health-care providers, starting to require doctors to see a set number of patients, leading to complaints about patient visits and hospital stays that are too short?

THIER: In this marketplace all hospitals must set guidelines on matters such as numbers of patients seen, using industry standards, but for our part we factor in the number of older or sicker patients various doctors’ groups are likely to see. Physicians at Massa-chusetts General and the Brigham and Women’s hospitals, for instance, tend to have sicker patients, so we have to take that into account. We do not have a cookie-cutter, one-size-fits-all approach.

Standards are critical-how can we even measure quality without having them?-but they should be used to improve the results of care rather than just efficiency. And that’s what academic hospitals should focus on as we compete with for-profits.

We also need another boost. An independent task force I’m chairing- organized by the Commonwealth Fund, a philanthropic foundation-has found that the clinical services of academic hospitals can’t fully compete on a cost basis with those of for-profit hospitals. That’s because we care for these patients who cannot pay and we subsidize research. (The National Institutes of Health under-reimburse overhead to ensure cost-sharing by grantee institutions.) We need a trust fund that pays for those services as social goods so that we play on a level field. The federal government should require Medicare, Medicaid, and health insurers to share in financing this fund. Our report also calls for setting up an independent, nongovernmental overseer of the fund to ensure that the money is used appropriately.

TR: What could convince the federal government to agree to finance the fund?

THIER: Congress already agreed to this general notion once, in the Balanced Budget Act of 1995, but President Clinton vetoed that for other reasons. Whether the idea will be reintroduced is unclear, but it should be.

Meanwhile, both federal and state legislatures can help with academic hospitals’ higher costs by insuring at least some coverage for those who really need it. One beginning step has occurred in Massachusetts, for example, where the legislature has determined that hospitals, the state government, employers, and health-care insurers will all contribute to the cost of care for people without any insurance. This is a wonderfully creative approach, as long as insurers don’t turn around and start paying hospitals less for their work. Other states should copy the model.

As a decent society, we should especially make sure that all kids are covered. If we consider such efforts in only the most hard-headed way, we should realize that because the first two to five years of youngsters’ lives are critically important in terms of their future health, their future productivity and participation in society are at stake.

Generally, as a society we need to think about the responsibilities of medicine as a profession. According to a definition proposed by Louis Brandeis, the former Supreme Court justice, a profession must have standards that its members enforce. He said a profession needs to advance and pass on a body of knowledge. That means we must conduct research and teach. According to Brandeis, a profession adheres to a code of ethics and values performance above re-ward. That’s the commitment to provide health care whether or not somebody can pay for it.