Is the teaching hospital an endangered species?

The nonmunicipal teaching hospital faces some special challenges in adapting to the increasingly austere fiscal environment in which all hospitals must operate. However, except in a few instances, such developments as constraints on Medicaid expenditures do not appear to be notably more serious for teaching hospitals than for their community counterparts. The teaching hospitals most closely connected with medical schools provide more charity care and carry more bad debt than community hospitals. But other teaching hospitals have about the same burden as their community counterparts. The most serious problem facing teaching hospitals results from new bases of prospective reimbursement, some of which do not adequately compensate hospitals that treat more "difficult" cases--that is, more expensive cases. Competitive providers of health care such as health maintenance organizations promise to reduce admissions at all types of hospitals; whether this reduction will selectively affect teaching hospitals is not yet clear. By contrast, the fiscal state of municipal teaching hospitals is far more precarious than that of their nonmunicipal counterparts. The ability of these institutions to maintain high-quality patient care and teaching programs is in considerable jeopardy.