Impact on academic medical center of reduction in reimbursement of indirect research costs.

Debate over the level of indirect cost reimbursement associated with federally funded research projects continues to grow. With the increasing federal budget restraints, one recurring proposal arising from federal legislators, the executive branch, and the National Institutes of Health to cut costs and sustain direct project support has been to reduce indirect cost reimbursement. Using a system dynamics simulation model, the authors in this paper analyze the long-term economic impacts of such cutbacks on an academic medical center. The significant negative multiplier effects, due to the required diversion of institutional funds, are indicative of those that any research oriented university would experience.