Uncovering the High Costs of Teaching Hospitals

Prologue: Teaching hospitals are expensive places to treat patients. In the price competitive health marketplace of the 1980s, this high cost puts teaching hospitals at a disadvantage and has caught the attention of both industry analysts and policymakers in Washington looking to control the federal deficit. In this article, Frank Sloan and Joseph Valvona delve into the costs of teaching hospitals, explaining how and where they differ from nonteaching hospitals. As the authors write: “Given this change in environ-ment, identifying the cost of graduate medical education is now much more than an academic exercise. For there to be informed public policy making, it is necessary to know what the cost differentials are, why they occur, and then to assess the advantages and deficiencies of alternative funding mechanisms. “ Professor Sloan, a well-respected health economist, is director of the Vanderbilt University Health Policy Center and chairman of the university's department of economics. Sloan has a doctorate in economics from Harvard University and has been affiliated with Vanderbilt for over a decade. Valvona is a research associate at the Vanderbilt Health Policy Center. He holds a bachelor of science degree in biology from Emory University, a master of science degree in genetics from the University of Arizona, and an M.B.A. in finance from Vanderbilt University. This article is drawn from a paper originally presented at a Vanderbilt Health Policy Symposium, “Providing and Paying for Medical Education: Past, Present, and Future. “ This symposium was one of three such meetings on health care issues held at Vanderbilt within the past three years.