Prospective Payment and the University Hospital

Despite the coverage of hospitals' educational expenses under the new Medicare prospective-payment system, that system poses a danger for complex care and biomedical research, and thus for university hospitals. New Jersey's three years under a similar system make this clear.The new payment rules seem certain to lead to shrinkage in the size or number of university hospitals — possibly both. Indeed, they provide a convenient means for shrinking the nation's entire medical-education apparatus. Recent New Jersey history indicates, however, that refinement of certain features in the new system and in the way academic medicine is financed may preserve the . . .