Access Type

Open Access Dissertation

Date of Award


Degree Type


Degree Name



Political Science

First Advisor

Professor Charles J. Parrish


This dissertation shows the impact upon two academic medical centers (AMCs) from the competition from managed care. From fiscally sound and thriving organizations a decade ago, many medical schools are now facing severe money problems. U. S. medical schools derive a large share of their general operating revenues from patient care, through the income of practice plans. Since neither tuition nor research generate sufficient funds to cover medical school costs, income from practice plans is vital. The reason most frequently given for the medical schools' fiscal problems is the penetration by managed care organizations into the markets in which AMCs' practice plans once flourished. Interviews were conducted with faculty members at two public medical schools in Michigan, Wayne State University School of Medicine and the University of Michigan Medical School, during the period October, 1997 and February 1998 to gather information for this study. The dissertation reports the transformation that has been taking place in medicine and the coping strategies that AMCs have adopted to remain competitive. Among the strategies adopted were organizational restructurings, greater clinical productivity, employing more primary care physicians, treating a greater number of patients in ambulatory centers, introducing cost-containment measures, and increased marketing efforts. Although some of the evidence is indirect since neither medical school disclose definitive details of their practice plans' financial activities, both schools examined appeared to do well in the past fiscal year. The leadership is encouraged but not satisfied with these results. The conclusion is that the changes and adjustments such as the vigorous efforts to reduce costs, increase productivity and market share have contributed substantially to their success. However, economic conditions in their areas of operation and the relatively mild stage of managed care competition (Stage I) are undoubtedly contributive factors which must also be considered in any assessment of their performances. It is appropriate that they are not relaxing their efforts or their vigilance with the real possibility that managed care penetration may reach the same level as in California and certain other regions of the country.