Most of us in academic medicine are dealing, more or less, with a decline in programmatic financial support. The decline is most acute in NIH grants, but philanthropic support also fell during the recession at many institutions—sometimes dramatically. The country is gradually recovering from the recession—though the government shutdown made everything worse for a time. However, as an experienced old gomer in my profession, I can assure you that this financial crisis shall pass—I believe this is the fourth one I have lived through in my professional career.
Discussion about the lack of sufficient resources is a common mantra in academic medical centers, and with good reason. It is impossible to build or improve programs without substantial financial resources. But few talk about the other side of the coin: too much money. I can hear some of you mumbling, “There is no such thing as too much money.” I disagree. Although not a universal problem, I believe it is more common than one might believe. So I shall try to make my case that too much money can be as bad as too little. Let's start with individuals and then move to academic medical centers.
Children, especially teen-agers, given large amounts of discretionary funding often waste it on trifles. They seem to have no concept or concern that someone worked for that money, often at a considerable cost of time and energy, and that they may have an unforeseen need for it later. They also begin to believe that they are entitled to having whatever they want. The doting parent fuels this avaricious attitude with an expensive gift, like a brand-new BMW as a high school graduation gift. I have seen this happen often in my own community. The message to the youngster is: You are entitled to very expensive gifts by simply doing what you should be expected to do in school and at home. Thus the entitlement tapeworm grows in the child/teen and soon becomes very difficult to eradicate.
Professional athletes often become instant millionaires after living a life in middle or lower economic environments. So what usually happens? They go on a perpetual buying spree of exotic automobiles and palatial homes. They magnetically attract hangers-on, women, and sychophants, who must be paid well to sustain the social and financial status the athlete “deserves”—an attitude often started in high school sports. And then he tears his anterior cruciate ligament, or worse, has multiple concussions so that he begins to forget things. His athletic prowess declines and he becomes useless to the team and then is cut. The average career of an NFL player lasts three and a half years.
An article in Sports Illustrated in 2009 estimated that 78 percent of NFL players were bankrupt or facing serious financial stress within two years of ending their playing careers, and that 60 percent of NBA players are broke within five years of retiring from the game (sportsillustrated.cnn.com/vault/article/magazine/MAG1153364).
A starting lineup of financial-distress examples could include Terrell Owens, Lawrence Taylor, Michael Vick, Deuce McAllister, and Bernie Kosar in football; and Allen Iverson, Scottie Pippen, Latrell Sprewell, and Antoine Walker in basketball. All were unable to live within their means despite multimillion dollar annual contracts.
There are two major underlying reasons for these misfortunes: (1) Lifestyles adjusted to very high incomes are almost impossible to reverse, and with no one to borrow from, often lead to financial catastrophe; and (2) It seems that the more lucrative the income, the fewer the degrees of freedom to adapt to the loss of a job or even a significant shortfall in income.
The same can be true for institutions, including academic medical centers. Although the consequences usually are not an individual's bankruptcy, the outcome can be much worse. I will give two examples, both based on my personal observation of more than a dozen institutions.
‘The Problem is Not Space’
The seed often starts with a belief that bigger is always better. Let's imagine an institution that has been financially successful due to largesse from the state or a generous philanthropist along with a large and profitable clinical operation. Its faculty has been fairly successful in getting research grants, though the research may be of average quality or a bit above, but not outstanding. Someone suggests that they could improve their scientific stature by hiring more scientists; for that they need more lab space, and they proceed to build more and more buildings.
There are two major problems with this approach. More buildings and more scientists may turn out to have an output and stature much the same as before the expansion: competent to a degree, but still not outstanding, because the problem is not space. The institution continues to have the same standards for new recruits as for existing staff. Unless the bar is raised and the leadership has the brass to accept or retain only top-tier performers, the output will be the same mediocrity.
Huge Fixed Cost
The other problem is that the new buildings now burden the institution with a huge fixed cost for maintaining the expanded technologically complex facilities for the next 25 to 50 years. This may strain the finances a great deal, especially in times of reduced grants, recession, or a Congress that on average isn't interested in supporting the nation's research. Also, grants do not cover the full cost of doing “funded” research. They never have and probably never will. So the additional scientists with grants require substantial institutional support; if the institution has greatly enlarged its research faculty, the additional infrastructure cost can be huge.
Another insidious twist to the problem above has to do with philanthropy. A very rich man or woman is very grateful for the care they or their family received at the institution. They wish to donate a very large sum of money to the institution. So far, so good. But there often are strings attached by the donors. The institution's most pressing need is to hire high-quality (and expensive) research program leaders with recruitment packages for hiring a team, or to refurbish existing facilities, or to buy badly needed equipment.
But many donors would like something visible and grand, like a building, as a monument to themselves or a family member—e.g., the John Q. Doe Cancer Research Institute. That's nice, and quite welcome until someone does the math concerning the cost of facility maintenance and hiring people to fill it. Donors usually are not interested in supporting infrastructure or hiring new faculty; it is hard to put a name on that. I even know of an instance where the institution agreed to build a building funded by a benefactor and then scrambled around trying to decide what to put in it—a clear waste of resources.
There is a serious danger that the rapid growth of expensive facilities causes financial stress so that gimmicks are created for the sole purpose of raising large amounts of money—e.g., affiliation agreements with community hospitals for a substantial fee. Taken to its natural conclusion, the institution's top mission becomes getting more revenue, and the alleged noble mission and aims are secondary at best.
In summary, it is possible for an individual to have too much money. Some teenagers are blessed with parents who teach them their responsibility for money and frugal habits. Professional athletes are more difficult. The NFL does provide training programs on managing money and the necessity for saving for the future. But for most of them, it apparently doesn't sink in.
Most institutions are careful about spending and require convincing evidence for the need of expensive facilities. They often have priority lists of needs and a business plan for building and sustaining facilities and programs. But some institutional leaders are dazzled by rich donors (who may sit on their boards of directors) and may see a new building as part of their personal legacy or as a means to increase their bonuses.
The ideal is to have only enough money for carefully monitored growth and development. But life is seldom ideal.
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