The authors present data and information about appointment, tenure, and compensation policies to describe how medical schools are redefining the terms under which they relate to their full-time clinical faculties. First, the authors note the increasing differentiation of clinical faculty members into two groups, researchers and clinicians. The present-day competitive realities of both research and clinical enterprises have prompted this change and the principles of mission-based management are reinforcing it. Second, they document the long-term tendency of schools to appoint new clinical faculty members to contract-term (as opposed to tenure) appointments, as special non-tenure-eligible tracks for clinically oriented faculty proliferate. Third, they report on the policies of schools to limit the financial guarantees provided to clinical faculty members who are awarded tenure. For schools that have yet to address this issue, they discuss the various employment and pay arrangements that inform or confuse the question. Fourth, they describe historic problems with clinical faculty compensation arrangements and illustrate, with examples from ten schools, the characteristics of recently implemented performance- and risk-based compensation plans.
While these trends in institutional policies and practices may initially concern faculty advocate groups, the authors argue that they may serve the long-term interests of those groups. The terms of relationships between medical schools and their clinical faculties are tied closely to the specifics of organizational structure, which are currently undergoing review and change. The challenge all schools face is to define these terms in ways that allow them to continue to attract high-quality clinical faculty while avoiding an insupportable financial liability.
In a previous report,1 we described the status of and changes under way in personnel policies governing medical school faculty in U.S. allopathic medical schools. While the data revealed that no medical school had eliminated tenure, many schools were considering, if not already implementing, changes to the tenure salary guarantee, the length of the pre-tenure probationary period, faculty tracks, faculty compensation structures, and faculty evaluation, including post-tenure review.
The motivation of medical school leaders to reexamine and change the way in which faculty are appointed, evaluated, tenured (or not), and paid is easily understood. While medical school revenues continue to grow, the schools are operating in a less certain economic environment.2 The financial health of many is tied closely to the fortunes of their teaching hospital partners, which are being buffeted by changes in health care financing and reductions in Medicare funding from the Balanced Budget Act of 1997.3 The health care market is also having a direct impact on income from faculty physicians' fees, part of which supports medical school academic programs. Some schools are seeing actual declines in faculty practice income, after years of growth.4,5 Others are maintaining these revenues, but purportedly at the cost of increased faculty time in the clinic, and diversion from academic endeavors. To be sure, research support available to medical schools, through the National Institutes of Health (NIH) and other research sponsors, is growing at an unprecedented rate.6 However, the ability of schools to take advantage of this external funding boom is dependent on their sound management of institutional resources to meet infrastructure-support and cost-sharing demands.
The financial underpinnings of medical schools have always rested on a thin layer of hard-money support: tuition, state appropriations, and endowment income. Together, these three sources constituted only 20% of the revenues of public medical schools in 1998-99, and as little as 8% of those of private medical schools.7 The bulk of the remainder, 74% for public schools and 84% for private schools, derives from faculty practice, hospital, and grant and contract revenue. Korn has written persuasively of the fragility of this financial support structure and of the difficulties of sustaining the historic levels of growth enjoyed by academic medicine.8 Yet, the institutional commitments inherent in traditional faculty appointment, tenure, and compensation structures have often failed to reflect these risks.
In this report, we present data on and discuss trends in clinical faculty appointment, tenure, and compensation policies. (The issues with regard to the basic science faculty have nuances that merit a separate discussion). We believe that medical schools are redefining the conditions under which they relate to their clinical faculties-indeed, that they have been engaged in this redefinition for many years. Its hallmarks are (1) an increasing differentiation of faculty roles and a separation of clinical faculties largely into two groups, clinicians and researchers; (2) a movement to contract-term, as opposed to tenure, appointments; (3) the establishment of limited tenure guarantees for those clinical faculty who are awarded tenure; and (4) the introduction of compensation structures that are more performance- and risk-based. These changes are occurring against the backdrop of a more fundamental reexamination and restructuring of medical school-clinical enterprise relationships, the full description of which is beyond the scope of this article.9
The data and information that support our thesis come from several sources: (1) the 1999 online Faculty Personnel Policies Survey conducted by the Association of American Medical Colleges (AAMC), to which all but two schools responded; (2) the AAMC Faculty Roster System (FRS), a continuously updated database on the characteristics of fulltime U.S. medical school faculty; (3) institutional documents describing new faculty compensation arrangements, and (4) informal telephone interviews and discussions with faculty affairs deans and principal business officers within the past two years.