Academic medical centers are under intense pressure as funding cuts for National Institutes of Health being to take effect.
How are organizations preserving the academic mission of advancing science, training future clinicians, and care for the nation’s most complex patients?
By Jason Tackett, Managing Principal, SullivanCotter
Originally published by Fierce Healthcare
These cuts come at a time when AMCs are already navigating immense financial strain, workforce shortages, and evolving partnerships with health systems that are increasingly expanding academic initiatives. For institutions where federal research dollars are critical to faculty compensation and innovation infrastructure, the path forward likely demands difficult choices, and a rethinking of how to sustain the tripartite mission amid shifting federal priorities.
At the same time, the traditional lines between AMCs and broader health systems are blurring. Some health systems are establishing medical schools, while others are forming academic partnerships, expanding residency and fellowship programs, and investing in medical student teaching infrastructure. These efforts are designed to address immediate physician workforce shortages and strengthen long-term talent pipelines. As a result, more organizations—regardless of structure—are recruiting from the same pool of clinical and research talent, particularly in high-priority service lines such as cardiology, neuroscience, behavioral health, and oncology.
As health systems prioritize expanding patient access, strengthening community presence and optimizing care delivery, competition for physician talent, particularly in high-demand specialties, is intensifying—regardless of academic affiliation. All health care organizations are drawing from the same limited talent pool. Without a proactive strategy, AMCs risk falling behind, especially as widening pay differentials make some academic roles and specialties less market competitive and increasingly vulnerable.
Physician Workforce Models are Evolving
The 2024 Association of American Medical Colleges (AAMC) and SullivanCotter Physician Recruitment and Retention Survey found that AMCs were already taking steps to address financial pressure. Among the top strategies cited were improving patient access and care delivery (75%) and adjusting physician faculty work effort expectations (66%) – reflecting an emphasis on the clinical mission to preserve long-term academic viability.
A key shift highlighted in the survey is the increased clinical workload expected of newly hired physician faculty. At the same time, many existing faculty face a widening pay-to-productivity gap, with performance expectations set at higher levels relative to compensation. Together, I see these dynamics further straining recruitment and retention, particularly for early-career physicians evaluating an academic career.
As AMCs adapt to this financial reality, they must redefine workforce strategies, optimize governance structures, and realign faculty compensation models to remain competitive and sustain their academic missions.
Reductions in Funded Research Could Deter AMC Physician Talent
Employed physician faculty are central to AMCs’ missions, balancing the demands of research, clinical care, and teaching. NIH funding reductions exacerbate existing challenges in recruiting and retaining both clinically oriented physicians and leading physician-scientists. Specialties such as cardiology, neurology, and oncology are particularly affected, given the heightened competition and notable compensation disparities compared to non-academic settings.
According to the same joint AAMC and SullivanCotter study, 47% of departing physician faculty transition to private practice or non-AMC health systems, underscoring the growing difficulty of retaining talent within the academic setting. Unlike clinical revenue, research funding is secured through a lengthy and uncertain process of grant applications, peer reviews, and renewals. Many physician-scientists depend on these grants to support their compensation.
Beyond the financial implications, I believe that a sudden reduction in NIH funding risks are undermining the culture of academic medicine. If increased clinical demands replace research and teaching effort, both new and existing faculty will question the long-term value of remaining in academic practice.
Four distinct concerns stand out:
- Greater Reliance on Clinical Revenue: As NIH funding declines, AMCs are placing greater emphasis on clinical revenue streams. As a result, new physician hires will be expected to dedicate significantly more time to patient care, while existing physician faculty with previously protected research time may be asked to increase their clinical workload. Over time, this shift may discourage early-career researchers from pursuing academic paths, weakening the pipeline of future physician-scientists.
- Increasing Salary Pressures and Physician Migration: Historically, AMCs have leveraged their reputation and mission-driven environments to attract faculty, often compensating below private practice levels in exchange for research opportunities and academic distinction. Now, NIH funding cuts threaten to widen existing pay gaps—already 15 to 25 percentage points in some specialties—moving AMCs toward a tipping point and eroding their longstanding competitive advantage. Without market-competitive salaries, physician-scientists may increasingly migrate to private industry or non-academic roles.
- Rising Competition for Research Talent: Historically, with over three-quarters of NIH funding concentrated among just one-third of U.S. medical schools, well-funded AMCs have been better positioned to recruit and retain top physician-scientists. In contrast, the remaining AMCs —particularly those lacking fully integrated governance across the health system, faculty practice plan, and school of medicine—face steeper challenges in attracting research talent. Without coordinated institutional support and aligned strategic priorities, faculty at these AMCs may find it increasingly difficult to sustain competitive, long-term research programs.
- Erosion of Start-Up Support:Start-up packages, often ranging from $500,000 to $2 million, are critical to attracting research talent and academic leadership such as Department Chairs. These packages typically include funding for lab space, research staff, equipment, and early faculty hires. With potential cuts to NIH funding—through fewer grants or reduced indirect cost reimbursements—AMCs may be forced to scale back these investments, hampering their ability to support early-career physician-scientists.
How AMCs Can Respond to NIH Funding Challenges
To remain competitive in the face of NIH funding reductions, AMCs must take proactive steps to restructure faculty funding models, realign financial resources, and adapt workforce expectations.
Evaluate Governance Structures for Agility
- Perform a comprehensive governance assessment to identify areas of fragmented or overly centralized decision-making, evaluating potential impacts on faculty engagement and strategic execution.
- Redesign governance frameworks to clarify accountability, promote faster decision-making, and strengthen alignment across community and academic practice entities.
- Actively engage Department Chairs and faculty leadership as strategic partners in recruitment, retention, and compensation planning to support unified enterprise goals.
Engage Key Physician Leaders and Facilitate Broader Collaboration
- Shift key physician leaders from department-focused oversight to broader collaboration across the entire enterprise.
- Ensure key physician leader stakeholders, like Department Chairs, have an active voice and role in enterprise-wide decisions to align department and faculty practice plan goals with enterprise-wide strategy.
Optimize Faculty Workloads and Service Line Strategy
- Strengthen the primary care strategy and geographic expansion to enhance patient access and financial sustainability. Notably, primary care was identified as the most difficult specialty to recruit and retain in the 2024 AAMC and SullivanCotter survey, underscoring the need for renewed focus in this area.
- Focus on clinical-research integration, ensuring that high-volume service lines (e.g., oncology, neuroscience) serve as financial engines to sustain academic efforts.
- Take steps to improve team-based care and minimize administrative burden, such as streamlining documentation requirements and compliance processes.
- Develop hybrid clinical-research models that allow physician-scientists to maintain research commitments without over-reliance on clinical revenue.
Clarify Work Effort Expectations and Career Progression
- Develop differentiated physician faculty tracks that reflect varying levels of clinical and academic focus, ensuring that roles and growth pathways align with institutional strategy.
- Establish a clear, transparent framework for defining faculty work effort across all responsibilities, with aligned expectations for each faculty track.
- Define minimum performance standards for both clinical and academic roles to support accountability, inform compensation decisions, and guide career development.
Redesign Compensation Models
- Assess market dynamics, including the expansion of key service lines among health systems, and evaluate the impact on physician faculty recruitment and retention.
- Address pay compression where salaries for entry-level roles are growing faster than those for senior faculty.
- Harmonize executive, Department Chair, and faculty incentive compensation models to drive engagement, performance, and institutional alignment.
- Introduce salary structures and faculty tracks that balance research, clinical work, and teaching responsibilities while integrating both academic and community practice market benchmarks.
Diversify Research Funding Streams
- Expand philanthropic efforts and forge industry partnerships to supplement lost NIH dollars.
- Prioritize big data, AI-driven research, and translational medicine—fields that align with commercial investment opportunities.
A Defining Moment for AMCs
In the past, AMCs that have successfully navigated financial challenges have done so by aligning leadership, restructuring financial models, and integrating research and clinical revenue streams more effectively. Institutions that act decisively—and take a proactive posture—will be best positioned to attract and retain top physicians, while safeguarding the long-term strength of their research enterprise and the culture of academic medicine, even in the face of uncertainty.
AMCs have an opportunity to differentiate through innovation, partnership, and a renewed commitment to the tripartite mission. The race for talent will continue to be won by forward-thinking organizations, and for AMCs, the time to sprint forward is now.