Back to Front PageVOLUME 6, NUMBER 4

Development Assumes a Prominent Place on Medical School Agendas

By Jennifer Proctor

 

With gifts received through Campaign Minnesota, the University of Minnesota was able to more than double the amount of scholarship support for medical students.

With lower patient care revenues, dwindling state appropriations, and an emerging economy that seems unsure at best, many medical schools and teaching hospitals argue that fund-raising is more important than ever before to shore up institu-tional finances.

"While philanthropy can't by itself fill the funding gap, it has become an absolutely essential means of supporting research and education," says Brad Choate, president and CEO of the Minnesota Medical Foundation, which has the primary role of attracting philanthropic support for the University of Minnesota's two medical schools and its public health school.

He explains that the growing reliance on development has come as cuts in Medicare, the rise of managed care, and other elements of the rapidly changing health care environment have left medical schools and teaching hospitals scrambling to secure needed funds. According to AAMC figures from 2000, teaching hospital operating margins, which include sources of income deriving from hospital operations (primarily patient care activities), have been falling since 1996. The decline for integrated major teaching hospitals has been more severe than that for other hospitals.

Making matters worse, funding from some state governments is static or decreasing. In Minnesota, for example, Gov. Jesse Ventura has expressed his desire to limit spending increases for government agencies and programs, including higher education. While the state continues to maintain a budget surplus, officials have agreed to direct much of it into tax rebates or cuts.

The traditional sources of revenue have changed, and the opportunity for philanthropy clearly exists, Choate says. And, he says, the time is ripe for charitable giving.

Individuals, corporations, and foundations are contributing at record levels, with total charitable giving in the United States topping $190 billion in 1999 and giving to health reaching $17.9 billion. Medical schools' coffers have increased likewise. Choate says that in four years, gifts through Campaign Minnesota have more than doubled the amount of scholarship support for University of Minnesota medical students - from $420,000 in 1997 to $1 million in 2001. The campaign has also led to the creation of 26 new endowed faculty positions.

Despite the current economic slowdown, experts express confidence that charitable giving will continue to rise in America. While a highly publicized handful of former dot-com millionaires have found themselves out of a job, many Americans stand poised for considerable inheritances. In fact, some predict that the United States will soon see an unprecedented intergenerational transfer of wealth.

"There is a convergence of two powerful forces - a significantly wealthier population and tremendous advances in science and medicine," Choate says. Now more than ever, the people who really want to make a difference in medical education and research have the resources to do it, he adds.

The new economy is also bringing new types of donors: Benefactors are becoming more involved in their charitable projects. Many modern-day philanthropists built their companies and their fortunes and, therefore, desire a hands-on approach to charitable giving, Choate says. "Donors care about the program beyond the money, and they want to contribute their expertise, abilities, and ideas."

He stresses that because of the growing need for philanthropy, development professionals must be well trained, especially when fund-raising for medical endeavors, such as research. At the same time, faculty must be better educated on the importance of development, something that Choate believes is occurring as faculty members become directly involved in campaign efforts.

Development Team Work

At the Oregon Health Sciences University, development is a "team sport," says Timothy Goldfarb, director of the health care system. Goldfarb works with the university president, medical school dean, vice president of clinical programs, and director of the foundation, as well as department chairs and individual faculty members, to raise money that supports the university as a whole.

So instead of the hospital competing for donations with the medical school or one department fighting another for a donor, the university collaborates on development. "Overall, the philanthropic effort of the institution benefits everyone," he says.

Goldfarb supports a collaborative approach among the health care system, medical school, and university for effective fund-raising. "It used to be that getting donations was done one-on-one in situational, almost accidental, occasions," he says. "Now fund-raising is a team sport, not an individual one."

The institution educates and mentors everyone who does development work. This widespread training not only allows faculty to understand the benefits of the team approach, but, Goldfarb says, it also teaches them that development requires more than taking a donor out to lunch.

Because of the lack of competition for philanthropic dollars at Oregon, Goldfarb estimates that he spends only about eight to 16 hours a month on direct fund-raising activities. Indirectly, he also contributes his time through his involvement in numerous strategic planning discussions.

In contrast, he estimates that the university's president, Peter Kohler, M.D., spends 20 percent of his professional time on direct development activities. Goldfarb adds that department chairs and individual faculty members also do "heavy lifting" in fund-raising because they have direct, personal connections with patients or are conducting research on diseases of concern to benefactors.

Development, Goldfarb stresses, is only growing in importance. It takes far less energy, planning, and investment to generate support through fund-raising than to figure out how to increase patient care revenue, he says.

Campaigning for Resources

Darrell Kirch, M.D., dean of the Pennsylvania State University College of Medicine and CEO of the Milton S. Hershey Medical Center, says that because of slowing revenue streams, the development needs of medical schools can be more severe than those of the rest of the university. "There could be an emerging competition between medical schools and their universities for development money," he predicts.

Dr. Kirch says one of the key questions then becomes how university leadership balances the needs of the medical school with those of the rest of the university. "One of the biggest challenges for medical school deans is explaining the complicated and convoluted finance system of medical schools, and then explaining why the resources are threatened," he adds.

Diminishing resources are requiring medical school deans to become more involved in development activities. For Dr. Kirch, it means leading the school's strategic planning process and ensuring that the university as a whole understands the medical school's priorities. In addition, he takes part in the development process so that he can identify how philanthropy can be best aligned with the strategic goals of the medical school - whether it be bricks-and-mortar projects, the recruitment of faculty, scholarships, or something else.

Dr. Kirch honed his fund-raising skills through experience. "It's like every other management or leadership challenge that faces a dean," he says. "You learn the skills on the job." He also credits experienced staff at the university and medical school with helping him learn the development ropes.

As the challenge of securing financial resources has grown, medical school faculty and staff have become increasingly involved in development. Faculty members have an active role in fund-raising at Penn State, like those at Oregon Health Sciences University. However, Dr. Kirch acknowledges quandaries with involving faculty in development. "The average faculty member would love to be involved in development," he says. "The average faculty member would, also understandably, like to be the identified priority of the institution. There is no shortage of eagerness."

The difficulty emerges in trying to get individual faculty members to understand and respect the importance of the clearly defined foci that are essential in coordinating fund-raising efforts both across campus and within the medical school. And like the dean, faculty members have to build their development skills. At Penn State, development staff works directly with faculty in targeted one-on-one sessions.

Penn State is in the midst of a billion-dollar fund-raising effort, dubbed the Grand Destiny campaign. Launched more than three years ago, the campaign began with goals similar to the university's past efforts. No individual college was named as a priority, and the objectives centered on the general educational mission of the university.

However, the decreasing resources of the medical school and teaching hospitals became evident, and with the president's full support, the enhancement of medicine became a cited goal midway through the campaign.

While the campaign was already in progress when Dr. Kirch assumed the dean's position last year, he acknowledges that the priority shift makes his role in development very important. "We have to have ambitious campaign goals because there is no other source for the money," he says. Academic medical centers require philanthropy to thrive, he stresses.

Dr. Kirch is hopeful that development will continue to help academic medical centers care for patients, educate medical students, and conduct research - regardless of the economy. "I don't think people will temper their philanthropic goals. They will try to look beyond the short-term economic ups and downs and take a long-term view."

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18 June 2001