Why Do University Hospitals Require A Distinct Management Model?

Managing care, education, research, referral pathways, and financial sustainability within a single system

It would be incomplete to define university hospitals merely as hospitals with high bed capacity or advanced technology. These institutions simultaneously treat patients, train physicians and other health professionals, provide specialist education, produce scientific research, develop new diagnostic and treatment methods, and often serve as referral centers for the most complex cases that the broader health system cannot resolve. For this reason, the management challenge of a university hospital is broader than the operational challenge of a conventional hospital.

The OECD’s 2026 study on tertiary care describes this structure in tertiary institutions integrated with academic functions as a “triple mission”: health care, medical education, and research. The OECD also emphasizes that tertiary services do not fit easily into standard payment mechanisms because they are multidisciplinary, resource-intensive, and exposed to rapid technological change [1]. This observation is one of the clearest explanations for why university hospitals need a distinct governance and financing architecture.

Managing a university hospital means managing not only a hospital, but also the present health system, its human capital, and its future scientific capacity at the same time.

Why is the patient profile of a university hospital different?

One of the core functions of tertiary and academic centers is to manage patients who require advanced expertise, advanced technology, and multidisciplinary decision-making. The OECD notes that tertiary care particularly includes complex and severe health problems, organ transplantation, neurosurgery, cardiac surgery, advanced cancer treatments, rare diseases, intensive care, and advanced diagnostic methods [1]. The Alliance of Academic Health Centers International (AAHCI) likewise defines academic health centers as institutions specializing in the most complex and difficult diagnoses and treatments while also educating future generations of health professionals [3].

For this reason, the patient population referred to university hospitals may naturally include a higher proportion of advanced-stage, rare, multimorbid, treatment-resistant, or previously treated cases. It would not be correct to generalize that “every patient is severe”; however, the nature of being a referral center increases case complexity and resource utilization. Even two patients with the same diagnostic label may consume very different levels of resources.

This leads to an important management principle: not every high cost represents inefficiency. Sometimes high cost is the price of treating the most difficult patient in the health system with the most advanced technology and highest level of expertise. Therefore, evaluating a university hospital only by revenue per patient, length of stay, or departmental profitability can be misleading.

Without a referral chain, the mission of the university hospital is eroded

For university hospitals to fulfill their core functions, the different levels of the health system need a functioning referral and back-referral mechanism. The World Health Organization positions primary care as people’s first point of contact with the health system and considers referral to secondary or tertiary institutions when needed to be part of primary care’s coordination role [2]. The OECD similarly emphasizes that access to tertiary care in many systems occurs through referral by general practitioners or secondary-care providers [1].

Primary care should resolve preventive services, early diagnosis, a substantial share of chronic disease management, and basic treatments as close as possible to where people live. Secondary care should undertake standard specialty services, common surgical procedures, and a substantial share of general hospital care. The core capacity of university hospitals should then be reserved for cases that cannot be resolved at these two levels and require advanced expertise and multidisciplinary management.

An uncontrolled flow of routine and low-complexity patients into university hospitals does more than create crowding. It can reduce the time faculty members can devote to complex cases, push research into the background, consume advanced technology capacity on routine services, lengthen waiting times, and make access more difficult for true referral patients. In addition, if the financing system turns routine cases into easier revenue-generating service lines, the institution may gradually become dependent on low-complexity patient volume in order to finance its academic mission.

The OECD’s example from Slovenia highlights exactly this type of incentive risk: when institutional add-on payments to tertiary institutions do not sufficiently distinguish routine elective procedures from genuinely high-complexity cases, cross-subsidization may emerge between profitable routine services and advanced specialty services [1]. This example shows that the referral chain is not merely a bureaucratic gatekeeping mechanism, but also a system tool that protects appropriate resource allocation and the academic mission.

The stronger primary and secondary care become, the more university hospitals can focus on their true mission.

A university hospital is not merely an institution that applies existing treatments

What distinguishes an academic hospital is that it does not stop at applying the treatments already known today. It is expected to investigate new therapies, conduct clinical research, evaluate new medicines and devices, establish referral structures for rare diseases, develop personalized medicine and genomics applications, and bring artificial intelligence and biotechnology into clinical practice. The OECD particularly emphasizes the central role of university hospitals in clinical research, translational research, and the development of new treatments [1].

The economic logic of these activities differs from routine health care. Research outcomes do not always emerge in the short term; some projects take years, some generate scientific knowledge without becoming a commercial product, while others pave the way for a new treatment only after hundreds of attempts. For this reason, evaluating the research budget only by asking “how much revenue did it generate this year?” weakens the scientific mission.

Charité – Universitätsmedizin Berlin in Germany is a strong example of this scale. According to Charité’s 2025 figures, the institution operated across four campuses with approximately 100 departments and institutes, 3,293 beds, 25,256 employees, and 5,882 researchers and physicians, while educating 10,199 students. In the same year, it secured approximately EUR 292.5 million in third-party research funding [7]. A structure of this scale is no longer simply a “hospital”; it is an academic health system in which clinical care, education, research, and innovation are managed within one ecosystem.

Financial risk: Three different missions cannot be sustained by a single revenue stream

One of the most critical structural problems of university hospitals is the mismatch between service revenues and the costs of the academic mission. Complex patients may require more specialists, more consultations, longer hospital stays, more expensive medicines and devices, and more advanced laboratory and imaging services. At the same time, the same institution must finance student and resident education, scientific research, laboratory infrastructure, data management, ethics committee processes, clinical research organization, and research personnel.

AAMC studies on “funds flow” in academic health systems describe a similar problem: who generates clinical revenue, how much of it should be transferred to education and research, and how resources should be distributed across different missions are among the fundamental management challenges of academic health systems. Narrowing clinical margins and rising education and research costs make it even more critical to align financial flows with institutional strategy [8].

There are two extreme risks. The first is forcing a university hospital to maximize profit according to the logic of a conventional commercial enterprise. This may create pressure to avoid high-cost, low-return complex cases, education, and research. The second is to push financial discipline completely into the background in the name of the academic mission. An institution that continuously loses money, cannot service its debt, cannot renew its equipment, and cannot develop its staff cannot sustain its scientific mission either.

Therefore, the correct objective is not “maximum profit” but financially sustainable value creation. A university hospital should be capable of generating a positive operating result; however, the purpose of the resulting surplus should not be distribution to shareholders, but reinvestment in service quality, human resources, research, education, and technology. This is a more appropriate framework for the institutional sustainability of an academic health system.

Around the world, the cost of the academic mission is recognized through separate funding

International examples show that the burden of education and research is not left entirely within ordinary service tariffs. According to the OECD’s 2026 study, France supports education, research, referral, and innovation missions through a separate financing mechanism known as MERRI. In 2023, MERRI funding reached EUR 5.91 billion, equivalent to approximately 5.8% of the total hospital budget. Of this amount, EUR 1.53 billion was allocated to education [1].

In Austria, the additional costs generated by university hospitals’ education and research missions are covered through a separate clinical additional-cost mechanism known as “Klinischer Mehraufwand - KMA.” For example, in addition to the global hospital budget for AKH Vienna, KMA components cover investment, cash, and clinical physician personnel costs [1]. These models do not need to be copied directly by other countries; what matters is the underlying principle: making the burden of education and research visible and financing it separately.

This approach also creates financial transparency. When the cost of service delivery, education, and research are blended together, the institution cannot see which mission consumes which resources. Under such a structure, genuine efficiency analysis is also impossible. “Mission-based cost accounting” should therefore be one of the core management tools for university hospitals.

The solution: Multi-source and mission-based financing

Linking all university hospital financing to patient-care revenue creates a conflict between the institution’s academic responsibilities and its financial incentives. A healthier structure should bring together service revenues, publicly defined education support, research funds, national and international project grants, clinical trials, university-industry partnerships, technology transfer and intellectual-property income, and donations and philanthropy within the same ecosystem.

Research and project-development capacity in particular should be professionalized. It is not enough for a university hospital simply to employ scientists who conduct research; it also needs a professional research and innovation office that develops projects, monitors national and international funding opportunities, prepares budgets, builds partnerships, and manages contracts and intellectual-property processes. The institution should move from being a structure that “waits for resources” to an organization that designs projects with measurable impact and secures funding for them.

Donations and philanthropy are not a way to close deficits; they are partnerships in mission

One of the important characteristics of strong academic health systems is the voluntary-support relationship they establish with society. Philanthropic individuals, alumni, foundations, and companies can support concrete goals such as research centers, scholarship programs, new treatment projects, child health, cancer care, rare diseases, simulation centers, or researcher-development programs.

Mayo Clinic explicitly states that philanthropy supports clinical care, pioneering research, and the education of future health leaders [10]. In Singapore, NUHS manages donations through a separate registered charity, the NUHS Fund, with governance and internal-control mechanisms to support research, education, and patient programs [6]. These two examples point to an important principle: philanthropy is not a method for covering an unplanned budget deficit; it is a vehicle for voluntary partnership in a clearly defined health and scientific mission.

University hospitals should therefore build a professional “development/fundraising” capability. Resource requests should not be abstract. Instead of saying “our hospital needs money,” institutions should prepare projects with clearly defined objectives, budgets, timelines, patient and societal impact, success indicators, and sustainability models. Examples include a genomic diagnostic program for rare diseases, an advanced stroke center, a childhood cancer research fund, an AI-assisted early-diagnosis platform, or a simulation center for health professionals. These are fundable structures with both scientific and social value.

The correct sequence: Develop the project - define its impact - fund it - measure it - transparently communicate the results to society and supporters.

Value-based management: Measuring success beyond profitability

Financial discipline is indispensable in a university hospital; however, turnover or operating profit alone cannot be the measure of success. Michael Porter’s value framework in health care defines value by evaluating the health outcomes achieved for patients together with the resources used to produce those outcomes [11]. In a university hospital, this framework needs to be expanded even further.

The value of an academic health center should be assessed by considering together its clinical outcomes, patient safety, health gains achieved in complex cases, the specialists and health professionals it trains, scientific publications and research outputs, clinical trials, new treatments and technologies produced, contribution to society, access, and financial sustainability. Removing education and research from the performance dashboard and measuring only service revenue distances the university hospital from its own mission.

What should a distinct management model mean?

Proposing a distinct management model for a university hospital should not mean exempting it from financial or operational discipline. On the contrary, a more complex mission requires more professional and transparent management. The authorities and responsibilities of the rectorate, medical faculty/dean’s office, hospital administration, chief medical office, department chairs, and research structures should be clearly defined. Academic freedom should be preserved while patient safety, quality, budget, human resources, and operational standards are managed within institutional discipline.

Johns Hopkins Medicine states that since 1997 it has brought together the leadership of the medical school and the health system within an integrated governance framework, enabling the missions of patient care, research, and education to be managed together [4]. The National University Health System (NUHS) in Singapore explicitly defines itself as an integrated academic health system based on the triple mission of care, education, and research, while also operating as a regional health system through hospitals, specialty centers, polyclinics, and community providers [5]. This structure is a strong example of how the referral chain and the academic center can be managed not as disconnected entities but as different levels within the same system.

What model could be proposed for Türkiye?

For Türkiye, the need is to reassess university hospitals from an “academic health system” perspective rather than forcing them into a single conventional hospital performance model. Each institution will differ in scale, ownership structure, and regional role, but the core architecture can be shared.

First, the referral chain should be strengthened; a substantial share of routine and standard cases should be resolved in primary and secondary care, while preserving the university hospital’s capacity to receive complex and referral cases. Electronic referral, back-referral, teleconsultation, shared clinical protocols, and regional service networks can support this structure. The patient should not be someone who is “turned away,” but someone who is directed to the right level of care.

Second, financing should make four separate missions visible: clinical care, education, research, and referral/advanced-technology capacity. While payment models sensitive to case complexity are developed, the additional costs of education and research should be supported through separate budget lines. Cross-subsidization within the institution should be as transparent as possible; it should be measurable which service line produces what and which academic mission it finances.

Third, professional management capacity in university hospitals should be strengthened. Academic leadership and healthcare management are not alternatives to one another. A strong model requires joint leadership by academics and professional managers who understand academic culture, can interpret the clinical system, and are competent in finance, human resources, quality, technology, research management, and operations.

Fourth, separate professional structures should be established for research, project development, clinical trials, technology transfer, international funding, and philanthropy. A university hospital’s ability to diversify its resources should depend on institutional systems, not personal relationships. Donations and voluntary support should also be directed to defined projects through ethical, transparent, and traceable governance.

Finally, the performance system should be redefined. Bed occupancy, outpatient volume, number of operations, and revenue are important indicators, but they are not sufficient on their own. Outcomes in complex patients, mortality and complications, patient safety, resident and student education quality, research funding, number of clinical trials, scientific output, technology transfer, access for referral cases, patient experience, and societal impact should be monitored on the same management dashboard.

Conclusion: The true balance sheet of the university hospital

University hospitals may be among the most expensive institutions in a health system, but when properly managed they can also be among the institutions that generate the greatest strategic value. These organizations do more than treat today’s patient. They train tomorrow’s physicians and specialists, investigate new treatments, offer hope to the most difficult patients, contribute to the development of health technology, and expand the country’s scientific capacity.

For this reason, the financial sustainability of a university hospital and its academic mission should not be seen as opposing objectives. When an effective referral chain, mission-based financing, professional governance, research funding, project-development capacity, transparent philanthropy, and a value-based performance system come together, these two objectives can reinforce each other.

The success of a university hospital should not be measured by how many patients it sees, but by how much advanced value it creates for patients who truly need it, how many qualified professionals it trains, and how much it contributes to the treatments of the future.

The true balance sheet of a university hospital is not merely its year-end financial result; it is the lives it saves, the people it trains, the science it produces, and the value it leaves to the health system of the future.

Behlül Ünver

President, World Health Tourism Platform

References

1. Lorenzoni, L. (2026). Best practice in the regulation and financing of tertiary care based on case studies from five OECD Countries: Lessons for Slovenia. OECD Health Working Papers, No. 191. https://doi.org/10.1787/8e7ae7ab-en

2. World Health Organization. (2022). Primary health care - Questions and answers. https://www.who.int/news-room/questions-and-answers/item/primary-health-care

3. Association of American Medical Colleges (AAMC). Alliance of Academic Health Centers International (AAHCI). Academic health centers and systems. https://www.aamc.org/career-development/affinity-groups/alliance-academic-health-centers-and-aahci

4. Johns Hopkins Medicine. Leadership - integrated governance of Johns Hopkins Medicine. https://www.hopkinsmedicine.org/about/leadership

5. National University Health System (NUHS), Singapore. Who We Are - Academic Health System and Regional Health System. https://www.nuhs.edu.sg/about-nuhs

6. National University Health System (NUHS), Singapore. About NUHS Fund. https://www.nuhs.edu.sg/giving/about-nuhs-fund

7. Charité - Universitätsmedizin Berlin. Facts & Figures 2025. https://www.charite.de/en/charite/about_us/facts_figures/

8. Association of American Medical Colleges (AAMC). (2018). Funds flow: What you need to know. https://www.aamc.org/news/funds-flow-what-you-need-know

9. Association of American Medical Colleges (AAMC). Patient Care Data Snapshots - teaching hospitals, complex care and hospital financing. https://www.aamc.org/data-reports/teaching-hospitals/report/aamc-patient-care-data-snapshots

10. Mayo Clinic. Philanthropy at Mayo Clinic / Giving to Mayo Clinic. https://www.mayoclinic.org/giving-to-mayo-clinic

11. Porter, M. E. (2010). What Is Value in Health Care? New England Journal of Medicine, 363, 2477-2481. https://doi.org/10.1056/NEJMp1011024

University Hospitals