Painful medicine: managed care and the fate of America's major teaching hospitals.

: Healthcare spending in the United States has risen steadily throughout the post-World War II period as the American healthcare system has been transformed from cottage industry to big business. The increasing rate of social investment in healthcare also transformed America's major teaching hospitals. As a case in point, the University of Iowa Hospitals and Clinics saw annual operating revenues rise from $1 million in 1945 to more than $350 million in 1995, which was accompanied by an extraordinary expansion in its physical facilities and in its multifaceted operations. In the 1970s and even more so in the 1980s, however, the unceasing climb in healthcare spending fueled concern among policy experts, politicians, employers, and insurers alike. In turn, the search for effective cost controls led to the current managed care revolution. While the end of that revolution is not yet in sight, managed care has, it appears, effected significant cost savings, but at no small cost to America's major teaching hospitals and their social missions of teaching, research, and patient care. Whether those missions can survive--and, if so, in what form--in a healthcare system dominated by the managed care ethos is an increasingly important concern.