Tessa Quinn
Research hospitals in the United States receive funding from a variety of sources, including federal, state, and local governments, industry, and private nonprofit organizations. The distribution of funding varies across states and hospitals, with some receiving subsidies and federal aid, while others are funded through grants, contracts, and loan repayment programs. The National Institutes of Health (NIH) is a significant source of federal funding for medical research, with AAMC-member institutions conducting over 60% of extramural research with these funds. Additionally, two-thirds of federally sponsored health sciences research is conducted in institutions of higher education, research organizations, and hospitals, contributing to the advancement of health research in the country.
| Characteristics | Values |
|---|---|
| Primary source of federal funding | National Institutes of Health (NIH) |
| Other sources | Patient and disease groups, industry, voluntary health agencies, Medical Research Organizations (MROs) |
| Hospitals with the most NIH funding in 2023 | Leidos Biomedical Research, Johns Hopkins University, UC San Francisco, University of Pennsylvania, Duke University, University of Michigan at Ann Arbor, Massachusetts General Hospital, University of Pittsburgh |
| Hospitals with the most NIH funding in 2022 | UC San Francisco, Johns Hopkins University, University of Pennsylvania, University of Michigan at Ann Arbor, Duke University, University of Pittsburgh, University of Washington, Stanford University, Yale University, Columbia University |
| Hospitals with the most NIH funding in 2005 | UC San Francisco, Johns Hopkins University, University of Pennsylvania, University of Washington, Stanford University, Yale University, Columbia University, Duke University, University of Michigan at Ann Arbor, University of Pittsburgh |
| Hospitals with the most NIH funding in 1992 | UC San Francisco, Johns Hopkins University, University of Pennsylvania, University of Washington, Stanford University, Yale University, Columbia University, Duke University, University of Michigan at Ann Arbor, University of Pittsburgh |
| Federal funding for outcomes research in 1989 | $5.9 million from Medicare trust funds, $3.9 million from the Federal Hospital Insurance Trust Fund, and $2.1 million from the Federal Supplementary Medical Insurance Trust Fund |
| Proportion of federally sponsored health sciences research conducted in institutions of higher education | Two-thirds |
| Proportion of federally sponsored health sciences research performed in federal laboratories | One-quarter |
| Proportion of industrial health sciences research performed within corporate facilities | Majority |
| Proportion of federally sponsored research performed in private industrial laboratories | Small fraction |
| Federal aid distribution | No specific quantitative requirement or effective enforcement mechanism |
| Hospitals as nonprofit or publicly owned institutions | Three-quarters |
| Hospitals exempted from taxes | Property, sales, and income taxes |
| Surplus revenues used for | Improving facilities, undertaking medical research, providing free and discounted medical care to the poor |
| Exemption worth to nonprofit hospitals in 2020 | $28 billion |
What You'll Learn
Federal, state, and local governments
The federal government is a primary source of funding for research hospitals in the US. Two-thirds of federally sponsored health sciences research is conducted in institutions of higher education (colleges and universities), research organizations, and hospitals. The National Institutes of Health (NIH) is the country's primary funder of medical research, providing the basis for almost every test, treatment, and cure. The NIH funds over 60% of extramural research conducted by AAMC-member institutions.
The NIH budget has failed to keep up with inflation over the past decade, and the Trump administration attempted to limit its funding for research institutions. However, a federal judge blocked this attempt, arguing that it would harm American scientific prowess. The NIH continues to be a crucial source of funding for universities and academic medical centers, providing billions of dollars in grant money.
The Department of Veterans Affairs (VA) also provides financial support for residents and interns, with approximately 13% of trainees in the US receiving VA funding. Additionally, Congress appropriates R&D funds to the VA to conduct studies.
State governments also play a role in funding research hospitals. In some states, like California, 100% of DSH aid is allocated to public hospitals, captured by state officials for general fiscal purposes. However, this has led to criticism as it yields no measurable improvement in patient health.
Local governments may also provide funding for research hospitals, particularly for municipal hospitals. Municipal hospitals are established as public institutions, exempt from certain taxes, and are required to use surplus revenues for "community benefits," such as improving facilities, conducting medical research, or providing discounted medical care to the poor.
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Industry and private organisations
The United States is recognised as the world's greatest investor in health sciences research. In 1989, the US invested approximately $132 billion in research and development (R&D), with $20.6 billion going towards health-related research. This investment has grown by 65% in inflation-adjusted dollars over the past decade.
Health research in the US is funded by three autonomous yet interlocking sectors: federal, state, and local governments; industry; and private nonprofit organisations. In 1988, the federal, state, and local governments supported just over half (51%) of all health-related R&D in the country. Industry funded about 45%, and private nonprofit organisations funded about 4-5%. This ratio has changed slightly over the past decade, and the nation's investment in health research has tripled in current dollars.
Biotechnology is an important subcategory of industrial biomedical R&D. It involves using living organisms or their components to create or modify products, improve plants and animals, or develop microorganisms for specific purposes. The understanding of genetics, recombinant DNA, and cell fusion techniques has led to the emergence of "new biotechnology".
Additionally, two-thirds of federally sponsored health sciences research in the US is conducted in institutions of higher education, research organisations, and hospitals, with only a small fraction performed in private industrial laboratories. This decentralised nature of research efforts is considered a key advantage of the US approach to health research, contributing to its success over the past four decades.
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Medicare trust funds
Funding for Medicare comes from various sources, including general revenues (government contributions), payroll tax revenues paid by employers, workers, and the self-employed, and premiums paid by beneficiaries. In 2023, Medicare funding totalled $1 trillion. Medicare trust funds are held in two accounts by the US Treasury, and these funds can only be used for Medicare. Medicare Part A (Hospital Insurance or HI) benefits are paid out of the HI trust fund, which covers inpatient hospital care, skilled nursing facility care, home healthcare, and hospice care.
The solvency of the HI trust fund is a key measure of Medicare's financial condition. The Medicare trustees have projected that the HI trust fund will be depleted by 2036, an improvement of 5 years compared to previous estimates. To address this, the trustees have suggested an increase of 0.35% in taxable payroll or a spending reduction of 8% to balance the fund over the long term.
In addition to Medicare funding, hospitals in the US receive substantial public subsidies and support from federal agencies like the National Institutes of Health (NIH). The NIH is the nation's primary funder of medical research, and its funding has a significant impact on healthcare outcomes. However, the distribution of federal aid to hospitals has been criticised, with hospitals in affluent neighbourhoods sometimes receiving more funding than those serving poorer communities.
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National Institutes of Health (NIH)
The National Institutes of Health (NIH) is the primary federal agency for conducting and supporting medical research in the United States. It is the Federal focal point for health and medical research and is part of the United States Department of Health and Human Services (HHS). The NIH is one of the world's foremost medical research centres and is responsible for biomedical and public health research.
The NIH conducts its scientific research through the NIH Intramural Research Program (IRP) and provides significant biomedical research funding to non-NIH research facilities through its Extramural Research Program. The IRP is the largest biomedical research institution in the world, with 1,200 principal investigators and more than 4,000 postdoctoral fellows as of 2013. The extramural arm provided 28% of biomedical research funding as of 2003. In 2019, the NIH devoted 10% of its funding to research within its own facilities (intramural research) and gave more than 80% of its funding in research grants to extramural (outside) researchers.
The NIH funds medical research behind almost every test, treatment, and cure. For example, the NIH has saved 3.8 million lives through cancer research since 1991 and decreased the rate of heart attack deaths per 100,000 people by 56% between 1999 and 2020. The NIH also sponsors the Database of Genotypes and Phenotypes (dbGaP), a repository of information produced by studies investigating the interaction of genotype and phenotype.
The NIH offers health information for the public, scientists, researchers, medical professionals, patients, educators, and students. It also provides training opportunities, including internships and fellowships, at universities and other institutions across the U.S.
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Nonprofit hospitals
Three-quarters of hospitals in the US are either nonprofit or publicly owned institutions. Most American hospitals were established as municipal or charitable organizations with a commitment to providing free and discounted medical care to the poor. This responsibility is now recognized in federal law, aided by substantial public subsidies. However, the magnitude of state and federal subsidies to support hospitals now substantially exceeds the value of "uncompensated care" that facilities provide to the uninsured.
- New York-Presbyterian Hospital/Weill Cornell Medical Center (New York City)
- Florida Hospital Orlando
- Jackson Memorial Hospital (Miami)
- UPMC Presbyterian (Pittsburgh)
- Yale-New Haven Hospital (Connecticut)
- Orlando Regional Medical Center (Florida)
Medical research in nonprofit hospitals is also funded by various entities, including the federal government, patient and disease groups, and industry. A primary source of federal funding for medical research comes from the National Institutes of Health (NIH). The NIH funds research that leads to improved health outcomes, including cancer research and heart attack prevention.
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Frequently asked questions
Research hospitals in the US are funded by federal, state, and local governments, industry, and private nonprofit organizations.
The National Institutes of Health (NIH) is the primary source of federal funding for research hospitals in the US.
Research hospitals in the US receive billions of dollars in funding from various sources. The amount of funding can vary depending on the state, the type of hospital, and the specific research being conducted.
The distribution of funding to research hospitals in the US has been criticized as being senseless and hard to justify. There have been calls for a more equitable distribution based on the number of uninsured local residents.
Some research hospitals in the US that have received significant funding include Massachusetts General Hospital, which received $675,290,582 in NIH funding in Fiscal Year 2023, and Johns Hopkins University, which led all US universities in NIH funding the same year with $842,956,584 in awards.
