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Comparative Study
. 2009 Jan;84(1):26-31.
doi: 10.1097/ACM.0b013e3181904633.

The economics of new faculty hires in basic science

E Ray Dorsey  1 , Brian C Van Wuyckhuyse, Christopher A Beck, William P Passalacqua, David S Guzick
Affiliations
Comparative Study

The economics of new faculty hires in basic science

E Ray Dorsey et al. Acad Med. 2009 Jan.

Abstract

Purpose: To compare the streams of expenses and revenues associated with investment in a cohort of basic science investigators at the University of Rochester School of Medicine & Dentistry for seven years.

Method: The authors evaluated a medical school's financial investment in 25 basic science faculty who were hired between 1999 and 2004 to expand basic science research. The authors compared direct and indirect costs with the extramural grant support generated by these investigators through 2006. To facilitate a comparison of investments made and grants generated, the authors calculated present value (in 2006 dollars) of revenues and expenses using the school's approximate cost of capital.

Results: Of the 25 faculty members hired, 24 (96%) remained at the school through 2006. From 1999 to 2006, the school invested a total of $69.0 million ($33.1 million in start-up costs and $35.9 million in indirect costs) to support the faculty members. Through 2006, these faculty members generated $99.7 million in extramural grant revenue ($70.7 million in direct grant revenue and $29.1 million in indirect grant revenue). Whereas the faculty generated $1.45 in total grant revenue per dollar invested, start-up expenses and incomplete recovery of indirect costs required the school to add 40 cents to every grant dollar generated to achieve financial equilibrium.

Conclusions: Investments in basic science research, even when successful, may require significant financial subsidies from academic health centers.

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Figures

Figure 1
Figure 1
Total Investment Made by University of Rochester School of Medicine & Dentistry and Total Extramural Grant Revenue Generated by a Recently Hired Cohort of Basic Science Faculty, 1999 - 2006. The values in the figure represent the present value in 2006 dollars of the investments made and extramural grant support generated from 1999 - 2006. The present value is calculated as C x (1 + r)^t where C is the value of the investment made or grant generated, r is the cost of capital, and t is the time (in years) since the investment was made or the grant was generated. Of the $35.9 million in indirect costs invested by the school from 1999 to 2006, the school was able to recover only $29.1 million (81%) through grants generated by the cohort through 2006. Therefore, the school invested a total of $39.9 million ($33.1 million in start-up packages plus $6.8 million in unrecovered indirect costs) in order to generate $99.7 million in grants (most of which supported the research of the hires).
Figure 2
Figure 2
Cumulative Present Value of Investment in and Grant Revenue Generated by a Recently Hired Basic Science Faculty Cohort at the University of Rochester Medical Center, 1999 - 2006.
See this image and copyright information in PMC

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