Is Higher Education Today Going the Way of Hospitals in the 1980s?

As the data flow continues from the published articles about the economic crisis and its impact on colleges and universities, it strikes me that the writers may be confusing facts of the economic crisis with changes inside the industry itself.  It is true that public universities are under pressure from state budgets that are buckling under the weight of reduced tax revenues.  It is true that private institutions are concerned that their tuitions are too high for families concerned about the job of one or both parents.  It is also true that online institutions are growing their enrollments at rates that none of the traditional college sectors have seen since the late 1940’s and early 1950’s.  Is there a linkage?

In the 1980’s and 1990’s, I was an officer of several healthcare companies.  During that era, the high costs of hospital stays created opportunities for administrators and physicians to seek other options.  One of the outcomes of that era was the Outpatient Surgery Center.  Initially, some outpatient surgery centers were established off of the hospital campus in order to keep the cost reimbursement for Medicare and Medicaid from being distorted.  Eventually, every hospital established an outpatient surgery center as the trend widened and reimbursement rules adjusted to accommodate the new trend.  Physicians developed less invasive types of surgery such as laparoscopy which shortened the recovery time, the exposure to infections, and the requirement for lengthy hospital stays.

It is my view that online degree programs are similar to the outpatient surgery centers of the 1980’s.  An online program does not need any of the traditional bricks and mortar requirements of physical classrooms, dormitories, dining halls, etc.  Thus, the costs to operate the program are less.  The programs offer convenient access to students who may not be able to attend campus-based programs.  In many cases, the programs are offered 12 months a year which allows the student to choose when to attend versus conforming to the more standard three semester or four quarters schedule demanded by a residential campus restricted by its physical limitations.

In a September 8, 2005 article in the Economist, Peter Drucker was quoted as saying “Thirty years from now, the big university campuses will be relics.”  Drucker went on to say that he considered “the American research university of the past 40 years to be a failure and that help was on the way in the form of internet classes and for-profit universities.”  I agree that internet programs can help the access and affordability issues of many students seeking an education.  I think Drucker’s reference to the for-profit status was only symbolic of the for-profit institution’s quest to meet its customers’ needs more so than a state-supported or endowed non-profit institution.

The cost pressures by insurers and the federal and state government forced hospitals and healthcare providers to change the way they conducted their business.  Many community hospitals closed or were consolidated once it became evident that they had to operate effectively and efficiently.  Eventually, outpatient surgery centers became a standard feature at most hospitals (rehab hospitals excluded) and the length of stay and costs of many procedures decreased.  I think the similarity is building in higher education and students should benefit.  The question is how soon will the changes occur and which institutions will thrive and which will not?

Subjects of Interest


Higher Education

Independent Schools


Student Persistence