Background: Academic medical centers (AMCs) face severe financial constraints because they must now compete directly with private providers that focus exclusively on cost-effective healthcare delivery. Educational and research capacities developed at AMCs have been supported by government and third party payers, but government support is diminishing. Physicians are ill-equipped to respond to market pressures.

Data sources: Analyses of cultural change and restructuring in corporate giants such as Greyhound, IBM and FedEx are relevant to teaching hospitals. To succeed, organizations must flatten hierarchy, empower staff, train leaders, and mobilize intellectual capital. Effective leadership is essential.

Conclusion: Physicians must educate themselves on forces impacting the AMC, understand changes needed in the structure and processes of AMC governance and acquire competencies for leadership and management if AMCs are to survive and thrive. Surgeons should acquire competencies that will enable them to become leaders in the process of AMC transformation.