The Trump administration announced plans to cut $5.8 billion from the NIH 2018 budget.

The Trump administration announced plans to cut $5.8 billion from the National Institutes of Health (NIH) 2018 budget, primarily by limiting indirect cost reimbursements. Although the outcome is yet to be determined, the potential impact is causing the research community to look at their operations.

"While we have seen proposals in the past as new administrations are looking at limited federal dollars, we recommend you wait and see before assuming any dramatic cutting of reimbursements."

While we have seen proposals in the past as new administrations are looking at limited federal dollars, we recommend you wait and see before assuming any dramatic cutting of reimbursements. There are also steps institutions can take now to simplify the process for managing those costs to prepare for a future reimbursement reduction.

1. Assess your current cost structure, identifying areas for further cost control. 

A recent report by the Association of American Medical Colleges (AAMC) and Huron measured the investment of academic medical research, surveying 46 institutions receiving external funding. The report found an institution’s average investment in research was an additional $0.53 for each dollar of sponsored research received — with much of the gap a result of research sponsors providing far less than the federally negotiated F&A rate, leaving more costs unrecovered.    

The report helps illustrate areas where institutions can potentially control costs further. For instance, survey respondents found that outside of unrecovered F&A, research expenditures were highest around the salary support of the research effort, startup packages for recruiting new scientists, mandatory and voluntary committed cost sharing and cost overruns.  

2. Evaluate and diversify your research portfolio. 

It's challenging to achieve your long-term research goals while balancing them with your short-term funding requirements — yet diversifying your research portfolio can be an effective means to rely on other sources of funding outside of federal awards. 

When evaluating, consider what other funding opportunities exist, considering industry, patient advocacy groups and philanthropic organizations as viable sources.

3. Consider alternative operating models to further reduce costs. 

For institutions that have already cut costs and are looking for other areas to streamline research operations, consider alternative service-delivery models. For instance, an internal shared services approach can be a cost-effective means to centralize research administration support, training staff to specialize in specific functions of an operation.  

For institutions with a smaller research portfolio, a partial- or full-outsource model is another alternative. Research administration outsourcing can help shift the financial, operational and regulatory burden off of an institution by providing back-office support services that include coverage analyses, budget development and negotiation, financial reporting and grant submission support, among other services.  

Huron offers partial and full outsourcing options through Research Office. 

Huron’s higher education research practice will continue to monitor and report additional developments on this topic in our weekly Clinical Research Management Briefing newsletter, monthly Future of Higher Education newsletter, and on our website.