Duke University is under “extraordinary stress” and needs to get smaller in the face of federal Medicaid spending reductions and other policy changes, President Vincent Price told faculty last month.
Duke Health System expects to lose revenue of $1 billion over the next five years, five times more than previously estimated, according to Vice President for Finance Rachel Satterfield. Much of that impact stems from the federal government’s “One Big Beautiful Bill” passed in July, officials said in comments to the university’s Academic Council on Sept. 25.
“This is unusual behavior for universities,” Price said. “Universities have done nothing
but grow. I’m not talking just about Duke, but universities in general, for a long time.
Compression is not what we’re all that great at doing.”
Duke faces particular pressure to “fund the School of Medicine on an annual basis at the current level of $240 million a year,” Satterfield said.
Duke is ranked as the seventh-best U.S. national university in this year’s U.S. News & World Report survey. Its medical school is also considered a top-10 institution, though it doesn’t participate in the U.S. survey.
Price, Satterfield and Executive Vice President Daniel Ennis were on hand to explain various moves to position the university to absorb cuts in support due to policy changes by Congress and the Trump administration and the ongoing federal government shutdown.
The law is expected to reduce federal Medicaid spending by $911 million over 10 years, according to a Congressional Budget Office cost estimate. Supporters say the cost-cutting is needed to slow the program’s growth amid massive federal deficits, to ferret out waste and abuse and to encourage more working-age adults to enter the workforce.
For each month the shutdown continues, Duke loses sponsored research subsidies of about $60 million, Ennis said.
Duke Health made up 64% of the university’s operating revenue of $11.3 billion in the 2024-25 fiscal year. Of the hospital system’s revenue, about $1.1 billion comes from research support, including federal funding.
Officials noted Duke has an endowment of $12.3 billion, of which 70% is restricted to honor donor requests. It also has $2.6 billion, with no plans for future borrowing.
Price is seeking a $350 million annual cut in Duke’s operating costs over the next five years. Voluntary staff and faculty requirements are providing more than a third of those savings. About 45 people, mostly from the medical school, were laid off, Satterfield said.
University officials’ concerns over finances come amid pressure from various community groups in Durham urging Duke to make voluntary contributions for city projects in lieu of property tax exemptions. Campus leaders say the university’s support for Durham far outweighs the tax benefits.
Meanwhile, the Trump administration’s clampdown on foreign-student visas didn’t cause “nearly the loss” of revenue that Duke officials had feared, she said.
A congressional move to tax large university endowments is expected to cost Duke $20 million to $40 million more a year. That’s less than officials had feared, Satterfield said.
Aside from Medicaid cuts, the biggest problem Duke faces on the financial front is the Trump administration’s push to lower to 15% the amount of overhead expenses universities can charge for research grants. Satterfield expects that change will take $662 million off the bottom line over five years.
Still, projections have things running “still above break-even, which is kind of miraculous,” she told the Academic Council.
But the fallout for Duke Health means the “School of Medicine is under profound pressure,” Ennis said. “If the School of Medicine is under profound pressure, the rest of the university is under pressure.”
Price added that Duke is realigning its capital planning to focus on “the renewal of existing buildings” instead of erecting new ones.
Price said the university’s fundraising arm has to start helping the healthcare operation. “We do not have a history of philanthropy supporting the clinical enterprise. That has to change, and it’s unusual.”
With Duke’s “resource envelope shrinking, we have to become smaller,” Price added.
Duke Health is North Carolina’s third-largest healthcare system behind Atrium Health and Novant Health. It owns Duke University Hospital, Duke Regional Hospital in Durham, Duke Raleigh Hospital and Duke Health Lake Norman Hospital.
