Over the last ten years, American colleges and universities have spent over $400 billion on their physical plants despite the fact that student enrollments have continued to decline. The increase in maintenance and energy costs has caused a financial strain, forcing cutbacks in vital ingredients of education: research, course offerings, student financial aid, faculty and staff support. The author draws a comparison between higher education and the health care industry and suggests that costs can be reduced by avoiding duplication of facilities and developing modes of interinstitutional cooperation. An increase in institutional efficiency will reduce the reliance of the higher education community on public subsidies for operations. This approach is seen to be particularly important during an era when every qualified student is expected to have the opportunity to obtain a university education without undue financial strain.