MANAGING ACADEMIC HEALTH CENTERS: MEETING THE CHALLENGES OF THE NEW HEALTH CARE WORLD A Report of The Commonwealth Fund Task Force on Academic Health Centers October 2000 Support for this research was provided by The Commonwealth Fund. The views presented here are those of the Task Force on Academic Health Centers and should not be attributed to the Fund or its directors, officers, or staff. Copies of this report are available from The Commonwealth Fund by calling our toll- free publications line at 1-888-777-2744 and ordering publication number 408. The report can also be found on the Fund’s website at www.cmwf.org. THE COMMONWEALTH FUND TASK FORCE ON ACADEMIC HEALTH CENTERS CHAIR Samuel O. Thier, M.D. Michael M.E. Johns, M.D. President and Chief Executive Officer Executive Vice President for Health Affairs Partners HealthCare System, Inc. Director of the Robert W. Woodruff Health Sciences Center VICE CHAIR Emory University The Honorable Bill Gradison Senior Public Policy Counselor William B. Kerr Patton Boggs LLP Advisor to the Chancellor University of California, San Francisco MEMBERS Edward N. Brandt, Jr., M.D., Ph.D. Lawrence S. Lewin, M.B.A. Regents Professor Senior Consultant University of Oklahoma Health Sciences The Lewin Group Center Charles B. Mullins, M.D. Gail Cassell, Ph.D. Executive Vice Chancellor for Health Affairs Vice President, Epidemiology University of Texas System Eli Lilly & Company Paul Citron EXECUTIVE DIRECTOR Vice President, Science and Technology David Blumenthal, M.D., M.P.P. Medtronic, Inc. Director Institute for Health Policy William H. Danforth, M.D. Massachusetts General Hospital/Partners Chancellor Emeritus HealthCare System, Inc. Washington University Janice Douglas, M.D. TASK FORCE PROJECT DIRECTOR Professor Joel S. Weissman, Ph.D. Department of Medicine Assistant Professor Case Western Reserve University Institute for Health Policy Massachusetts General Hospital/Partners Alain Enthoven, Ph.D. HealthCare System, Inc. Professor Graduate School of Business Stanford University Robert S. Galvin, M.D. Director Corporate Healthcare and Medical Programs General Electric Company Paul F. Griner, M.D. Vice President and Director Center for the Assessment and Management of Change in Academic Medicine Association of American Medical Colleges iii TASK FORCE STAFF Brian Biles, M.D. Chair Department of Health Services Management and Policy George Washington University Eric G. Campbell, Ph.D. Instructor Institute for Health Policy Massachusetts General Hospital/Partners HealthCare System, Inc. James A. Reuter, Sc.D. Director Institute for Health Care Research and Policy Georgetown University Medical Center COMMONWEALTH FUND STAFF Stephen C. Schoenbaum, M.D. Senior Vice President Melinda K. Abrams, M.S. Program Officer iv CONTENTS EXECUTIVE SUMMARY.......................................................................................... vii PART 1. INTRODUCTION AND BACKGROUND................................................1 PART 2. CHALLENGES FACING AHCS IN THE NEW HEALTH CARE MARKETPLACE...........................................................................................3 Financial Threats to AHCs...............................................................................3 The Need to Change and Improve Management of Mission-Related Activities. ........................................................................................................4 PART 3. IMPROVING AHC GOVERNANCE AND MANAGEMENT...................7 Organizational Reforms...................................................................................8 Unified clinical and academic governance. .................................................8 Increasing autonomy for the AHC and/or its clinical enterprise. ................9 Reforms in faculty governance................................................................. 10 Mission management. .............................................................................. 11 Improved information systems. ................................................................ 12 Leadership Development. .............................................................................. 14 PART 4. REFORMING THE CLINICAL ENTERPRISE........................................ 17 Strategies to Increase Volume and Market Share. ........................................... 17 Developing primary care capabilities. ....................................................... 17 Protecting specialty care market shares. .................................................... 20 Building integrated delivery systems. ........................................................ 23 Strategies to Improve Efficiency and Reduce Costs........................................ 24 Strategies to Reduce Dependence on the Clinical Enterprise. ........................ 26 PART 5. REFORMING THE RESEARCH ENTERPRISE..................................... 29 Attracting Alternative Sources of Research Funds. ......................................... 30 Industrial research support........................................................................ 30 Commercializing research results.............................................................. 30 Reforming Research Management. ............................................................... 31 Resource management............................................................................. 31 Management of clinical research............................................................... 33 Management of industrial relationships and conflict of interest.................. 34 PART 6. SUMMARY AND CONCLUSIONS.......................................................... 37 REFERENCES ............................................................................................................ 39 v EXECUTIVE SUMMARY The 1990s witnessed dramatic changes in the internal organization and management of academic health centers (AHCs) as they struggled to maintain their social missions in a tumultuous health care marketplace. It was a decade of radical transformation for many AHCs, requiring rapid response to unprecedented challenges from private markets and governmental policy. The Commonwealth Fund Task Force on Academic Health Centers has long worked to help preserve the nation’s 125 AHCs and their social missions of providing specialty care, biomedical research, graduate medical education, and continuous innovation in health care. Throughout the 1990s, Task Force members carefully observed AHCs to learn how their missions might be preserved. They conducted exhaustive research¾including case studies, focus groups, and literature review¾into how these missions were threatened by new competition in the health care marketplace and changing public policies. They also looked into how AHCs might respond through such means as increased clinical activity and specialized care, and more sophisticated management techniques. Past reports and journal articles of the Task Force have focused primarily on developing current information on the status of AHCs and their missions and making recommendations for public policy that will preserve and enhance these missions.1-5 Now, the Task Force is focusing on reviewing and synthesizing information on the internal strategies¾changes in organization, management, governance, and relationships with other local institutions¾that AHCs in this country are adopting to assure their survival and the health of their missions. This report focuses on strategies documented by the Task Force concerning AHCs’ management of patient care and research missions. Changes in the management of educational missions will be covered in a later document devoted exclusively to this topic. CHALLENGES FACING AHCS IN THE NEW HEALTH CARE MARKETPLACE AHCs face two kinds of challenges to their social missions: financial and managerial. Competitive health care markets and reduced payments from public programs have caused unprecedented financial difficulties for some of the nation’s leading AHCs, such as the Beth Israel-Deaconess Medical Center in Boston; the University of California, San vii Francisco; and the University of Pennsylvania. These institutions and many more must find the resources necessary to sustain mission-related activities. Even in the absence of these financial challenges, reforms would be necessary to deal with the growth of managed care and the changing nature of research and education. To serve society’s needs and achieve their potential, AHCs must teach physicians new skills, conduct more interdisciplinary research, accommodate the increasing importance of industrial sponsors of research, and take advantage of the information revolution. All these demands require changes in the management of AHC missions. IMPROVING AHC GOVERNANCE AND MANAGEMENT Whatever challenges AHCs face in the future, their ability to respond effectively will be determined by the quality of their governance and management. To improve these capabilities, AHCs are adopting a number of reforms. Organizational Reforms Unified clinical and academic governance. To align the interests of academic and clinical enterprises, some AHCs have created leadership positions with joint responsibilities for the medical school and clinical facilities. These positions carry a variety of designations¾vice chancellor for health affairs, executive vice-president for health affairs, provost of the health science center. All are intended to assure that clinicians, clinical managers, and faculty work more effectively together. Increased autonomy