Health Reform Hits Academic Health Centers (AHCs)

The health care landscape is rapidly changing owning to the Affordable Care Act, state budget deficits, and private insurers responds to constrain cost growth.

Victor J. Dzau, MD, and seven co-authors, Duke University School of Medicine and Duke University Health System,  “Transforming Academic Health Centers for an Uncertain Future,” New England Journal of Medicine,  September 12, 2013

The University of Minnesota Hospitals ranks and academic faculty stand in the first rank among American academic health centers. Yet each is threatended and vulnerable to curren and future competitive economic forces.  Each is in the process of restructuring itself internally to cope with the external environment.

Richard Reece, MD, “Myth-Breaking, Image-Making, and Corporate-Reshaping at the University  of Minnesota Hospitals and Medical School,” And Who Shall Care for the Sick? The Corporate Transformation of Medicine in Minnesota,  Media Medicus, 1988

Of all the horrid ,hideous notes of woe,

Sadder than owl songs or the midnight blast,

Is that portentous phrase, “I told you so.”

Lord Byron (1788-1824), Canto, XIV

I have an annoying habit of being too far ahead of the health care  trend parade. Twenty five years ago  in my book  And Who Shall Care for the Sick?,  I predicted, among other things, a doctor shortage, a revulsion among doctors at being called “providers,” and a reshaping of  American medicine and academic health centers into competing corporate entities.

In academia,  it is no longer be enough to hve a cluster of world class specialty centers.  It is no longer be enough to attract National Institute of Health and other grants. It is no longer be enough to be enough to be comprised of a series of independent specialized fiefdoms connected by a common heating system,  a commodious parking lot,  and buildings held together by a prestigious academic name.   It is no longer enough “Publish or perish.” Now,  AHS faculty members  must“Transform or perish.”

According to Dzau et al, this following factors have brought about this state of academic affairs: Obamacare regulations , reductions in Medicare and Medicaid reimbursements. The driving of health  plan enrollees to lower cost providers into  narrow  tiered networks of  physicians and hospitals;  and ending of government funding for hospitals treating low income patients.  The result is that academic centers are falling 30 to 40 cent short for every federal dollar needed to support their research and educational missions.

How to respond?

Dzau  and his team describe  these survival  strategies.

·         Balance specialized clinic excellence with population health.  Combine “centers of excellence” with research translating that excellence into training for doctors.

·         Become high-performing regional health systems ”spanning the spectrum from community-based and primary care to highly specialized hospital and post-acute care, all linked by effective information systems.’

·         Increase research yields by translating results so they have an immediate impact on practices and services offering natural economies of scale and fostering innovation and entrepreneurship.  

·         Offering new ways to engage patients, through e-healthy, mobile devices, and increased personalization driven by advanced data analytics.

·         Require  centralized enterprise-wide planning and management to prepare for an uncertain future. 

·         Centralize coordination and tamp down  with faculty individuality and autonomy will not be enough to get the job done.   

AHCs, in the words of the authors, must “reexamine their approaches, challenge sacred cows, and prepare for transformation.  While doing these things, academic centers must realize that the bulk of revenues come from mundane operations and common illnesses, not from high tech procedures or from treating rare diseases.   University health centers must come to grips with the new realities that catering and integrating the outside environment with what goes on inside is a key to survival in the brave new world of health reform. AHCs must restructure  to deliver a systematic, organized, and purposeful level of services to patients and referring physicians.

Tweet:  Academic health centers face uncertainties because of health reform, lower payments , and shifts of patients to lower-cost environments.