Originally posted June 9, 2015
By Kirsten Stewart
A dying beast? Fated for extinction? Dead on arrival? The recent musings of industry analysts about the future of academic medical centers (AMCs) inspire more panic than confidence these days. Long considered the showpiece for American health care, AMCs have also been an important financial anchor for universities. But times are changing. An April headline in The Wall Street Journal read “Once Cash Cows, Teaching Hospitals Now a Source of Worry for Schools.”
Contrary to the alarming headlines, Vanderbilt University Medical Center has a much brighter story to tell, in part because it’s forsaking tradition to forge a bold new path. The $3 billion medical center is separating from the 142-year-old university, a move that is already reaping dividends, said Vanderbilt’s deputy vice chancellor of medical affairs, C. Wright Pinson, M.B.A., M.D. “We needed more freedom and speed in our decision-making …than the old structure afforded.”
It’s a seismic cultural shift to make for a large, hide-bound institution, but academic health systems must evolve or expire, said Pinson, speaking recently at a health transformation symposium at the University of Utah. The health industry is in flux, and a “business as usual” strategy––though still lucrative for some medical centers ––can’t last, said Pinson. “Why not just keep chopping in high cotton? Because the world has changed, and we cannot just hold steady.”
Vanderbilt Health System faced stiff financial headwinds in 2013, but was on sound footing when it made the decision to spin off. Driven by divergent risk appetites, the strategy was proactive, not reactive, said Pinson. Becoming a distinct operation frees the medical center to more easily secure financing to grow its footprint and market share by moving health care from the expensive confines of the “ivory tower” into more affordable and easier-to-access community settings.
As Pinson and a growing number of other health care leaders see it, gone are the days when providers at academic medical centers can sit on the hill and wait for patients to find their way to them. The reality is that the vast majority of health care consumers don’t need the highly complex and expensive subspecialty care they offer. What they need is routine care in a convenient location, which is unchartered, and even undesirable, territory for many AMCs.
Vanderbilt’s strategy: Move into more affordable and easier-to-access community settings through expansion projects and joint ventures with affiliate health centers throughout the southern region. Today, Vanderbilt Health System is the largest provider in Tennessee, due in part to its vision to look beyond the horizon of its campus, Pinson says. It has 100 locations around southern Tennessee and Kentucky, and about one quarter of its business now comes from a wealthy community south of its Nashville campus.
Physicians were slow to embrace this paradigm shift, which included such efforts as the Hundred Oaks clinic, which Vanderbilt opened in a defunct, shopping mall south of Nashville. “There was not a single chair or division chief who wanted to go to a rundown shopping mall,” Pinson said. “It took two years of solid leadership to convince people that this might not be so bad.” But it was only a 15-minute drive from campus, it has surface parking and it’s easier to get there and not get bogged down in the traffic of downtown Nashville. “The patients loved it,” and now “everyone wants to go to Hundred Oaks, or wants us to do another one,” Pinson said.
Vanderbilt has also developed retail walk-in clinics and is investing in hand-held and remote care technologies. “If you are under 30, you do not care about the relationship you have with your doctor,” said Pinson. “What you like is to pick up your cell phone and access someone on the Internet instantly. We all think of that as not being medical care, but everybody needs to warm up to that idea.” Health systems must accept that the modern medicine contributes to just 10 percent of the health and longevity equation, said Pinson. Coaches, other entities, and apps will help physicians get to the other 90 percent.
Another key move to strengthen Vanderbilt’s referral base was to build up its affiliate network. The system is now partnering with 54 regional hospitals in five surrounding states. “Many of these hospitals used to be our competitors. And now they are in the system with us,” Pinson said.
All these strategies combined contribute to Vanderbilt’s success, Pinson said. But timing was also critical. “It used to be that when I talked to potential partners, no one was talking about joint ventures. Now when I talk to partners, I hear, ‘Oh, someone from HCA was just here talking about the same thing.’ If you think you have a leg up and you’re out front, you stay out front. If you don’t think you’re out front, I highly recommend you get busy.”
Kirsten Stewart, MA is a former health reporter now writing for the University of Utah-sponsored publication, “Algorithms for Innovation.” She can be reached at email@example.com.