Hello again, folks!
The first two blogs addressed two priorities: how we may want to use this new method of communication; and an introduction to the concept of a new department, the Department of Oncology.
You might agree with me that it is now important to focus a little attention on some of our organizational structural processes, with an emphasis on our financial structure and productivity.
Overall, there is nothing more important than our financial health. Without resources, we are unable to execute and act on our priorities. Our mission is then relegated to being an effete compilation of platitudes.
As a result of this realization, we all spend a very significant portion our energy and effort in assuring that there are sufficient funds to meet our current obligations, to keep enough in reserve to mitigate unforeseen obligations and to take advantage of opportunities that may fortuitously appear.
The school has weathered a few challenging years, but through inspired leadership and with full cooperation of a loyal and committed faculty and staff, we have made very significant progress in the right direction. Of course, we are still toiling on with the state and national economy as a constant concern in the background.
The ECU leadership has just published the most current budget-management guidelines for our use and application. Here are the basic elements of this direction:
- New administrative positions should not be planned without the chancellor’s approval.
- Prudent expenditure of financial resources is recommended.
- Vice chancellor oversight will remain in place.
- Focus and emphasis will remain on instruction and student support.
- Resources should be spent as evenly as possible through the year.
Apart from the clear concern related to the avoidance of administrative expansion, the remaining issues all pertain to managing our costs.
The largest component of our cost in the medical school is the salary for our faculty and staff. The largest component of our income is our physician services. State salary lines and other state sourced funds will all be reasonably predictable as the allocations become clear over the next several months. The physician service component of our funding will remain the most dominant component of our funding for the foreseeable future.
Does any of this cause you anxiety? Perhaps it does, for the following reason: Payment for physician services depends on a variety of controllable and uncontrollable influences. The uncontrollable component is the main reason for concern.
Here are just a few of the complexities:
- Productivity is essentially dependent on the performance of individual faculty members and is also influenced by the efficiency of the team within which they work.
- Pay for the work performed is negotiated, and sometimes mandated, by processes that are not under the immediate control of the individual faculty member or the school.
- Contractual payment schedules are transactional and bound to cycles that are long-term and are not easily modified.
- Vulnerabilities are evident in the form of processes such as “look back” reviews of Medicare payments.
- The mission of the school mandates a responsibility for supporting the underserved.
This could become a very long list, and you could add many items yourself, to be sure.
Fortunately we are in good company. These anxieties and concerns are widely held across the nation, and as a result there are a whole slew of national organizations and consulting experts who have studied these dynamics and are poised to offer their support. Some of these published reports could provide useful insight that we can interpret to suit our own needs.
One report that was recently shared with me comes from the Deloitte Center for Health Solutions. Experts there confirm that for “the 76 Schools of Medicine that are publicly owned, less than 25 percent of operating revenues come from public sources.” We are within this prototypical group.
They indicate that “the schools depend on a wide variety of funding sources to stay afloat at a time of significant shortages of trained health care workers.”
Deloitte defines the academic medical center as one that “supports a
community’s need for patient care while also training medical professionals and investigating new diagnostic and therapeutic innovations to improve care. An AMC is a complex organization – mission-driven, large, labor and capital-intensive, and subject to every positive and challenging trend in health care.”
This captures what we are and what we aspire to accomplish.
AMCs conform to a finite number of various relationships and formulations. We define ourselves as existing in a collaborative relationship with our hospital but are a separate business entity.
Here is a list of possible relationships with hospitals and other entities provided by Deloitte. With this list in mind, you can think about where we stand and how, in our opinion, we may need to evolve. You may need to pick and choose from several categories and perhaps add new categories as we are unique.
I am not committed to any of these combinations, but you may want to consider some of these models as you engage in a personal thought experiment:
- Some AMCs own hospitals with the clinical, research and educational enterprises reporting to a dean.
- Some are part of a larger health system with various leadership relationships between the clinical enterprise and the research and teaching endeavors.
- Some permit faculty department chairs to hire faculty and manage their finances autonomously; others use more centralized controls and limit department chair independence.
- Some are strategically integrated under university oversight whereby capital budgets and operating procedures are tightly integrated; others operate semi-autonomously from their university affiliate.
- Some emphasize specialty care; others focus on primary care.
- Some subordinate research and education to patient care; others weight the three equally, building mechanisms to assure that clinicians engage in all three.
- Some contract with local hospitals for faculty and resident privileges; others own and operate their clinics and hospitals.
- Some staff the clinical programs exclusively with academic faculty and residents, while others include community-based providers.
- Some operate on a single campus; others operate as a distributed network or within the context of a regional system as the “teaching hub.”
- Some allow mid-level practitioners to treat patients in a wide scope of practice; others are restrictive.
Deloitte proposes some overarching strategies that help AMCs, just like us, become more successful:
“The quality and quantity of the health care workforce is central to the mission of the AMC. To effectively fulfill this responsibility, an AMC must have the following:
- Access to information technologies that connect providers and patients (electronic health records, personal health records) with a registry function (clinical decision support) and data warehousing capabilities to stimulate research. NOTE: In Title XIII of the American Recovery and Reconstruction Act (H.R. 1, aka ‘stimulus bill’), AMCs may receive up to $4 million per hospital and $44,000 per physician for accelerated ‘meaningful use’ of electronic health records.
- Access to biomedical informatics and computational math capabilities to effectively evaluate clinical data and thus improve the efficacy and effectiveness of diagnostic and therapeutic recommendations.
- Support of institutional leaders to transition facility-based educational programs to ambulatory and in-home-based learning environments for students.
- Changes in regulations about scope of practice and professional competence that will force the health care workforce to suspend traditional silo approaches to patient diagnosis and treatment planning.
- Changes to graduate medical education that require more protected time for faculty, higher standards for accreditation and more attention to the education portion of GME that may drive new approaches to curriculum design.
- Compensation plans and recruitment programs for faculty to reward investments in student preparation and effectiveness.
- A commitment to uphold the respect and dignity of healing professions in external communications and in internal operations: health professionals choose these careers to make a difference. They thirst for appreciation and respect at a time when sentiment is otherwise in some circles.
“The complexity of academic medicine places a premium on leadership savvy, operating policies, and procedures that limit conflict and optimize organizational efficiency and effectiveness.”
Our administrative radar sweeps through 360 degrees with clear-minded regularity. On the radar are all the line items that make up the cash flow elements of the enterprise, including our state-derived funds, our grant recovery dollars and our contractual support from a myriad of sources. This radar sweeps in three dimensions as well, to identify and address the less tangible elements that maximize and underpin the productivity that this note has emphasized.
In the past, we have managed this work with a small group of administrative personnel, supplemented in a more distributed manner, by the leaders and business managers in each department and unit. As the challenges and mandates from external regulatory bodies and agencies continue to increase, it may be necessary to revisit the managerial structure to improve our ability to respond to these needs – externally and internally. Despite the need to avoid administrative expansion at this time, will it be necessary to add essential internal bench strength to supplement our traditional team?
Undoubtedly, it appears that the work detail may amount to a worthwhile challenge for us all. Together, we have accomplished much already on the way to success and in preparation for the uncertainties that the future may hold. The work is ongoing, and I am honored to continue to work with the smartest people that I know, right here at the BSOM.
With your continued help, assistance and guidance, I have no doubt that we will be successful in managing our business to full success. There is not a better strategy. Let me know how you feel.
Best regards,
Paul
