TRANSACTIONS OF THE AMERICAN CLINICAL AND CLIMATOLOGICAL ASSOCIATION, VOL. 128, 2017
Coordinated Management of Academic Health Centers JEFFREY R. BALSER, MD, PhD, and (by invitation) WILLIAM W. STEAD, MD NASHVILLE, TENNESSEE
ABSTRACT Academic health centers (AHCs) are the nation’s primary resource for healthcare discovery, innovation, and training. US healthcare revenue growth has declined sharply since 2009, and is forecast to remain well below historic levels for the foreseeable future. As the cost of education and research at nearly all AHCs is heavily subsidized through large transfers from clinical care margins, our institutions face a mounting crisis. Choices centering on how to increase the cost-effectiveness of the AHC enterprise require unprecedented levels of alignment to preserve an environment that nurtures creativity. Management processes require governance models that clarify decision rights while harnessing the talents and the intellectual capital of a large, diverse enterprise to nimbly address unfamiliar organizational challenges. This paper describes key leadership tactics aimed at propelling AHCs along this journey — one that requires from all leaders a commitment to resilience, optimism, and willingness to embrace change.
INTRODUCTION Academic health centers (AHCs) face a challenging competitive environment. US healthcare revenue growth has declined sharply since 2009. It has dropped in half for not-for-profit healthcare systems, and is forecast to remain below 6% for the foreseeable future, a level below nationwide expense growth. AHCs now compete on price in an industry where provider systems and payers are rapidly consolidating to achieve scale. Competition is amplified by the healthcare industry’s shift from fee-for-service to pay-for-value and the societal shift toward consumerism. AHCs have an inherent advantage in this competition because they are the nation’s primary resource for healthcare training and discovery. This positions AHCs to control the health profession pipeline and to be early adopters of innovation. These advantages are offset Correspondence and reprint requests: Jeffrey R. Balser, MD, PhD, Vanderbilt University Medical Center, 1161 21st Avenue South, Nashville, Tennessee 37232-2104, Tel: 615-936-3030, Fax: 615-343-7286, E-mail: [email protected]. Potential Conflicts of Interest: None disclosed.
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by the cost of education and research. At nearly all AHCs these costs are heavily subsidized through large transfers from clinical care margins. These transfers reduce the capital available to develop competitive clinical facilities and infrastructure. To remain competitive, AHCs must become much more cost effective internally. Choices centering on how to increase the cost effectiveness of the AHC enterprise require unprecedented levels of alignment to preserve an environment that nurtures creativity. This paper provides examples of key leadership tactics from Vanderbilt aimed at propelling AHCs along this journey — one that requires a commitment to resilience, optimism, and willingness to embrace change.
ALIGNMENT CHALLENGES All health systems, not just AHCs, have governance challenges. In fact, in most medical centers the physicians are governed separately from the hospitals, sometimes through practice plans with independent ownership and boards. Major decisions, such as agreement on which electronic medical record everyone should use (in some cases, physicians and hospital employees use different ones) can limit operating efficiency. Healthcare systems also face financial complexity. For example, most are dealing with hundreds of payer plans from several dozen government payers and insurance companies. Pay for performance or shared savings metrics differ among plans, creating a cacophony of quality measures and metrics to manage. AHCs have an additional alignment challenge that relates to our mission. AHCs are not only caring for patients, but are also managing large research and education enterprises. A physician in an AHC serves many masters — at a minimum, her patients, the hospital, and the practice plan. The medical school has expectations for teaching and mentoring. And for physicians with research funding, the sponsor (National Institutes of Health [NIH] or industry) is a key constituency. The needs and expectations of these stakeholders are rarely aligned, and can sometimes be in direct conflict.
ALIGNING GOVERNANCE Historically, Vanderbilt University (VU), with its wholly owned medical center (VUMC), was one of a handful of fully integrated AHCs. This
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integrated governance and finance structure facilitated alignment of physicians with the health system, trans-institutional education programs, and bi-directional basic and translational research with rapid transfer of new knowledge into clinical programs located on campus or in nearby clinics. VUMC responded to the rapid consolidation of the healthcare industry and the shift toward population health management and pay-for-value by developing a state-wide affiliate network extending into four adjacent states. To align governance and financing for this rapidly growing health system, the VU Board of Trust decided to transition VUMC into a separate not-for-profit organization in 2016. Mission alignment is maintained through overlapping boards and a strong academic affiliation agreement. The health care system, clinical departments and centers and graduate medical education transitioned to VUMC, maintaining critical governance alignment for the clinical staff and health system administration, as well as key translational research and training programs. Faculty appointments, basic science departments, and degree-granting programs, including PhD training, remained within VU, given the intrinsic university-based nature and alignment of these activities. Undergraduate medical education and other biomedical professional degree programs remain within VU, but are jointly staffed by both entities.
ALIGNING GOALS AND PEOPLE TO GOALS A framework for increasing alignment in any very large system is to establish common goals. The challenge to developing common goals in an AHC is 2-fold. First is finding “all-in goals” that people across different sectors of the AHC, with its diversity of missions, find relevant. What goals can nurses and physicians share? What goals work for clinicians, educators, and researchers? Do the people managing administration and finance think those goals are important? The second challenge is to effectively communicate goals across broad and vast operating units with hundreds, and in some cases thousands of employees. To advance organizational alignment, goals must be communicated and understood, cascaded through the organization, incorporated into individual and team tactics, measured and reported. Culture is one of the biggest barriers to all-in goals. For example, “white coats” and “blue suits” are mentored in different cultures and orientations. Health professionals, the doctors and nurses, are trained to primarily focus on the needs of the individual patient. Whereas people
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trained in business and administration also think and care about individual patients, their framework is more likely to be systemic — the health of the whole system — in providing care for the patient. As such, both groups care deeply about the success of the health care delivery system, but come at a question very differently. A problem such as patients waiting in a waiting room to see the doctor for extended periods of time is an example. The physician may recommend spacing out the appointments to preserve face-time with individual patients, but this may result in fewer patients seen per day. The administrator might suggest, “We’ve got to hit budget so that the entire clinic is financially healthy and able to provide services to patients over the long term. Maybe we need to create more efficiency in the way patients are seen?” One can imagine the conflict this cultural difference creates. Conflicts of this nature have the potential to boil beneath the surface of large organizations without being satisfactorily resolved. Resolution requires that organizations make workplace conflict visible, and bring people together to address conflict in systematic ways so they can learn and “practice” finding common ground and resolution strategies. At Vanderbilt, over the past 5 years we have developed a process for surfacing conflict in clinical operations at the senior leadership levels that we call “GoalFest.” Quarterly, in half-day sessions, we bring together approximately 40 medical center senior officers, the clinical department chairs, the chief executive, nursing, and medical staff officers, and senior officials of the clinical entities. The room is set up in a “fish bowl” configuration surrounded by white walls that display the goals of each operating unit. The group works together to build goals for the organization, to work out alignment, to monitor progress, and report out on successes and failures. Beyond addressing the substance of shared goals, the sessions have yielded a number of organizational outcomes. The management team has learned, over time, to manage and to a greater degree depersonalize workplace conflict. This has occurred through confronting problems in a structured, safe setting, where leaders can take the time to learn each other’s perspective. Senior leaders are also learning that failure to achieve goals rarely is due to individual performance shortcomings, but rather, due to complicated system challenges. While a leader presenting a result “below target” may feel guilty, or even shame, almost always the failure is the result of several challenges that a vast array of participants jointly own. As a result, we are learning that most of our problems are system problems that can only be solved through working as a team. Finally, developing competency and comfort solving
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problems in the room, instead of in the hallway “in the meeting after the meeting,” increases the transparency of the organization, and builds trust among members of the management team. We are seeing these developmental outcomes manifest as improved executive performance outside of GoalFest, as leaders know each other better, have an expanded toolkit for conflict resolution, and are in a better position to resolve conflicts in myriad settings. The basic principles of GoalFest are also being applied to much larger groups of organizational leaders. Every quarter, more than 800 people at VUMC come together for a “Leadership Assembly,” which includes nearly all faculty and staff responsible for managing other people. Similar to GoalFest, we have white coats and blue suits, as well as research and education leaders, all in the room together. The CEO and other members of the senior leadership team speak about the goals for the organization, with a focus on helping people not only understand each goal, but why a specific goal is important to the organization’s success. We find the “why” is very important to people. Why do we really need to focus on infection rates this year? Why is it one of our biggest goals for the year? Leadership Assemblies also provide an opportunity to discuss and share tactics that leaders can use with their teams. In addition, reports are given on how VUMC is performing on each organizational goal for the quarter and year to date, with a focus on clear communication and transparency. Accepting shared responsibility for performance “below target” is a key priority of the Assembly, as clearly articulating both good news and performance challenges, and even failures, without “sugar coating” is important for the senior management team’s legitimacy. Finally, the Assemblies are opportunities to celebrate success and give awards. We honor people who have displayed exceptional team work in accomplishing goals in the organization. And finally, because we’re in Nashville, we bring in local entertainers who have had care in the medical center, which inspires people and motivates our people to tackle difficult challenges. Like non-academic health systems, we have goals for service (e.g., patient access and satisfaction), quality (e.g., events causing patient harm, pay for performance metrics), and finance (e.g., days of cash on hand, net revenue per FTE). But recognizing our academic nature and the goal of aligning across all mission areas, we include academic performance metrics such as the number of active clinical studies approved by the Institutional Review Board, and the number of participants enrolled in those studies. Reporting academic performance metrics along-side clinical quality and finance metrics at
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the institutional level and by Patient Care Center fosters mission alignment.
ALIGNING DECISION RIGHTS Vanderbilt, similar to other leading AHCs, is proud of its collaborative culture. A collaborative culture nurtures patient safety, interdisciplinary discovery, and team-based training, while creating an attractive atmosphere for employees, patients, and families. As faculty members are promoted to administrative positions, they will bring these collaborative practices with them. Although beneficial in many ways, AHCs can sometimes develop into organizations with “a thousand points of veto” — organizations where anyone can block a decision, but no one can make one. The competitive environment of healthcare rewards rapid execution. AHCs must develop ways to clarify decision rights while harnessing the talents and the intellectual capital of a large, diverse enterprise to nimbly address unfamiliar organizational challenges. At Vanderbilt, we have adopted the “RACSI” model to simplify and clarify decision rights. In this model, each person or constituency is assigned a defined role in each decision process. They may be designated to be: • • • • •
Responsible for doing the work and recommending a course of action Accountable for approving the final decision Consulted to provide input to the recommendation Supportive of implementation of the decision Informed of the decision
When we began to use the RACSI model, several key stakeholders expected to be designated as Accountable for each critical decision. With practice, we learned to designate a single accountable person, and to require them to consult with other stakeholders in transparent meetings before a decision was recommended or approved. As stakeholders develop trust that they will have a chance to speak and be heard before decisions are approved, they become comfortable allowing one of them to be the final approver. The architecture of Vanderbilt’s Patient Care Centers (PCCs) provides an example. PCCs are organized to manage a cluster of conditions, such as heart and vascular disease, across the care continuum. Clinicians are drawn from multiple academic departments, and services are provided in multiple facilities, e.g., inpatient, outpatient, specialty facilities. Each PCC is led by a leadership team consisting of a
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medical director, a nurse leader, and an administrative leader. Each PCC is governed by an executive committee which includes the relevant clinical department chairs, the PCC executive director, and the relevant health system executives (CEO, COO, CNO, CMO, COS). The PCC executive director is accountable for establishing mission, vision, and goals in consultation with each member of the executive committee. The PCC Leadership team is accountable for establishing policies, procedures, standards; monitoring performance; identifying problems; and implementing solutions. Each of these accountabilities is assigned to the most appropriate member of the team who consults with each member of the executive committee.
ALIGNING A REGIONAL SYSTEM OF CARE In 2011, VUMC began to respond to the threat of consolidation by entering into affiliation agreements with community hospitals across the state. These agreements established a strategic relationship and a joint steering committee for the purpose of enhancing services and pursuing opportunities for business development. The parties remained independent, and the agreements are non-exclusive and do not involve a financial transaction. VUMC helps the affiliates develop clinical programs, and provides access to infrastructure they need to succeed. With the shift toward pay-for-value and population management, AHCs are compelled to learn to practice healthcare across regions. For example, for a patient coming to VUMC for cardiac surgery from Jackson, Tennessee, nearly 130 miles away, VUMC has not only a quality stake, but also, in a value-based reimbursement environment, an economic stake, in how the patient is cared for in Jackson prior to surgery. In many cases, surgical outcome and cost of care are impacted by how patients are managed and their health status in the weeks and months before the procedure, as well as afterward. To develop a regional platform for healthcare, beginning in 2013 VUMC has partnered with hospital and clinical practice affiliates across the mid-south to form the Vanderbilt Health Affiliate Network (VHAN). VHAN is a consumer and employer facing network, and today aligns 12 health systems, 56 hospitals, 215 practices, and 3,900 participating providers across Tennessee and four adjacent states. Each participating entity engages in all aspects of network management including governance, shared savings contracts, evidence-based guideline, and data exchange. Through VHAN, patients are able to receive more of their care in their home
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communities, and move to VUMC for quaternary care only when the high-complexity resources of an AHC are essential.
CONCLUSION As AHCs develop infrastructure and programmatic scale to compete in a drastically changing value-based healthcare economy, the fundamental elements of governance and management within AHCs are also pressured to evolve. As this occurs, increased alignment across programs and management ranks will be fundamental to success. While being the key resource for much of our nation’s specialty care, AHCs are also the nation’s primary resource for healthcare training and discovery. As such, alignment strategies that support and further the AHC academic missions will be essential to securing their economic viability in the future. Moving forward, AHCs, like all healthcare provider systems, will be subject to relentless cost pressures. Finding sustainable ways to improve cost-effectiveness will require unprecedented levels of alignment to preserve the full complement of AHC missions.
DISCUSSION Balser, Nashville: Any questions or comments? Ludmerer, St. Louis: Thank you for that. Pursuing this theme of alignment, one term that can be used to describe the entire health system but particularly academic medical centers is profligacy — we do too much. And an estimate says a third of our healthcare expenses at least have no justification whatsoever. Some would say as much as 50%. Academic medical centers have often been considered prototypes of excess. Surgeries that are not necessary. Residents will get five non-invasive imaging studies and one would have sufficed. And in some cases none. Do you see any potential for a true professional and educational alignment — we’ll keep it within one center: Vanderbilt, or Washington University, or Hopkins, where the educational, medical and hospital leaders get together and really concentrate on education. So that learners learn to do what is appropriate and not what is there. And this is reinforced by a system of practice in the hospital that true patient-centered care. Which is doing what is necessary not everything that is there. And spending sufficient time. And such an approach easily could reduce the total healthcare expenses significantly. Also, taking a lot of the pressure off the funders who fund care and maybe allow funders to be a little more generous in putting back into academic medical centers, those margins that we so desperately need. Balser, Nashville: Yes, so I think it’s a great question and my comment would be, my answer would be — absolutely! In fact, I would argue that academic medical centers are the only places that can really get this right and so let me give you an example: Pharmacy — so I’m not one of these people who believe that we need more money in the system. I actually think that we waste, and all the data show, that we waste about a
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trillion dollars a year in healthcare on stuff that is just not necessary. And one of the efforts we have at Vanderbilt, and we are not unique in this way, is to really get our heads around pharmacy and to actually get the P and T committee to prioritize drugs and the use of drugs and then actually work with our decision support that we now have. Because we have really good health IT to support physicians in using the drugs they need but not the drugs they don’t need. Honestly, when we did that on the inpatient environment, we have saved countless millions in getting religion around that. And we haven’t even started in the outpatient environment, and think about what that’s worth. Then think about testing. So we just started in the last year examining testing. And we just started in some of the low hanging fruit areas like genetics testing. Send out genetics tests, oh my goodness! People just order everything, right? And the waste is extraordinary and it’s not that people are ill-intended. It’s doctors that are busy and just click off all this test, right? And so getting our heads around how to support physicians to only order what they need is worth billions of dollars to this country. And I have trouble imagining that this won’t be led by academic medical centers. So I am a huge optimist about our ability to lead really decisive cost savings around utilizations of just drugs and tests in the care of patients. I think that is going to help a lot. Carethers, Ann Arbor: Jeff, wonderful talk and I know the last couple of years this was a lot of work for Vanderbilt in reconstructing things and I applaud you on your efforts. I was just wondering if you can clarify a few things for me. At the University of Michigan, we have one board of regents, one hospital, one medical school that is all tied together. I just noticed that you mentioned that the clinical departments are on the VUMC side while the basic science departments are on the VU side and you also mentioned that you pulled the clinical research. So I guess the research is associated with clinical departments over there. So I was just wondering — how does that work now with the faculty appointment for, let’s say someone like me, in internal medicine? Is it with the university? But all the research is on the VUMC side and if you have collaborations with other basic sciences, I was just wondering if you could explain how that worked in your system. Balser, Nashville: Yes. So there are five basic science departments in the medical center and the decision was that we would leave those basic science departments financially inside the university. We actually did that for a reason — clinical departments inevitably are partly supported by their clinical revenue they bring in and they reallocate to science. And all of our chairs have that value system. If you look at the state of basic science departments right now in this country, they are under enormous stress because they are dependent upon the goodwill of clinical department chairs and or deans to reallocate those funds. What we thought was the most sustainable model was to put in place a funds flow where forever and ever, we the medical center pay an academic affiliation payment to the university that is sustainable over time and is not a function of our fluctuating financials. And that essentially locks in the financial security of the basic science departments because it’s a direct funds flow to them. So they are not susceptible on a year-to-year basis to whatever is happening to us in healthcare. We thought that that was the most secure model for our basic sciences. We are not interested in changing the way faculty interacts with one another. So we are all of Vanderbilt faculty — even those of us in clinical departments, have our faculty appointments, appointed by the university. Those of us in the clinical departments are employed by the medical center versus the employer of the basic science faculties as the university. But everybody can hold joint grants — everybody’s lab space is interspersed. We don’t want to change the culture of the place or the way people interact but the funds flow is what has changed. That’s a great question.
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Carethers, Ann Arbor: You mentioned funds flow to the basic science departments. So did the tax structure, the rest of the funds flow to the university change? For instance, at the University of Michigan, there is a transfer of money to the provost. Is that built into this formula as well? Balser, Nashville: Sure, although it’s no longer a tax system because entities that no longer own each other can’t tax each other. Basically though if you look at the way, the only way a thing like this can get done, is if everybody is break even on day 1, right? Because we are all too big, we are like aircraft carriers; we’re all too big to sustain any significant change in our financials. So essentially what we are paying the university now in affiliation payments is identical to what we were paying in taxes the day before the reorganization. Because neither of us (we’ve been in place 150 years), we couldn’t really change that and didn’t want to. So now it’s just a payment that is fixed over time and grows at the rate of inflation and it’s rational.
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Coordinated Management of Academic Health Centers JEFFREY R. BALSER, MD, PhD, and (by invitation) WILLIAM W. STEAD, MD NASHVILLE, TENNESSEE
ABSTRACT Academic health centers (AHCs) are the nation’s primary resource for healthcare discovery, innovation, and training. US healthcare revenue growth has declined sharply since 2009, and is forecast to remain well below historic levels for the foreseeable future. As the cost of education and research at nearly all AHCs is heavily subsidized through large transfers from clinical care margins, our institutions face a mounting crisis. Choices centering on how to increase the cost-effectiveness of the AHC enterprise require unprecedented levels of alignment to preserve an environment that nurtures creativity. Management processes require governance models that clarify decision rights while harnessing the talents and the intellectual capital of a large, diverse enterprise to nimbly address unfamiliar organizational challenges. This paper describes key leadership tactics aimed at propelling AHCs along this journey — one that requires from all leaders a commitment to resilience, optimism, and willingness to embrace change.
INTRODUCTION Academic health centers (AHCs) face a challenging competitive environment. US healthcare revenue growth has declined sharply since 2009. It has dropped in half for not-for-profit healthcare systems, and is forecast to remain below 6% for the foreseeable future, a level below nationwide expense growth. AHCs now compete on price in an industry where provider systems and payers are rapidly consolidating to achieve scale. Competition is amplified by the healthcare industry’s shift from fee-for-service to pay-for-value and the societal shift toward consumerism. AHCs have an inherent advantage in this competition because they are the nation’s primary resource for healthcare training and discovery. This positions AHCs to control the health profession pipeline and to be early adopters of innovation. These advantages are offset Correspondence and reprint requests: Jeffrey R. Balser, MD, PhD, Vanderbilt University Medical Center, 1161 21st Avenue South, Nashville, Tennessee 37232-2104, Tel: 615-936-3030, Fax: 615-343-7286, E-mail: [email protected]. Potential Conflicts of Interest: None disclosed.
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by the cost of education and research. At nearly all AHCs these costs are heavily subsidized through large transfers from clinical care margins. These transfers reduce the capital available to develop competitive clinical facilities and infrastructure. To remain competitive, AHCs must become much more cost effective internally. Choices centering on how to increase the cost effectiveness of the AHC enterprise require unprecedented levels of alignment to preserve an environment that nurtures creativity. This paper provides examples of key leadership tactics from Vanderbilt aimed at propelling AHCs along this journey — one that requires a commitment to resilience, optimism, and willingness to embrace change.
ALIGNMENT CHALLENGES All health systems, not just AHCs, have governance challenges. In fact, in most medical centers the physicians are governed separately from the hospitals, sometimes through practice plans with independent ownership and boards. Major decisions, such as agreement on which electronic medical record everyone should use (in some cases, physicians and hospital employees use different ones) can limit operating efficiency. Healthcare systems also face financial complexity. For example, most are dealing with hundreds of payer plans from several dozen government payers and insurance companies. Pay for performance or shared savings metrics differ among plans, creating a cacophony of quality measures and metrics to manage. AHCs have an additional alignment challenge that relates to our mission. AHCs are not only caring for patients, but are also managing large research and education enterprises. A physician in an AHC serves many masters — at a minimum, her patients, the hospital, and the practice plan. The medical school has expectations for teaching and mentoring. And for physicians with research funding, the sponsor (National Institutes of Health [NIH] or industry) is a key constituency. The needs and expectations of these stakeholders are rarely aligned, and can sometimes be in direct conflict.
ALIGNING GOVERNANCE Historically, Vanderbilt University (VU), with its wholly owned medical center (VUMC), was one of a handful of fully integrated AHCs. This
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integrated governance and finance structure facilitated alignment of physicians with the health system, trans-institutional education programs, and bi-directional basic and translational research with rapid transfer of new knowledge into clinical programs located on campus or in nearby clinics. VUMC responded to the rapid consolidation of the healthcare industry and the shift toward population health management and pay-for-value by developing a state-wide affiliate network extending into four adjacent states. To align governance and financing for this rapidly growing health system, the VU Board of Trust decided to transition VUMC into a separate not-for-profit organization in 2016. Mission alignment is maintained through overlapping boards and a strong academic affiliation agreement. The health care system, clinical departments and centers and graduate medical education transitioned to VUMC, maintaining critical governance alignment for the clinical staff and health system administration, as well as key translational research and training programs. Faculty appointments, basic science departments, and degree-granting programs, including PhD training, remained within VU, given the intrinsic university-based nature and alignment of these activities. Undergraduate medical education and other biomedical professional degree programs remain within VU, but are jointly staffed by both entities.
ALIGNING GOALS AND PEOPLE TO GOALS A framework for increasing alignment in any very large system is to establish common goals. The challenge to developing common goals in an AHC is 2-fold. First is finding “all-in goals” that people across different sectors of the AHC, with its diversity of missions, find relevant. What goals can nurses and physicians share? What goals work for clinicians, educators, and researchers? Do the people managing administration and finance think those goals are important? The second challenge is to effectively communicate goals across broad and vast operating units with hundreds, and in some cases thousands of employees. To advance organizational alignment, goals must be communicated and understood, cascaded through the organization, incorporated into individual and team tactics, measured and reported. Culture is one of the biggest barriers to all-in goals. For example, “white coats” and “blue suits” are mentored in different cultures and orientations. Health professionals, the doctors and nurses, are trained to primarily focus on the needs of the individual patient. Whereas people
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trained in business and administration also think and care about individual patients, their framework is more likely to be systemic — the health of the whole system — in providing care for the patient. As such, both groups care deeply about the success of the health care delivery system, but come at a question very differently. A problem such as patients waiting in a waiting room to see the doctor for extended periods of time is an example. The physician may recommend spacing out the appointments to preserve face-time with individual patients, but this may result in fewer patients seen per day. The administrator might suggest, “We’ve got to hit budget so that the entire clinic is financially healthy and able to provide services to patients over the long term. Maybe we need to create more efficiency in the way patients are seen?” One can imagine the conflict this cultural difference creates. Conflicts of this nature have the potential to boil beneath the surface of large organizations without being satisfactorily resolved. Resolution requires that organizations make workplace conflict visible, and bring people together to address conflict in systematic ways so they can learn and “practice” finding common ground and resolution strategies. At Vanderbilt, over the past 5 years we have developed a process for surfacing conflict in clinical operations at the senior leadership levels that we call “GoalFest.” Quarterly, in half-day sessions, we bring together approximately 40 medical center senior officers, the clinical department chairs, the chief executive, nursing, and medical staff officers, and senior officials of the clinical entities. The room is set up in a “fish bowl” configuration surrounded by white walls that display the goals of each operating unit. The group works together to build goals for the organization, to work out alignment, to monitor progress, and report out on successes and failures. Beyond addressing the substance of shared goals, the sessions have yielded a number of organizational outcomes. The management team has learned, over time, to manage and to a greater degree depersonalize workplace conflict. This has occurred through confronting problems in a structured, safe setting, where leaders can take the time to learn each other’s perspective. Senior leaders are also learning that failure to achieve goals rarely is due to individual performance shortcomings, but rather, due to complicated system challenges. While a leader presenting a result “below target” may feel guilty, or even shame, almost always the failure is the result of several challenges that a vast array of participants jointly own. As a result, we are learning that most of our problems are system problems that can only be solved through working as a team. Finally, developing competency and comfort solving
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problems in the room, instead of in the hallway “in the meeting after the meeting,” increases the transparency of the organization, and builds trust among members of the management team. We are seeing these developmental outcomes manifest as improved executive performance outside of GoalFest, as leaders know each other better, have an expanded toolkit for conflict resolution, and are in a better position to resolve conflicts in myriad settings. The basic principles of GoalFest are also being applied to much larger groups of organizational leaders. Every quarter, more than 800 people at VUMC come together for a “Leadership Assembly,” which includes nearly all faculty and staff responsible for managing other people. Similar to GoalFest, we have white coats and blue suits, as well as research and education leaders, all in the room together. The CEO and other members of the senior leadership team speak about the goals for the organization, with a focus on helping people not only understand each goal, but why a specific goal is important to the organization’s success. We find the “why” is very important to people. Why do we really need to focus on infection rates this year? Why is it one of our biggest goals for the year? Leadership Assemblies also provide an opportunity to discuss and share tactics that leaders can use with their teams. In addition, reports are given on how VUMC is performing on each organizational goal for the quarter and year to date, with a focus on clear communication and transparency. Accepting shared responsibility for performance “below target” is a key priority of the Assembly, as clearly articulating both good news and performance challenges, and even failures, without “sugar coating” is important for the senior management team’s legitimacy. Finally, the Assemblies are opportunities to celebrate success and give awards. We honor people who have displayed exceptional team work in accomplishing goals in the organization. And finally, because we’re in Nashville, we bring in local entertainers who have had care in the medical center, which inspires people and motivates our people to tackle difficult challenges. Like non-academic health systems, we have goals for service (e.g., patient access and satisfaction), quality (e.g., events causing patient harm, pay for performance metrics), and finance (e.g., days of cash on hand, net revenue per FTE). But recognizing our academic nature and the goal of aligning across all mission areas, we include academic performance metrics such as the number of active clinical studies approved by the Institutional Review Board, and the number of participants enrolled in those studies. Reporting academic performance metrics along-side clinical quality and finance metrics at
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the institutional level and by Patient Care Center fosters mission alignment.
ALIGNING DECISION RIGHTS Vanderbilt, similar to other leading AHCs, is proud of its collaborative culture. A collaborative culture nurtures patient safety, interdisciplinary discovery, and team-based training, while creating an attractive atmosphere for employees, patients, and families. As faculty members are promoted to administrative positions, they will bring these collaborative practices with them. Although beneficial in many ways, AHCs can sometimes develop into organizations with “a thousand points of veto” — organizations where anyone can block a decision, but no one can make one. The competitive environment of healthcare rewards rapid execution. AHCs must develop ways to clarify decision rights while harnessing the talents and the intellectual capital of a large, diverse enterprise to nimbly address unfamiliar organizational challenges. At Vanderbilt, we have adopted the “RACSI” model to simplify and clarify decision rights. In this model, each person or constituency is assigned a defined role in each decision process. They may be designated to be: • • • • •
Responsible for doing the work and recommending a course of action Accountable for approving the final decision Consulted to provide input to the recommendation Supportive of implementation of the decision Informed of the decision
When we began to use the RACSI model, several key stakeholders expected to be designated as Accountable for each critical decision. With practice, we learned to designate a single accountable person, and to require them to consult with other stakeholders in transparent meetings before a decision was recommended or approved. As stakeholders develop trust that they will have a chance to speak and be heard before decisions are approved, they become comfortable allowing one of them to be the final approver. The architecture of Vanderbilt’s Patient Care Centers (PCCs) provides an example. PCCs are organized to manage a cluster of conditions, such as heart and vascular disease, across the care continuum. Clinicians are drawn from multiple academic departments, and services are provided in multiple facilities, e.g., inpatient, outpatient, specialty facilities. Each PCC is led by a leadership team consisting of a
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medical director, a nurse leader, and an administrative leader. Each PCC is governed by an executive committee which includes the relevant clinical department chairs, the PCC executive director, and the relevant health system executives (CEO, COO, CNO, CMO, COS). The PCC executive director is accountable for establishing mission, vision, and goals in consultation with each member of the executive committee. The PCC Leadership team is accountable for establishing policies, procedures, standards; monitoring performance; identifying problems; and implementing solutions. Each of these accountabilities is assigned to the most appropriate member of the team who consults with each member of the executive committee.
ALIGNING A REGIONAL SYSTEM OF CARE In 2011, VUMC began to respond to the threat of consolidation by entering into affiliation agreements with community hospitals across the state. These agreements established a strategic relationship and a joint steering committee for the purpose of enhancing services and pursuing opportunities for business development. The parties remained independent, and the agreements are non-exclusive and do not involve a financial transaction. VUMC helps the affiliates develop clinical programs, and provides access to infrastructure they need to succeed. With the shift toward pay-for-value and population management, AHCs are compelled to learn to practice healthcare across regions. For example, for a patient coming to VUMC for cardiac surgery from Jackson, Tennessee, nearly 130 miles away, VUMC has not only a quality stake, but also, in a value-based reimbursement environment, an economic stake, in how the patient is cared for in Jackson prior to surgery. In many cases, surgical outcome and cost of care are impacted by how patients are managed and their health status in the weeks and months before the procedure, as well as afterward. To develop a regional platform for healthcare, beginning in 2013 VUMC has partnered with hospital and clinical practice affiliates across the mid-south to form the Vanderbilt Health Affiliate Network (VHAN). VHAN is a consumer and employer facing network, and today aligns 12 health systems, 56 hospitals, 215 practices, and 3,900 participating providers across Tennessee and four adjacent states. Each participating entity engages in all aspects of network management including governance, shared savings contracts, evidence-based guideline, and data exchange. Through VHAN, patients are able to receive more of their care in their home
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communities, and move to VUMC for quaternary care only when the high-complexity resources of an AHC are essential.
CONCLUSION As AHCs develop infrastructure and programmatic scale to compete in a drastically changing value-based healthcare economy, the fundamental elements of governance and management within AHCs are also pressured to evolve. As this occurs, increased alignment across programs and management ranks will be fundamental to success. While being the key resource for much of our nation’s specialty care, AHCs are also the nation’s primary resource for healthcare training and discovery. As such, alignment strategies that support and further the AHC academic missions will be essential to securing their economic viability in the future. Moving forward, AHCs, like all healthcare provider systems, will be subject to relentless cost pressures. Finding sustainable ways to improve cost-effectiveness will require unprecedented levels of alignment to preserve the full complement of AHC missions.
DISCUSSION Balser, Nashville: Any questions or comments? Ludmerer, St. Louis: Thank you for that. Pursuing this theme of alignment, one term that can be used to describe the entire health system but particularly academic medical centers is profligacy — we do too much. And an estimate says a third of our healthcare expenses at least have no justification whatsoever. Some would say as much as 50%. Academic medical centers have often been considered prototypes of excess. Surgeries that are not necessary. Residents will get five non-invasive imaging studies and one would have sufficed. And in some cases none. Do you see any potential for a true professional and educational alignment — we’ll keep it within one center: Vanderbilt, or Washington University, or Hopkins, where the educational, medical and hospital leaders get together and really concentrate on education. So that learners learn to do what is appropriate and not what is there. And this is reinforced by a system of practice in the hospital that true patient-centered care. Which is doing what is necessary not everything that is there. And spending sufficient time. And such an approach easily could reduce the total healthcare expenses significantly. Also, taking a lot of the pressure off the funders who fund care and maybe allow funders to be a little more generous in putting back into academic medical centers, those margins that we so desperately need. Balser, Nashville: Yes, so I think it’s a great question and my comment would be, my answer would be — absolutely! In fact, I would argue that academic medical centers are the only places that can really get this right and so let me give you an example: Pharmacy — so I’m not one of these people who believe that we need more money in the system. I actually think that we waste, and all the data show, that we waste about a
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trillion dollars a year in healthcare on stuff that is just not necessary. And one of the efforts we have at Vanderbilt, and we are not unique in this way, is to really get our heads around pharmacy and to actually get the P and T committee to prioritize drugs and the use of drugs and then actually work with our decision support that we now have. Because we have really good health IT to support physicians in using the drugs they need but not the drugs they don’t need. Honestly, when we did that on the inpatient environment, we have saved countless millions in getting religion around that. And we haven’t even started in the outpatient environment, and think about what that’s worth. Then think about testing. So we just started in the last year examining testing. And we just started in some of the low hanging fruit areas like genetics testing. Send out genetics tests, oh my goodness! People just order everything, right? And the waste is extraordinary and it’s not that people are ill-intended. It’s doctors that are busy and just click off all this test, right? And so getting our heads around how to support physicians to only order what they need is worth billions of dollars to this country. And I have trouble imagining that this won’t be led by academic medical centers. So I am a huge optimist about our ability to lead really decisive cost savings around utilizations of just drugs and tests in the care of patients. I think that is going to help a lot. Carethers, Ann Arbor: Jeff, wonderful talk and I know the last couple of years this was a lot of work for Vanderbilt in reconstructing things and I applaud you on your efforts. I was just wondering if you can clarify a few things for me. At the University of Michigan, we have one board of regents, one hospital, one medical school that is all tied together. I just noticed that you mentioned that the clinical departments are on the VUMC side while the basic science departments are on the VU side and you also mentioned that you pulled the clinical research. So I guess the research is associated with clinical departments over there. So I was just wondering — how does that work now with the faculty appointment for, let’s say someone like me, in internal medicine? Is it with the university? But all the research is on the VUMC side and if you have collaborations with other basic sciences, I was just wondering if you could explain how that worked in your system. Balser, Nashville: Yes. So there are five basic science departments in the medical center and the decision was that we would leave those basic science departments financially inside the university. We actually did that for a reason — clinical departments inevitably are partly supported by their clinical revenue they bring in and they reallocate to science. And all of our chairs have that value system. If you look at the state of basic science departments right now in this country, they are under enormous stress because they are dependent upon the goodwill of clinical department chairs and or deans to reallocate those funds. What we thought was the most sustainable model was to put in place a funds flow where forever and ever, we the medical center pay an academic affiliation payment to the university that is sustainable over time and is not a function of our fluctuating financials. And that essentially locks in the financial security of the basic science departments because it’s a direct funds flow to them. So they are not susceptible on a year-to-year basis to whatever is happening to us in healthcare. We thought that that was the most secure model for our basic sciences. We are not interested in changing the way faculty interacts with one another. So we are all of Vanderbilt faculty — even those of us in clinical departments, have our faculty appointments, appointed by the university. Those of us in the clinical departments are employed by the medical center versus the employer of the basic science faculties as the university. But everybody can hold joint grants — everybody’s lab space is interspersed. We don’t want to change the culture of the place or the way people interact but the funds flow is what has changed. That’s a great question.
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Carethers, Ann Arbor: You mentioned funds flow to the basic science departments. So did the tax structure, the rest of the funds flow to the university change? For instance, at the University of Michigan, there is a transfer of money to the provost. Is that built into this formula as well? Balser, Nashville: Sure, although it’s no longer a tax system because entities that no longer own each other can’t tax each other. Basically though if you look at the way, the only way a thing like this can get done, is if everybody is break even on day 1, right? Because we are all too big, we are like aircraft carriers; we’re all too big to sustain any significant change in our financials. So essentially what we are paying the university now in affiliation payments is identical to what we were paying in taxes the day before the reorganization. Because neither of us (we’ve been in place 150 years), we couldn’t really change that and didn’t want to. So now it’s just a payment that is fixed over time and grows at the rate of inflation and it’s rational.
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