UCSF Leadership Girds for Changing Health Care Economics

Victor Dzau and Sam Hawgood

Victor Dzau and Sam Hawgood

Despite academic health centers’ past success—in providing the most advanced, high-quality care, in educating future leaders in the health professions, and in making research discoveries and moving them into clinical practice—they may need to change to maintain their leadership roles in the future.

That thought was on the minds of about 150 UCSF leaders who gathered Jan. 21 for the annual UCSF School of Medicine Leadership Retreat in the Presidio of San Francisco.

Academic health centers consist of medical and other health professional schools, teaching hospitals, and organized health care services. These centers need to reinvent themselves to meet changing societal needs for health care services delivered equitably and with greater cost-efficiencies, according to the morning session’s keynote speaker, Victor Dzau, MD, CEO of Duke University Health System and chancellor for health affairs at Duke University.

The title of Dzau’s presentation was “Academic Health Centers: Preparing for an Uncertain Future.”

“Academic health centers can be leaders in the transformation of medicine,” Dzau said, and society will then continue to look to and value these centers for clinical breakthroughs and paradigm shifts, for high-quality, cost-effective care, for improvements in population and community health, and as magnets for innovation and innovators.

But academic health centers must contribute to needed health care reforms, Dzau added, by helping to address problems that include rising health care costs, diminished access to health care, fragmentation of care, misplaced emphasis on late-stage disease instead of prevention, the difficulty of translating innovation to standard practice, and persistent health care inequalities at both the local and global levels.

The greatest challenge may be to make game-changing advances during an era of economic constraints.

Shrinking Subsidies for Research, Education

A major concern for academic health centers is that future revenues from clinical services are expected to exceed the costs of providing those services by a smaller percentage, thereby greatly limiting funds that can be used to help subsidize the costs of education and research.

“Clinical revenues remain flat in aggregate, and margins are declining despite increasing volumes” of services provided, Dzau said. “With declining clinical reimbursement, a weak economy and reduced NIH [National Institutes of Health] funding, this gap is likely to increase.”

While UCSF and other academic health centers have successfully expanded their research portfolios, on the whole, research grants do not completely pay for the indirect costs of research—such as bricks and mortar, salaries, and administrative costs. The shortfall is growing, according to Dzau.

Given the costs of research, Dzau challenged the wisdom of always expanding the portfolio. Instead, he made a case for “rightsizing.”

Dzau said that there needs to be a closer alignment of priorities for research and the competitive delivery of top-tier medical services—with seamless organization, infrastructure and procedures to translate research advances into improved clinical practice.

Research should emphasize selected strengths, he said. In addition, researchers should propose studies that take advantage of existing resources, such as large tissue banks or extensive clinical databases.

Like research, graduate medical education also is heavily subsidized, by up to $100,000 per student per year at public medical schools, Dzau noted. He suggested that substantial cost savings could be achieved by changing the way the first two years of the medical school curriculum are taught, without compromising the training of physicians preparing to meet the medical care challenges of the future.

Dzau recommended using technology and online teaching to a greater extent, as well as faculty dedicated to the role of teaching. He also suggested shortening the total years of training required for primary care physicians.

Responding to the Health Care Reform Act

In an era of changing health care insurance, academic health centers will have to carefully pick and choose the medical services offered as well as where to offer them to provide cost-effective services for their communities and to fulfill their missions, Dzau said, using the phrase “right place, right time, right care.”

Organizationally, Dzau advocated the integration of academic departments, research programs and medical services in order to cut the number of nearly autonomous centers of authority, an approach that Duke has adopted.

Dzau addressed changes that are in the works due to federal health care reform, namely the Patient Protection and Affordable Care Act. The legislation created the Medicare Shared Savings Program, often referred to as the accountable care organization (ACO) program. Hospitals, physicians and other health care providers are organizing and joining together to coordinate care and realize cost savings. The aim is to hold down health care costs for the covered populations as a whole, while maintaining high-quality services. ACOs will receive a fixed amount of dollars per month for each patient enrolled.

Academic health centers are forming their own ACOs, and may also benefit by having some of their specific medical services participate in ACOs organized by others to provide comprehensive care.

In forming ACOs, academic medical centers should partner with skilled nursing facilities and home health care providers in their communities to better coordinate care and hold down costs, Dzau said. A successful ACO will require a “vertical organization,” he said.

Engaging the Community

Ambulatory care services should include community-based home health and urgent care, primary care clinics, and specialty clinics—including ambulatory surgery and specialty diagnostics, Dzau said. Outpatient services should include post-acute and long-term care services, community hospitals, and specialty-tertiary care hospitals. Any academic health center at the top of such an organizational scheme needs to transform itself from a center into an integrated system, according to Dzau.

Community engagement and efficient use of up-to-date information technologies will be required to seamlessly integrate patient care across medical services and locations and to achieve the cost-efficiencies that will be important to the success of ACOs, Dzau said.

“We need to engage the community” to identify gaps in care, he said. For example, access to preventive health care through schools, community clinics or home health visits could lead to lower emergency room costs, according to Dzau.

Attendees of the medical school retreat’s morning session discussed the issues Dzau had raised at their tables and reported out summaries for further discussion by all.