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Sunday, March 2, 2014

The burden of competing missions

I work at an academic medical center (AMC) and involved the classic tripartite missions of clinical service, education, and research. As noted in my recent blogs, I have become increasingly aware of the divergence between what our missions might be in an academic health center and the goals of our patients and their families. Specifically, our patient's priorities revolve around cost and convenience. It appears that these goals are at odds, particularly with our educational goals.

Our educational model is a legacy model which is not compatible with the increasingly rules based and focused factory based approaches begin adopted to increase efficiency and decrease cost. Furthermore, training requires exposure to a broad range of illness and therapeutics, which is not compatible with efficiency. In particular, health systems modeling of successful finances require they attract and cater to the least sick populations, in order to keep them happy and paying their premiums. While being of great financial values, these patients are of limited educational value.

Historically, GME and IME funds have attempted to close this funding gap, allowing for academic centers to have the resources to train and care for the sickest patient populations. The system worked reasonably well for a while. However like any subsidy, the money did not go where it might have more impact. It was all hospital based and tended to underwrite hospital functions. As the health care world moves more and more outside of the inpatient environment, how can training functions continue to exist, what should they look like, and who will pay for them?

Nothing lasts forever and there is no reason to believe that a program conceived about 50 years ago will continue in perpetuity. The question is not whether it will last forever but instead what will replace it and when, and what will the transition look like? It is unfortunate that no entity in the current system seems to want to address this issue. Existing oversight organizations such as the ACCME, LCME, and the ACGME seem to be most interested in extending their reach and operate on the assumption that the current funding structure can accommodate increasing regulatory burdens forever. They will have a scary wake up call when they discover that disruption of the current Federalized funding system will represent and existential threat to them as well as the programs they oversee.

Within academic health systems, there appear to be three distinct books of business. First, there are service lines centered around cutting edge technologies and approaches which do not exist as of yet in the community and serve as a robust training resource and source of revenue for these centers. While these used to be a major characteristic of academic health centers, these are remarkably rare. Technology which can be leveraged to generate income now diffuses into the community practices at light speed.

Second, there are services which generate healthy financial margins where AMC's must compete with the community practices. However, AMC's have difficulty competing because their structure and culture may not allow them to readily address patient desires for convenience and cost. Historically, many successful AMC's have been able to extract premium payments from commercial insurers which help offset their disadvantages. Increases in co-pays associated with commercial insurance and price transparency are undermining this revenue stream very rapidly.

Finally, academic health systems provide expertise and care for patients with very complicated disease where the relevant expertise simply does not exist in community practices. These patient populations are also necessary for fulfilling training missions and maintenance of a concentration of specialized competencies within AMC's. These concentrations serve a repositories of expertise and fulfill essential functions. They are why the sickest patients end up at AMC's for their care. Unfortunately, there is no present mechanism for AMC's to monetize these capabilities which serve both essential educational functions and meet otherwise unmet clinical needs in their communities. Those functions, no matter how essential, will disappear over time if they do not provide economic value to those delivering them.

What happens when the traditional subsidies which have underwritten training are eroded while at the same time cost pressures are increased on AMC's? Stein's Law is "If something cannot go on forever, it will stop". One f the worst aspects of our current system is that the way it is structured creates all sorts of barriers to testing new approaches to training. Regulations controlling Medicare based funding are notorious for forcing those participating into an all in or out structure. The various oversight entities such as the ACGME follow a similar model where innovative funding approaches are viewed with great prejudice. All seem to be blind to the reality that we have created increasingly complex cost structures while simultaneously creating increasingly constrained and de-differentiated funding streams. This is a very dysfunctional business model.

The end results are predictable even if the timetable of events is not. When the current funding mechanisms are disrupted, many training programs will quickly disappear. They live hand to mouth now. What will come up to replace them is an open question and will depend a great deal on what barriers will be created by current regulatory elements. What unmet needs will be created may become apparent only after a long time. Smart people will figure out how to meet human needs and profit from this, as long as they are not too constrained.

1 comment:

  1. I teach and practice at an academic medical center seeing patients with relatively rare but especially serious and prospectively fatal disorders, exactly the type of complex diseases referenced above. These disorders are a revenue sink in most cases, only offset in some because expensive treatments such as chemotherapy have a higher margin than the cognitive services I provide in evaluating these patients and formulating treatment plans. It is difficult to impossible to monetize my direct patient care and increasingly reliance on entreaties to downstream revenue is justification for continuing to see these patients. Unfortunately senior management, many of them physicians themselves, at academic institutions faced with such issues do not have the breadth of focus to look at a total revenue stream such as this much less engage in the creative thinking that will be necessary to insure the survival of the educational component that is the rationale for academic medical centers. If academic medical centers don't disappear they will likely be reduced to being nothing more that large and poorly managed multi-specialty clinics. That fate may be ordained in any case but recognition of the futility of continuing the current business model is the essential step in survival and the preservation of the academic mission.