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Association ofAmerican Medical Colleges

Navigating the New Realities of Academic Medicine: Implications and Opportunities for a Sustainable Future

Leadership Forum SummitWashington, D.C.February 26, 2013

Navigating the New Realities of Academic Medicine:Implications and Opportunities for a Sustainable Future

For more information about the Leadership Forum Summit proceedings, please contact the primary contributor of this resource kit, Mackenzie Henderson, Office of the President, at [email protected].

This publication is for all members of the Association of American Medical Colleges. Its purpose is the exchange of information between the AAMC membership.

Some opinions expressed in this document are those of individuals and do not necessarily represent the AAMCs policies and positions.

2013 Association of American Medical Colleges. May be reproduced and distributed with attribution for educational and noncommercial purposes only.

This is a publication of the Association of American Medical Colleges. The AAMC serves and leads the academic medicine community to improve the health of all. www.aamc.org.


Association of American Medical Colleges 20133

Chapter 1: A Call to Action 4

Chapter 2: National Perspective 5

Chapter 3: Fiscal Picture: From Deals and Dowries to a Sustainable Future 9

Chapter 4: Academic Health Centers Facing Challenges in Different and Creative Ways 18

Chapter 5: Breakout Discussion Questions and Graphic Renderings 25

Chapter 6: Moving Forward 33

Chapter 7: Tools for Continuing the Conversation on Campus Discussion Questions 34 Advocacy Related Material to Guide the Discussion 36 Suggested Readings 46

Appendix: Meeting Materials Agenda 55 Participant List 58 Staff Participant List 63 Speaker Biographies 65 Speaker Powerpoint Presentations 71



Chapter 1: A Call to Action The Board of Directors of the Association of American Medical Colleges (AAMC) is pleased to present you with this set of resources from our recent Leadership Forum Summit, Navigating the New Realities of Academic Medicine: Implications and Opportunities for a Sustainable Future. Participants of the summit were able to engage in deep discussion regarding the ways in which leaders should prepare their campuses for our new fiscal realities and ensure that academic medicine continues to thrive and lead the changes that will improve Americas health.

Our hope is that this report will serve as a resource to facilitate conversations at your institutions and help you develop your own institutional strategy to meet the challenges ahead. To assist you in convening these conversations, this document includes advocacy-related materials, real world approaches to fiscal challenges, and links to a series of videos by AAMC leaders explaining the current model of cross-subsidies. These videos may be a useful tool in helping your campus community develop a deeper appreciation of the financial model underpinning medical schools and the funds flow at your institution, and how this model is likely to be disrupted by reductions in federal funding.

As you will see from the summary that follows, the confluence of a number of factors is creating a change imperative. The sequestration recently allowed to go into effect by Congress may, in fact, represent a new baseline for our community. In recent years, growth in health care spending has not been matched by growth in the gross domestic product. The public is demanding change, and Congress is acting by making indiscriminate, across-the-board cuts. While the AAMC will continue to advocate strenuously to reverse these actions, academic medicine can and must develop solutions within this new fiscal reality that will allow us to fulfill our tripartite missions of medical education, patient care, and research in bold and creative ways.

As the summits participants concluded, creating a high-value health system will require not simply revenue expansion and expense reduction, but a true redesign in the way we do our clinical work. A similar consensus regarding the need for redesign was reached for the educational and research missions. The AAMC is committed to being an active partner with you in these efforts and hopes that this document provides both a call to action and a toolkit for these important conversations.

Dr. Kirch discusses Navigating the New Realities of Academic Medicine in this video

Valerie N. Williams, Ph.D.Chair, 2012-13

A. Lorris Betz, M.D., Ph.D.Chair-Elect, 2012-13

Darrell G. Kirch, M.D.President and Chief Executive Officer



Chapter 2: National Perspective During the national perspective portion of the Leadership Forum Summit, Christopher Jennings, president of Jennings Policy Strategies, Inc., and Sheila P. Burke, R.N., M.P.A., Wiener Center Fellow and adjunct lecturer in public policy at the John F. Kennedy School of Government at Harvard University, provided an informative assessment and diagnosis of the political environment confronting the academic medicine community.

Mr. Jennings outlined 10 observations about why the health care community will move forward with health care reform, regardless of the challenges created by the federal legislative environment. He summarized the political, budgetary, and policy barriers as well as the inevitable future pressure to reform the health system even further:

1. Todays political polarization surrounding budget and health care reform is unmatched historically; in fact, it has not been worse. Republicans are more concerned about challenges from the right in their primary elections and, as a whole, Democrats are becoming more liberal. This makes center-out compromises more difficult than ever.

2. Ironically, the resolution to both the debt limit and tax cliff debates largely removed pressure for a bigger deal and increased partisan divisions. The Republicans are now opposed to any additional revenue in a future compromise, and Democrats wont sign-off on substantial entitlement reforms without new net revenues. A large deal, therefore, now seems more out of reach than it did in 2012.

3. Mainstream economists argue that cuts made too hard and too fast will have a negative impact on the economy and jobs. While inefficient health spending is not good for the economy, excessive and poorly structured cuts in this sector may create harm.

4. The annual growth rate for Medicare and Medicaid is comparatively low (at or below GDP) compared to historical figures, which make it difficult to squeeze out more money without making painful impacts. The Affordable Care Act (ACA) already produced $500 billion in savings. Moreover, baseline health care spending has decreased even more than that amount. As a result, near-term excessive cuts may not only be flawed policy, but could undermine longer-term delivery reform objectives that have potential to sustain necessary low-cost growth over the long-term.

5. The health care community is divided over the effects of sequestration. Beneficiaries of discretionary investments strongly object to the law, rightly claiming it is unwise and unsound management strategy to have large cuts in programs like National Institutes of Health (NIH), Centers for Disease Control and Prevention (CDC), and the Food and Drug Administration (FDA). Health care stakeholders who receive their federal support from mandatory programs, such as Medicare and Medicaid (which were largely spared in the sequester), fear that opening up a new budget deal will mean much larger cuts for them and overall health care spending.



6. In recent months, non-health care issues, such as immigration and gun control, are getting more airtime. Some attribute the shift in media attention to health care fatigue, or the publics exhaustion of health care reform discussions and debates.

7. Notwithstanding the barriers to reform, the 2012 presidential election ensured that ACA reforms are moving forward. Since the ACA savings represent the floor, not the ceiling, of likely future health care reforms, the provider and insurer communities need to maximize their efforts in enrollment and outreach to make sure that their market share increases as their margins decrease.

8. Leaders of the White House, Congress, and mainstream media believe the nations fiscal problems begin and end with the inability to manage health care costs, particularly for Medicare and Medicaid. It is true that the demographic and health care challenges facing the community after 2021 are frightening, and must be thoughtfully addressed over time. As costs continue to rise, national attention is directed to reducing health care spending and the pressure to act more aggressively will only increase.

9. Because of past excesses and fewer resources, all public and private purchasers are (and will) demand greater value. Providers who learn how to survive in todays environment will likely thrive in tomorrows world.

10. There is growing understanding that the structural reforms and incentives that are necessary to prepare for the post-2021 period will have to be in place shortly in order to construct the system we will need for that time. No matter how efficient the community is, there will be a need for discussion for additional revenue to supplement our cost containment strategies. As time goes on, it will become self-evident that we do need a balanced approach of delivery reforms and revenues, and inevitably there will be a compromise to achieve that outcome. The question is when will this happen, not whether it will.

Ms. Burke discussed four essential questions:

What does todays political environment mean for your institution?

Ms. Burke emphasized that the cuts being made today should be considered the floor, not the ceiling, as Mr. Jennings noted in his remarks. Future cuts are likely to be system-wide and more substantial. To policymakers, the simplest solution, and the one that is typically chosen, is simply to cut spending, whether through reducing indirect medical education (IME) payments or through across-the-board cuts in reimbursement.

It is also important to remember that the next election cycle is already underway. Compared to general elections, in the midterms, the candidates will focus more on local issues and local sensitivities, including the impact of sequestration on states and local communities.

The growing consensus held by policy experts and the street is: health care costs are the problem.



How do some of academic medicines greatest challenges align with policy solutions?

Historically, policy proposals focused on medical education, particularly graduate medical education (GME), rather than increasing public appreciation of academic medicines research mission. Often, when policymakers think of research, they think of it in the context of NIH. It is important for the academic medicine community to understand that policymakers do not fully appreciate and understand the relationship between NIH funding and academic medical centers. Ms. Burke suggested focusing on the role of academic medicine in research and believes that Congress will be receptive to this message. She also discussed the multigenerational impact that budget cuts will have in deterring young people from pursuing biomedical research as a career.

When determining messaging, academic medical centers also must keep in mind the health care spending environment. Congressional Budget Office (CBO) estimates of Medicare and Medicaid funding have been updated since 2010, and these figures have declined by $200 billion ($126 billion for Medicare and $78 billion for Medicaid),1 in a relatively short amount of time. All the while, demographics are working against us as people are living longer and more Americans are drawing on entitlement programs. The short-term down turn we have seen in the past few years is likely short lived. Projections after 2020 show increased rates of health care spending; therefore, the necessary changes cannot wait until baby boomers are reliant on the system.

How does the academic medicine community use federal health care dollars and what are the expected outcomes?

Currently, outcomes are not tied to GME payments. However, the Medicare Payment Advisory Commission (MedPAC) and others have called for performance-based GME, which would hold teaching hospitals accountable for the provided funds.2, 3 Reducing IME and repurposing the funds for incentive payments is an opportunity currently being explored, but requires a decision on measures.

Discussions are taking place about the use of federal dollars to support health care professionals other than physicians. This sparks the debate on scope of practice and draws attention to how to engage the federal government in addressing health workforce shortages across specialties and levels of expertise. Tying outcomes metrics to programs such as the National Health Service Corps (NHSC) helps to determine how effective these payment systems are to improving access to health care services.

According to some policy experts, the passage of ACA signals a lessened need for disproportionate share hospital (DSH) adjustment payments and the assistance to safety net institutions. But, under the best of circumstances, 20 million people still are not covered. The conversation surrounding DSH and safety net institutions will involve moving existing money around, not introducing new funds.

1 Congressional Budget Office (2013). The Budget and Economic Outlook: Fiscal Years 2013 to 2023. Accessible at: http://www.cbo.gov/publication/43907. 2 Medicare Payment Advisory Commission (2010). Report to the Congress: Aligning Incentives in Medicare. Washington, DC. Accessible at: http://www.medpac.gov/chapters/Jun10_Ch04.pdf.3 112th U.S. Congress (2012). S.3201Graduate Medical Education Reform Act of 2012. Accessible at: http://thomas.loc.gov/cgi-bin/query/z?c112:S.3201.



What should you focus on in your institution?

Ms. Burke recommended structuring the health care workforce based on population needs, including a mix of services and providers. The guiding questions should be, Who are we preparing, and what are we preparing them to do? Students should be enabled and incentivized to practice in all settings, not just in acute care.

Students also should be taught to focus on quality and be prepared to consider value as they move into the health care delivery system. Policymakers are demanding greater transparency around outcomes for medical and other health care professionals.

Academic medicine must take ownership and institute new business models. Change is coming with or without academic medicine, so as institutions rethink financial systems, they must decide how to pay for incentivizing the behaviors they want. Institutions also should allow new systems to be tested because no one knows which levers will work and work best. The process of

innovation, including the use of technology, can save money, create sustainable change, and achieve a greater purpose.

Finally, Ms. Burke suggested partnering with patients, community-based institutions, and others to strengthen interprofessional relationships and team-based care during the training of medical students and residents.

Although she noted that some may feel unable to plan long-term because of looming uncertainties, the current instability will not go away. Academic medicine must change and adjust to the new circumstances.



Chapter 3: The Fiscal RealityFrom Deals and Dowries to a Sustainable FutureAfter the initial review of the current and future prospects for legislative relief at the Leadership Forum Summit, members of the AAMC Leadership Team described the fiscal picture facing academic medicine. Darrell Kirch, M.D., president and CEO, Carol Aschenbrener, M.D., chief medical education officer, Joanne Conroy, M.D., chief health care officer, Ann Bonham, Ph.D., chief scientific officer, and John Prescott, M.D., chief academic affairs officer, provided an overview of the fiscal environment and its impact on the three mission areas of education, research, and patient care. Chief Public Policy Officer Atul Grover, M.D., Ph.D., closed the panel by providing a policy perspective and detailing the impact of sequestration, as well as alternate scenarios, on academic medicine.

These presentations have been recorded and are accessible by clicking here.

Atul Grover, M.D., Ph.D. Chief Public Policy Officer

Joanne M. Conroy, M.D. Chief Health Care Officer

John E. Prescott, M.D. Chief Academic Officer

Darrell G. Kirch, M.D. President and Chief Executive Officer

Carol Aschenbrener, M.D. Chief Medical Education Officer

Ann Bonham, Ph.D. Chief Scientific Officer



Dr. Kirch began the presentation by describing the fiscal realities facing medical schools and teaching hospitals.

Almost all of the current sources of medical school revenue are affected by sequestration. As seen in Figure 1, the median medical school revenue was $526 million in 2011. Faculty practice plans, grants and contracts, and hospitals and medical school programs provided the majority of this revenue. All of these revenue sources are affected directly by sequestration, which comes at a time when our growing and aging nation is triggering a rise in health care costs. Contrary to common perceptions, student tuition and fees provide only a very small amount of revenue. In addition, there is broad concern about the increasing debt levels for medical school graduates being driven by increasing tuition and fees. Similarly, gifts and endowments do not constitute a large percentage of total income for the average medical school, and even philanthropy may be threatened by further changes to the tax code.

Clinical care has served as academic medicines economic engine via cross-subsidies from clinical margins to support education and research, but pressure to control health care costs no longer makes that a viable long-term strategy. As Figure 2 depicts, the number of basic science and clinical faculty size grew substantially over the last five decades as institutions sought to increase the number of individuals who could generate grant and clinical revenue, respectively. This robust growth continued even during the recession of 2007-2009 as Figure 3 shows.

Total Revenue: $93B Median Revenue: $526M

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Figure 1: Medical School Revenue, by Source, FY2011

Source: LCME Part I-A Annual Financial Questionnaire, FY2011

Source: LCME 1-A Annual Financial Questionnaire (AFQ), 2011

Source: LCME 1-A Annual Financial Questionnaire (AFQ), 2011

Figure 2: Growth in U.S. Population, GDP, and Medicine 1960-61 to 2010-11

Figure 3: U.S. Medical School Revenues, by Source



Just as in technology and real estate, a health care bubble may be forming. Dr. Kirch noted a recent analysis that health cares rapid growth over the last few decades has led some to predict that health care is the third bubble.4 When an economic bubble bursts, a fundamental realignment will occur and prices will drop substantially, just as occurred when previous bubbles in technology and housing burst. As a result of our rapid and increasingly unsustainable growth, the ratings agency Moodys has declared negative outlooks for both higher education and not-for-profit hospitals, two sectors which overlap in the academic medical center.5, 6 Understanding funds flow in the academic medical center is essential to addressing our fiscal challenges. In the 1990s, a number of medical schools and teaching hospitals instituted an AAMC-led mission-based management initiative in which institutions analyzed their revenue sources and the specific uses of those funds in a transparent manner.7 The initiative became controversial as the veil was pulled back and some leaders and faculty members were surprised by the magnitude of complex cross-subsidies in their institution. Today, more than ever, having a full understanding of academic medicines funds flows remains essential to addressing our fiscal challenges. In a totally aligned world without cross-subsidies, tuition and fees would support the educational mission, research grants and contracts would support medical research, and clinical revenues would support health care operations. Today, however, these funds are mixed in an opaque process and allocated in a seemingly unstructured and non-transparent manner portrayed as the cauldron in Figure 4. The net result is, at best, a lack of understanding of the financial interdependencies within the organization and, at worst, a high level of mistrust in the leadership at all levels.

4 Hogan, N. The End of the Third Bubble. BDC Advisors. 2009. Accessible at: http://bdcimpact.com/docs/TheThirdBubble.pdf.5 Moodys Investors Service. Moodys: 2013 outlook for entire US Higher Education sector changed to negative. 16 Jan 2013. Accessible at: http://www.moodys.com/research/Moodys-2013-outlook-for-entire-US-Higher-Education-sector-changed--PR_263866.6 Moodys Investors Service. Moodys: Outlook for US not-for-profit hospitals remains negative for 2013. 22 Jan 2013. Accessible at: http://www.moodys.com/research/Moodys-Outlook-for-US-not-for-profit-hospitals-remains-negative--PR_264373.7 Mallon, WT. Introduction: The History and Legacy of Mission-Based Management. Academic Medicine, Management Series: Mission-Based Management, 2006. Accessible at: http://journals.lww.com/academicmedicine/Fulltext/2006/04001/Introduction__The_History_and_Legacy_of.1.aspx.

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Figure 4: The Cauldron

Adapted from a presentation by David Hefner



Education

Dr. Aschenbrener began her remarks by noting that medical education is an area where the least is known about actual costs. What we do know is that cost of attendance (defined as tuition and fees plus living expenses, transportation costs, and computers) and average medical student debt at both public and private institutions have risen to levels increasingly viewed as intolerable by the public (Figure 5). In general, cost of attendance and average debt of indebted students are higher at private institutions, but huge variation exists, mainly because of differences in endowments and other sources of financial aid.

Cost sharing for physician education is broad and complex. The total cost of educating physicians in the U.S. is shared by students, federal and state government, private donors, affiliated hospitals, faculty, and parent universities. Each of these sources is under stress in the current economic environment.

Although good data on the cost of medical education do not exist, the primary cost drivers are: faculty time, curriculum design, educator mix, class size, institutional priorities, and teaching loads. Estimates of education costs are difficult to compare because there is no consistent methodology. Determining cost requires a detailed, accurate analysis of faculty effort, and this analysis is difficult to achieve. Currently there is no clear relationship between:

s THE STICKER PRICE PUBLISHED TUITION AND FEES STUDENTprice (what the student actually pays), and student debt

s THE STICKER PRICE AND PRODUCTION COSTS COST OFdelivering curriculum)

s PRODUCTION COSTS AND INSTITUTIONAL COSTS COSTS BORNEby medical schools/parent universities)

Physician education is in the process of a much needed transformation. Medical schools are implementing more interactive methods of learning and assessment and creating more alignment with desired outcomes through the use of competencies. Some examples include: problem-based learning, team-based learning, peer learning, simulation, standardized patients, formative assessment, and self-assessment. In order to assess the effectiveness of new models of physician education, baseline data about cost and outcomes need to be gathered now.

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Figure 5: Cost of Attendance and Medical Student Debt

* Source: AAMC Tuition and Fees SurveyTuition and fees for first-year medical students includes health insurance



Research

The key challenge for medical research articulated by Dr. Bonham is how do we implement a self-sustaining research mission when faced with the challenge of volatile federal funding? The challenge ahead for academic medicine is to balance the fiscal uncertainties surrounding the clinical enterprise, while sustaining a research mission that meets the needs of society and fosters a diverse biomedical workforce.

Using LCME data, Dr. Bonham demonstrated how the volatile fiscal environment would affect one public research-intensive institution. Figures 6A and 6B graphically depict the entire spectrum of revenues by source that are available to fund this institutions research mission, before and after potential cuts and monetary redistributions. Making some assumptions of fungible institutional dollars available to support research, a strong research enterprise in this example with federal and other grants and contracts ($423,724,170) still would need to receive about $93,471,164 from the institution to help sustain the research enterprise.

How can this institution preserve the research mission if the $93,471,164 is reduced or eliminated? This daunting question is relevant to all institutions. The status quo is no longer an option.

Patient Care

In her remarks, Dr. Conroy observed that understanding the economics of patient care requires looking retrospectively. In 1996, teaching hospitals had an opaque relationship with medical schools with respect to cross-subsidies. Clinical departments received institutional budgetary support for their unfunded/underfunded missions of education, research, and clinical care. Salary lines were created for faculty with no linkage to clinical productivity. Hospitals subsidized rent and overhead. Large chair and faculty recruitment packages were common, and once negotiated, this support rarely decreased even though the rationale for the support may no longer have applied.

The Balanced Budget Act of 1997 disproportionally affected teaching hospitals by decreasing indirect medical education, disproportionate share hospital payments, and other Medicare payments. Figure 7 shows this fluctuation by depicting teaching hospitals total margins compared to nonteaching hospitals. In 1999, close to 40 percent of teaching hospitals had negative operating margins. Slowly, over the early 2000s, teaching hospitals climbed back to financial stability by taking a business-minded approach to running hospitals, creating service lines, and combining high intensity with high-tech care. Comprehensive open heart surgery, transplant, and specialized cancer programs fueled this growth even further. The other major financial impact of the past

Federal Research Grants & Contracts $370,081,137

Tuition & Fees $34,021,071

Other $58,350,786

Gifts & Endowment Funds $53,442,708

Expenditures & Transfers from Hosp Funds $285,472,693

Government & Parent Support $88,684,163

Other Grants & Contracts $90,651,146

Total: $980,703,704

Federal Research Grants & Contracts $333,073,024 (10%)

Tuition & Fees $0 (100%)

Other $19,450,262 (67%)

Gifts & Endowment Funds $17,814,236 (67%)

Strategic Support of Med. School Programs from Hospital Funds $26,645,278 (50%)

Government & Parent Support $29,561,388 (67%)

Other Grants & Contracts $90,651,146

Total: $980,703,704

$517,195,334

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$423,724,170

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Figure 6A: 2011 Revenues & Expenditures by Source at a Research Intensive Public Institution: Before Potential Cuts

Figure 6B: 2011 Revenues & Expenditures by Source at a Research Intensive Public Institution: After Potential Cuts





20 yearsthe stock market crash of 2008affected teaching hospitals and nonteaching hospitals alike.

In 2013, many teaching hospitals margins are as high as they have ever been, and the requisite funds flow to support the education and research missions continues to increase. According to the University Health Consortium (UHC), funds flow from the clinical enterprise is, on average, 8.7 percent of net patient service revenue and growing. However, this growth is unsustainable in an era of shrinking revenue. More care is moving to outpatient settings, which pay less. Hospital discharges, the major source of revenue, have been decreasing for years and continue to decline. With the implementation of the Affordable Care Act, close to 50 percent of DSH payments will be repurposed to provide premium support in the health insurance exchanges. Finally, the small-employer commercial market is likely to decrease with the advent of the exchanges. The impact of these changes is becoming apparent as some teaching hospitals are beginning to have negative annual and quarterly margins.However, solutions are within reach. Hospitals and medical schools need to work together to manage expenses and revenue by aligning priorities and resources. Academic medical centers (AMCs) also will need to manage a greater amount of financial and performance risk by creating regional collaboratives to provide care to a broader community outside the traditional bricks and mortar of the teaching hospital.

View from the Epicenter of the Funds Flow

Deans are often referred to as the epicenter of the funds flow, according to Dr. Prescott because they are responsible for managing the convergence of AMC funds and culture. Such a task requires strong relationships with faculty, students, boards, university presidents, and state officials, among others. Deans gain a unique perspective by discussing a multitude of subjects, from subsidizing the parent university as state education funding decreases, to decreased donor funding as philanthropy is hit hard by the recession, and to larger health care workforce issues as shortages loom in the not-so-distant future. Because many requests that the dean receives involve financial resources, deans who reward behaviors across mission areas and manage finances effectively are able to balance the tradeoffs of running an AMC.

Note: Major teaching hospitals are defined by a ratio of interns and residents to beds of 0.25 or greater, while other teachinghospitals have a ratio of less than 0.25. A margin is calculated as revenue minus costs, divided by revenue. Total marginincludes all patient care services funded by all payers, plus non-patient revenue. Analysis exclude critical access hospitals.

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Figure 7: Hospital Total Margins 19962010

Source: MedPAC June 2008 Data Book.



Public Policy Perspective

According to Dr. Grover, the academic medicine community will see decreased revenue as sequestration, DSH cuts, value-based purchasing (VBP), and other policy measures take effect. Figure 8 shows the estimated losses for all major teaching hospitals and the baseline reductions in Medicare revenue from ACA implementation. Fifty percent cuts to DSH will translate into a $2 billion to 2.5 billion loss for AMCs, although some believe this decrease will be mitigated as the newly insured continue to access care at AMCs.

To understand the impact of sequestration and other budget cuts on academic medicine, Figures 9A and 9B depict two scenarios: sequestration and the alternative best case. Scheduled cuts that occur in both scenarios include 2 percent VBP, 3 percent readmission, and 25 percent DSH, amounting to $1.8 billion in cuts. Under the sequestration scenario, the 2 percent Medicare cut and $750 million reduction in NIH funding brings the total estimated loss from sequestration to $6.5 billion. The alternative scenario includes 10-60 percent cuts to IME (one to five billion dollars a year), decreased payments for hospital outpatient departments (HOPD) and evaluation and management services (E/M) reductions of $450 million, and other Medicare and Medicaid cuts totaling one to two billion additional dollars. This estimated total loss in this alternative scenario is between $5.6 billion and $9.3 billion.

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Figure 8: Estimated Losses for All Major Teaching HospitalsBaseline Reductions in Medicare Revenue From ACA Implementation

Figure 9A: Estimated Losses to Academic MedicineSequestration Scenario

Figure 9B: Estimated Losses to Academic MedicineAlternative Best Case Scenario

Source: AAMC Analysis of Medicare Cost Report Data, FY2009 (March 31, 2011 Release)

Source: FY2013 Medicare Final Impact File

Source: FY2013 Medicare Final Impact File



Individual AAMC-member institutions will likely face cuts of tens of millions of dollars from sequestration or any substitute agreed upon by Congress and the administration. While institutions operate varying sizes of hospital enterprises, the average medical school and teaching hospital would face a loss of $20 million to $30 million each year in addition to cuts already imposed by the ACA and subsequent health related legislation. Net patient care revenue that today is being transferred to other mission areas will have to be reduced under these cuts. Medicare cuts to many hospitals and practice plans under sequestration could result in losses of between $5 million and $10 million depending on the size of the clinical enterprise. Cuts to an institutions research enterprise could vary from $2.5 million to $25 million. Under alternative proposals, Medicare cuts could be much larger and cuts to federal grants might be decreased. Yet both scenarios result in substantial losses of tens of millions of dollars to the average academic medical enterprise.

To begin planning for this eventuality, many institutions will need to remove between $15 million and $20 million in recurring costs. At a minimum, health systems need to estimate total losses of two percent from all Medicare revenues and five percent reductions in federal grant support. While future cuts to federal funding may not occur in these exact areas, it is likely that these combined losses will reflect reductions in future support for the academic missions. Preparing a plan that examines what is being spent in each mission area and outlining potential cuts will help each institution understand their flexibility to navigate these volatile new fiscal realities.

Strategies to Prepare for New Realities

Following the panels presentation, meeting participants discussed strategies AMCs could employ to prepare for the new realities. The themes that emerged include establishing new partnerships and models and transforming culture. Highlights of the discussion follow.

For the past several years, the idea of industry and biomedical research relationships has been a sensitive subject. However, the conflict of interest discussion is now being reframed to enable academic medicine and industry to form partnerships that will strengthen discovery and improve health.

New opportunities exist to reorganize medical schools and teaching hospitals. Some schools are experimenting by introducing new models. Some schools have changed their department structures by moving from departments to centers. Often, the challenge of these changes lies in taking risk and moving forward rather than standing by complacently or retreating from change. Institutions must ask themselves: What do we want to be known for? The answer is to have the form follow the function.



Undertaking this type of transformation and innovation requires a paradigm shift. Historically medical schools and teaching hospitals are at a disadvantage; their autonomous, academic cultures reinforce the individual. Going forward, institutions will need to surmount their inherent individualism. AMCs will enjoy an advantage by having all the necessary pieces under one umbrella. But urgency exists. Already, some non-academic institutions are gaining ground and market share because they do not have to shoulder the weight and cost of the academic mission.

To some degree, academic medical institutions have nailed their feet to the floor. As a result, the degrees of freedom to change are limited. However, when dealing with adaptive problems, technical solutions are not sufficient. Radical transformation is required, but that will not happen until academic medicine reinvents itself. For example, if every faculty member contributed 10 percent of his or her salary for the next 10 years, one medical school estimates it would have enough money to send all its students to medical school for free. Learners also must be involved in these improvement process conversations.



Chapter 4: Academic Health Centers Facing Challenges in Different and Creative WaysMany institutions within the academic medicine community are tackling the challenge of fiscal sustainability. Four distinguished colleagues shared stories of how their institutions are adapting to these new financial realities. The speakers included: Michael Collins, M.D., F.A.C.P.; Robert Laskowski, M.D., M.B.A; Lily Marks; and David Skorton, M.D., representing University of Massachusetts, Christiana Care Health System, University of Colorado, and Cornell University, respectively.

Michael F. Collins, M.D., F.A.C.P.Senior Vice President, Health Sciences, University of MassachusettsChancellor, University of Massachusetts Medical School

University of Massachusetts Medical School is a freestanding health sciences campus that does not own a hospital or practice plan, operates in a state where the market is volatile, health care reform is underway, and the number of uninsured is decreasing. When he took the helm in 2007, Dr. Collins was faced with the task of reviewing the institutions five-year planning process. After assessing the environment, he decided the next logical step was to look at the institutions costs.

Dr. Collins engaged in a comprehensive review of the costs of each mission area and the corresponding revenue sources. Mission-based leaders were asked to conduct fact-based analysis and define productivity and costs for each mission area. A funds flow task force asked clinical and research chairs to develop transparent and consistent methodology surrounding tenure, academic expenditures, and mission alignment.

Dr. Collinss team established the goal Excellence 2012, which sought to eliminate $20 million in FY2012 by reducing costs, ensuring efficiency, and promoting the effective use of limited funds. The team also planned to eliminate an additional $30 million over the following two years. The initial rollout of the plan focused on seven basic administrative areas ranging from human resources to research. Rather than imposing the plan, the team asked the staff to lead the change. Staff from across the campus came together as a group to make 10 percent eliminations across the board. For the first time on campus, 80 people lost their jobs.

After achieving the $20 million goal in 2012, University of Massachusetts had a certain confidence in the thoughtful, methodical, and campus-wide approach. However, certain campus constituencies felt that they were exempted from the process. Excellence 2013 is underway and, according to Dr. Collins, all those campus constituencies have been added to the discussion. As part of the process, every administrator for every department has been evaluated. Rather than having a separate administrative group for every department, groups of administrators now provide services to multiple smaller departments.

The next phase, Excellence 2014, will require chairs and the leadership team to work closely together to continue collaborations with other key partners, such as Commonwealth Medicine, a consulting group within the medical school that maximizes state and federal dollars for under- and uninsured patients. Commonwealth Medicine has saved the state billions of dollars through its work on managed care, Medicaid payment reform, delivery systems for disabled adults, management of the prison system, health homes for critically ill patients, a health system database, and dental health.



Robert J. Laskowski, M.D., M.B.A.President and Chief Executive Officer, Christiana Care Health System

Christiana Care Health System is a regional community-based academic health system in Delaware. It employs more than 11,000 people and has a large share of the patient care market in the state. According to Dr. Laskowski, the strategy of Christiana, in one word, is value. Although a simple term, this strategy is not simply defined as quality divided by cost because this equation misses a big aspect of the value equationthe public. Christiana prides itself on taking care of its neighbors when they are sick and when they are healthy.

Christiana Cares goal is to make a difference in a way that can be measured and in a way that its neighbors can appreciate. This requires a focus on quality, outcomes, and cost. The true value equation is: benefits, determined by Christiana Care and the public, divided by cost. Over the last five years, Christiana Care has implemented progressive reductions in costs that have resulted in reasonable operating margins. According to Dr. Laskowski, costs on the delivery side can be broken down into two categories: money spent on people, and money spent on the supplies, tools, and support they need.

To tackle the people side of costs, Christiana Care implemented a position review committee to review every job before it is filled. This step provides a unique opportunity to view the different ways the institution adds to its costs and helps reduce its operating expenses.

To manage pharmaceutical and therapeutic costs, Christiana Care evaluates whether new drugs meet the Christiana Care value formula. A subcommittee, which includes members of the public, reviews the biologics used in therapies to determine if they provide value to the community and help meet Christianas social contract. These members of the public are leaders in the community, and although they are not health professionals, they state their opinion of the social value of these drugs and therapies. Their opinion helps inform the professional staff as they decide what to include on the formulary.

In addition to reviewing pharmaceutical and therapeutic costs, Christiana conducts a capital acquisition review that requires a specific assessment of the value of medical equipment and other devices. For example, a new imaging device used in dental service that improves capabilities and is not expensive, received a score of 95 out of 100, whereas, medical robots despite their cool factor received a score of 70 because of their immense cost. These scores are used to determine the value added to the community.

Ultimately, Christiana views its mission as taking care of its neighbors. Through its value-based approach, involvement of the public, and focus on their areas of expertise, Christiana is transforming the way it operates.



Lilly Marks Vice President, Health Affairs, University of Colorado Executive Vice Chancellor, Anschutz Medical Campus

University of Colorado (UC) has four campuses, one of which is the health science campus. In 1990, the UC Hospital became a public authority with a presiding governance board that led to a transformation in service, facilities, payer mix, and quality. The UC hospital has successfully grown market share and profit margins since its recent move to add new facilities at the Anschutz Medical Campus to meet surging demand. The UC Hospital has been ranked by the University HealthSystem Consortium as the number one teaching hospital for quality and safety for the second year in a row. It also is recognized as a three-time magnet hospital for nursing.

The practice plan, University Physicians, Inc., (UPI) is a separate 501(c)(3) organization now approaching $500 million in revenue. It operates in a very centralized fashion, allowing it to capitalize on not only the economies and efficiencies of scale, but the expertise of scale. The board of UPI (primarily clinical chairs and elected faculty) has had the discipline to develop corporate investment funds that allow the organization to make equity investments in a wide range of clinical opportunities and build significant reserves, which allow departments to grow their programs. Additionally, the board provides a critical funding bridge as NIH and other mission investments decline. While the independent corporate structure has allowed the flexibility to interface with the market, the practice plan is closely aligned with the school of medicine, and the clinical revenue margins from the practice plan have built the schools

academic programs. A 10 percent academic enrichment tax (Deans Tax) generates annual academic program support equivalent to a $700 million endowment. This support helps offset the extremely low state general fund support. Faculty relationships with the hospital have been excellent, and the relationship and partnership among the executive leadership of the hospital, the school, the practice plan, and the campus continues to be strong and collaborative.

The decision to form UC Health and relinquish control to a new and broader partnership was in response to a strong market imperative. The Colorado health care market is rapidly consolidating and becoming more competitive and predatory. With three dominant health insurers and three major hospital systems controlling the market and rapidly employing physicians in the state, the UC clinical system leadership were concerned about their ability to retain leverage and referral networks in the market. Convinced that the strategy of remaining Switzerland without any hospital system alignment was no longer viable, UC made a bold move and partnered with an unaligned but strategically placed and high-quality community hospital, the Poudre Valley Health System in Northern Colorado.

Together, they formed a joint operating company characterized by a new system governance board, a common bottom line, and unified administrative infrastructure and systems (IT, legal, HR, and finance). Shortly thereafter, the new entity acquired Memorial Hospital in Colorado Springs via a 40-year lease. The system now has five hospitals along with two smaller hospitals operated under management contracts with the UC Health System. Within its first year, UC Health System became the largest health system in Colorado with $2.3 billion in annual revenue and 15,000 employees. UC faculty physicians supported this significant change to the governance and organization of its university hospital, but there have been significant issues to overcome. Nevertheless, a culture of trust and a history of success by both the practice plan and university hospital enabled the bold venture. As Ms. Marks described, Success is empoweringwhen you have experienced success in past ventures it gives you more confidence to explore and pursue new opportunities.



The transitions did not come without challenges. First, bandwidth is in short supply and staff are struggling to keep up with all of the changes of the rapid consolidation. Because of the rapid changes in the clinical environment, major decisions are being made without the usual analysis and deliberation, which can be worrisome. Second, the systems shared governance has created difficulties for some, including the university and board of regents. Third, blending cultures of both the boards and management is a considerable challenge. Finally, there is concern that the integration of the clinical enterprise could potentially lead to the disintegration of the academic mission, as clinical decisions and strategies are prioritized and academic considerations subordinated. To guard against this, UC and UC Health System rewrote their affiliation agreement to establish the requirements and expectations of the hospital in maintaining and supporting the academic missions. The document also governs what the hospital and system may not do, such as employing university physicians or creating alternate physician structures that would threaten the viability of the academic faculty physicians.

In her closing, Ms. Marks noted that just as all politics are local, health care is also local. Strategies need to be customized to local challenges and market profiles. While change is daunting, it is clear that health care in America must undergo tremendous change. We can either be the victims of change or the architects of change.

David J. Skorton, M.D. President, Cornell University

Cornell University is a $3.4 billion organization, with $2 billion of expenditures coming from the main campus in Ithaca, New York, and $1.4 billion coming from Weill Cornell Medical College. Although the university does not own and operate a hospital, it has a strong, successful affiliation with New York-Presbyterian University Hospital and Columbia University. By itself, Cornell is the eighth largest nongovernmental employer in New York state.

In his opening remarks, Dr. Skorton emphasized that the academic community cannot manage its institutions based on revenue alone, regardless of the impact of sequestration, because complex problems in the present austere environment simply cannot be solved without more effective cost control. As leaders and managers, we must choose to manage and lead more efficiently and effectively, as Cornell did when faced with serious financial difficulties that began in 2008.

In fiscal year 2009-10, the Ithaca campus anticipated a $150 million operating budget shortfall, in the context of a shrinking endowment, decreased state support, a limited capacity of its students families to manage the rising costs of education, an uncertain health care environment, high costs of borrowing, and a tight credit environment. The imbalance between projected revenues and expenditures required leadership to have the guts to right the ship. On the medical school side of campus, leaders saw an additional $13 million problem.

After freezing salaries and instituting hiring and construction pauses, the university drew down its fund balance and reserves by $150 million to provide working capital liquidity. Cornell also sold $500 million in taxable debt for additional liquidity and realized that it still had to reduce the staff workforce. This reduction was accomplished, in part, through a generous severance package for retirement, cancelled searches for vacant positions, eliminating two vice presidencies, and other layoffs. The university presidents salary was voluntarily reduced by 10 percent. While Dr. Skorton and his team reduced the deficit by an enormous amount, they needed to find ways to make the changes sustainable. An outside consultancy helped them understand the cost matrix of the nonmedical campus. On the medical campus, they were able to remove the $13 million deficit by laying off some staff, reducing services, and freezing salaries. Monitoring the fiscal condition carefully required additional transparency. Every month, board members



from the university and medical campuses, as well as vice presidents and deans, are sent a multipage spreadsheet laying out the uses of money including projected spending and accruals across the university.

In his closing remarks, Dr. Skorton described some of the lessons learned from this experience. First, the solution requires fusion of both technical expertise and political savvy. Clear and transparent objectives and information are essential, as is the ability to call for help when needed. According to Dr. Skorton, todays problems cannot be resolved through revenue alone; institutions must rethink their size and growth, leadership, and the type of changes needed.

Strategies to Prepare for New Realities

In the discussion that followed this panels presentation, the themes of communication, leadership, data, and compensation emerged as important components of strategies to address the new fiscal realities. Some of the panelists insights are captured below.

When implementing changes across campuses, pay close attention to messaging and language by grounding endeavors in the mission of the organization. Combine language, leadership, and institution-wide measures to spur change.

Lead from the back row. Become a leader by bringing your voice and thoughtful fact-based context to the discussion. Use the power of writing the first draft. Exert leadership by doing the heavy lifting, defining the parameters for the discussion, conducting hard analytics, and framing the right questions. Get people involved in creating the solution after setting targets. Allow individu-als and teams to make recommendations. Be a proactive leader in an integrated process.

Give faculty good data, ask the right questions and they will come up with the right answers. Employ evidence-based change management across the campus by using transparent data to lead discussions.

Change the compensation model to include risk and pro-ductivity. Encourage productivity by using relative value unit (RVU) data across the practice plan and sending it out across the institution. As medicine moves away from fee-for-service medicine, conduct an effort assessment. Look at the mission areas to see what can be measured. Develop a proxy for the amount of money needed to support a faculty member. This is a work in progress, but practice is culture. Use incentive systems in the larger environment of culture to encourage shifts in behavior.

Other Examples of Academic Health Centers Facing Challenges in Different and Creative Ways

Prior to the start of the Leadership Forum Summit, participants were asked to respond to the following prompt:

Many of our academic health centers already have taken steps to prepare for the new financial realities of academic medicine and have considered the implications and opportunities for a sustainable future. We invite you to share an example of how your institution has taken this step.

Participants representing a range of geographic areas provided examples of how their institutions are transforming financial funds flow models, empowering their employees to work differently, improving the role of leadership, and implementing changes across the three missions of patient care, medical education, and research.



Transforming Financial Funds Flow Models

Several institutions have chosen to restructure their financial funds flow model into a single mission-based model that utilizes quality and other metrics. To distribute school funds to departments more equitably, institutions are implementing transparent and formulaic funds flow models for research, education (including funding for teaching), and clinical enterprises. Mission-based budgeting also can include revenue assignment based on educational effort, controls for future tenure track/tenured faculty recruits based upon future budgetary constraints, and engagement in discussions with department chairs about the right size of the total number of tenured faculty. In addition to mission-based funds flow, some academic health centers are combining the faculty practice plan, hospital, and medical school in a single financial entity. New financial models for departments are being driven by participation and accomplishments, rather than simply relying on the previous years budget.

After four years of implementing a new transparent mission-based funds flow model, one large urban institution saw a $60 million annual deficit turn into a surplus for investment, while substantially growing its research and clinical programs with many new recruits. Another suburban public institution confronted a significant drop in state funding by first preserving all its core operations, then by cutting staff and administrative costs, and absorbing significant costs across the clinical and basic science departments. After consolidating operations and activities, the institution engaged in some

joint hires. Revenue was boosted through increased productivity, grant activity, and student enrollment and tuition, as well as by renegotiating contracts or establishing new contracts for the practice plan.

Empowering Employees to Work Differently

Informal taskforces are helping some AAMC members discuss and identify tools that can assess the impact of existing partnerships, including their financial effects. By engaging departmental and administrative leadership in budgetary challenges, the realities and challenges become transparent for the community to face as a collective academic unit.

Given that state and federal support for research likely will be constant or declining and philanthropy likely will be inadequate, a number of institutions foresee the academic mission being supported by hospital performance. As a result, institutions must understand that hospital financial performance and faculty academic opportunities are tightly linked and require close collaboration.

Improving the Role of Leadership

One medical school dean was described as being open and transparent about finances. By reaching out to community physician leaders and having frank discussions with the CEO, chairs, and institute directors, he has created a medical school without walls.

To foster leadership among employees, one institution developed a leadership academy with the help of an affiliated business school.

Implementing Changes across Mission Areas

Patient Care

By minimizing administrative costs through efficiencies, shared services, and restructuring, institutions are facilitating true innovation in their care delivery systems. The use of data and analytics to measure productivity, performance, and benchmarks further strengthens patient care. One institution discussed their value-based reimbursement strategy, which prepares physicians for the change in health care funding and the health outcomes expected with health reform.



Another institution launched operations councils across their medical center that include physician and nurse leaders and specialists trained in process improvement. The primary care network is another opportunity for innovation at academic medical centers as academic medicine shifts to team-based delivery.

One teaching hospital has increased its RVU target for surgical faculty. However, one unintended consequence of having a proportion of salary determined by the RVU target has been decreased faculty participation in medical student clerkship activities. Another organization is moving from a system dependent upon individual negotiations between hospital and departments to one in which the hospital subsidizes RVUs, providing incentives for increased clinical productivity, and thus aligning goals.

Medical Education

To some, a medical school curriculum is a living thing that should change to meet the needs of students and communities. One urban medical school developed a novel 3.5-year curriculum for students with Ph.D. degrees in biomedical sciences who wish to obtain an M.D. degree. The pedagogy is based on adult learning theory with seminars, team-based learning exercises, and self-study rather than a traditional lecture format. Another medical school is implementing a new curriculum that will increase clinical correlations in the first 18 months of undergraduate medical education (UME) and provide students with earlier access to clinical rotations and broader exposure to career options. At another medical school, the leadership of the surgery clerkship is

experimenting with online modules to decrease faculty demands and maximize the value of student interaction with faculty when possible.

One institution noted that it is initiating a community-based medical educational curriculum to address the need for rural physicians. Another medical school has expanded its primary care focus in preparation for managing population health. This includes a new four-year track in primary care leadership in the school of medicine; expanded physician assistant and nursing programs; a redesigned family medicine residency; a new nurse leadership academy; and an integrated curriculum in population health.

Changes to graduate medical education are being made at several institutions, as well. One organization is looking to reduce or reallocate GME positions to prepare for potential cuts to federal GME support and align with the overall strategic plan of health system. Reducing and/or eliminating GME positions that exceed the institutional Medicare caps is being discussed at other institutions.

Research

Institutions are realigning their basic science departments to better address collaboration and sharpen their focus on current research questions, while striving to maintain disciplinary rigor. Some schools are revising their compensation models for both clinical and basic science faculty. While some research programs have been slower to shift toward a new culture of managing population health, funding from Patient-Centered Outcomes Research Institute (PCORI) is helping.

In one health system, the research mission has largely been budgeted through a major research institute, separate from the budgeting of clinical departments. With the founding of a new medical school, strong motivation exists to identify research mission funding throughout the clinical campus, particularly given strong need for growth in clinical research (including health services research and translational research). This health system is thus creating a clinical research service line that integrates research budgeting into the overall operations of the entire health system.



Chapter 5: Breakout Discussion Questions and Graphic RenderingsAfter the panel presentations, summit participants divided into smaller groups to discuss five issues considered central to the future sustainability to academic medicine.

s (OW CAN WE USE NEW APPROACHES TO MEDICAL EDUCATION THAT WOULD INCREASE EFlCIENCY AND EFFECTIVENESSsimultaneously?

s (OW DO WE PREPARE FACULTY FOR A VERY DIFFERENT ROLE AS TEACHERSs (OW DO WE EFFECTIVELY IMPLEMENT A SELFSUSTAINING RESEARCH MISSION WHILE STAYING ALIGNED WITH THE

goals of the institution and the community in which it serves?s (OW CAN WE DESIGN A CLINICAL CARE SYSTEM TO EFFECTIVELY MANAGE CHRONIC DISEASEs (OW CAN WE QUICKLY AND EFFECTIVELY PREPARE THE NUMBER OF LEADERS REQUIRED TO MEET CURRENT AND FUTURE

challenges?

Summaries of the discussions follow, along with graphic renderings of the conversations.

How can we use new approaches to medical education that would increase efficiency and effectiveness simultaneously?



The conversation began by defining the common core of a good physician. If the classroom is allowed to change from a place where information is exchanged to one of engagement and interaction, future physicians will be able to embrace change, work as a team, and perform in an outcomes-based model that is relevant in todays health care environment. The group identified a need for radical transformation. Schools are already beginning to move away from lectures by using their own offline or published content. Readiness to use other institutions content was noted, as well. In order to carry out any transformation, the consensus was that academic medicine must first determine a common vision and language surrounding competencies, milestones, goals, and objectives.

The group also questioned why medical educators are not shared. Sharing would allow medical schools to get together to determine which institution will teach which subject area, so that all can focus on clinical supervision. Each school can then focus its system on population health. The group recommended studying new models for medical education and evaluating the effectiveness of each by gathering data, assessing quality outcomes, and soliciting feedback from patients, nurses, and other members of the health care team.



How do we prepare faculty for a very different role as teachers?



The discussion of facultys role encapsulated perspectives from all different levels of academic medicine, but all agreed the role of faculty is changing. Although some are struggling with managing time, resources, and reimbursement, there is a desire to position faculty in a situation to innovate and rethink how we support our learners. Many questions remain, such as who will be doing the teaching, how will success and rewards be measured, and what should be taught?

Although faculty are not yet fully prepared for their new roles, the group believed a faculty catalyst (made up of junior- and senior-level faculty) would speed progress. Rather than top-down communications, the group thought that bottom-up strategies and mentoring also would help prepare faculty to adopt different roles as teachers. Learner-centered education also was highlighted as a different, but important, way of educating. Ways the AAMC can help this process include: making sure learners have a voice in the conversation, being a catalyst, and continuing the conversation by sharing best practices, ideas through its communications, and providing structure. While some schools have already recognized that faculty can teach differently, others need to re-approach this discussion.

How do we effectively implement a self-sustaining research mission while staying aligned with the goals of the institution and the community in which it serves?

The discussions in this group began with a stark realization: The 141 medical colleges in the U.S. cannot merely cut their way to greatness. Understanding specific operational costs and revenue streams are critical to sustaining the research mission. The types of relevant costs include start-up and recurring costs in addition to hidden and real costs. An opportunity exists to share costs through collaborative ventures, whether it is partnering with NIH, industry, schools of public health, YMCAs, criminal justice organizations, VA, community leaders, Kaiser Permanente, or public health departments. Such collaborations can help break down walls, determine the correct size of the research faculty, ask the appropriate research questions, and tackle the health issues on academic medical centers doorsteps.



Some of the big ideas coming out of this discussion include the radical notion to eliminate formal structures and allow faculty to be fluid. The right infrastructure will be needed to gain faculty support, incorporate transparency, reward creative collaboration, and institute a career arc focus at institutions. The infrastructure must also include value measured by ROI not just in dollars, but in value to the community.

How can we design a clinical care system to effectively manage chronic disease?



In order to design a clinical care system that effectively manages chronic disease, the group began by conceptualizing the end product that would result from this type of system. The end product would optimize individual health in a patient-centered way, track performance with national metrics, educate the medical workforce based on external metrics, and use these metrics to foster accountability. Achieving this will require creation of a different organizational model, realignment of funds, rethinking of curricula, and making prevention part of the management of chronic disease.

The group also noted that patients seeking care at academic medical centers fall into three categories. The first category is acute care patients. Academic medical centers successfully care for this population but need to better manage their costs. The second category is patients who are nearly ill and/or impacted by the social determinants of health. This population needs academic medical centers to help them work with community providers in order to improve their health. The third category is patients whose admissions are preventable. These are patients who are in declining health, cognitively impaired, and visit the emergency room (ER) with high frequency. The needs of these patients should be anticipated ahead of time, so no admission is a surprise. Special attention should be focused on patients with complex diseases and dual diagnoses of a mental health

disorder and substance abuse, because they are seen often in the ERs of academic medicine centers.

To create high-quality, complex medical homes, academic medical centers must be better at managing costs and quality of complex care. Making this happen does not require that academic medical centers own everything. Some institutions are setting up primary care facilities next to ERs or partnering with others so that patients can be sent to the right acuity setting for services when they arrive at the hospital. Paying community providers to see ER discharges also creates continuity without using ER services. With such diverse populations of patients, health systems need to think about managing them differently. Also, innovation can be encouraged at institutions by incentivizing and supporting faculty to design new models of care. Lastly, the use of big data is a big opportunity to manage patient risk and carry out surveillance of at-risk populations.

The group concluded that academic medicine can do a lot to manage chronic conditions more effectively, whether it is experimenting with different models, incentivizing faculty differently, or creating innovative solutions. Regardless of what path is chosen, academic medicinal centers cannot wait for the government to require action, academic medical centers must drive the conversation.



How can we quickly and effectively prepare the number of leaders required to meet current and future challenges?



To determine how to best prepare leaders to meet current and future challenges, the group identified the factors leaders are missing today. Some spoke of how leaders seek permission to innovate, while others touched on the need to be bold and able to take risks. The group identified value-based leadership as the core of the discussion. Leaders need to own their responsibilities and break down barriers.

The group noted that it is important to recognize that wisdom is not always just at the top. Academic medical centers must think broadly about who to expose to conversations occurring at the leadership level. Sometimes a new perspective is needed to pull behaviors and thinking out of a rut. There are thought leaders at all institutions who may not be equipped with a traditional leadership toolbox, but who are good thinkers ready to solve leadership issues. By getting out beyond the C-suite, talent can be engaged deeply and broadly across campuses. Multipliers are the key to rapidly scaling up this base.

As roles change, it is important to remember that change is the only constant. People must be given the opportunity to fail. Lastly, academic medical centers should take advantage of technology and implement online learning that outlines the skill sets or competencies that students, residents, faculty, and administrators need to lead.

Several participants referenced leadership programs at their own centers, campuses, or parent universities that benefit faculty and staff at the academic medical center. A sampling of such programs include:

s #ORNELL 5NIVERSITY https://www.hr.cornell.edu/life/career/leading_cornell.html

s 'EISEL 3CHOOL OF -EDICINE AT $ARTMOUTH 5NIVERSITY http://geiselmed.dartmouth.edu/dean/leadership_2013/

s "OSTON 5NIVERSITY 3CHOOL OF -EDICINE http://www.bumc.bu.edu/facdev-medicine/

Also, the AAMC has catalogued national leadership development programs, and this information can be referenced at: https://www.aamc.org/initiatives/leadership/ld/.



Chapter 6: Moving ForwardIn addition to using this proceedings book as a resource and tool, the AAMC hopes the academic medicine community will continue to share critical information and inspirational ideas to take on todays fiscal challenges. Several messages emerged from the Leadership Forum Summit. Clear and honest dialogue about current challenges, the need for change, and the vision for the future is imperative to create a sense of urgency, foster trust, and build commitment for the challenging decisions and work ahead.

It is equally important that all leaders take responsibility for facilitating communication and change. As Darrell G. Kirch, M.D. noted in his 2012 annual meeting address, relying on a Moses or the sage at the topthe one and only person upon whom we pin all our hopes, who single-handedly ascends the mountain, and returns with the definitive commandments that will lead us into the Promised Landis not a viable option. Instead, there is a need for a new kind of leadershipnot a Moses figure, but rather the kind of leaders that Liz Wiseman and co-author Greg McKeown call multipliers in their best-selling book of the same title. These leaders are needed at every level of the organization.

This new type of leadership values diversity and leverages it. The research in Scott Pages book, The Difference, shows that diversity trumps ability when solving complex problems. In some situations, a group of ordinary people who are diverse can defeat a group of like-minded experts because diverse groups of people bring to organizations more and different ways of seeing a problem and, thus, faster and better ways of solving it. Diversity is vital for innovation and transformation within academic medicine.

It will be a long road to fiscal sustainability, but a rewarding one. There is a need to recognize and celebrate what the academic medicine community has accomplished and the unique and important roles that academic medical centers play in the nations health care system. The AAMC will continue to be an active partner in implementing change at medical schools and teaching hospitals. Whether it is MedEdPORTAL using technology to make education more efficient, Research on Care Communities implementing translational research to improve care delivery, the Bundling Initiative changing the care delivery model, or expanding leadership development offerings, the AAMC is committed to leveraging positive change that leads to sustainable results and improved value.



Chapter 7: Tools for Continuing the Conversation on Campus

Discussion Questions

Group 1 How can we use new approaches to medical education that would increase efficiency and effectiveness simultaneously?s What measures of efficiency and effectiveness would be compelling at your institution? What baseline data do

you currently have for the efficiency (resource use) and effectiveness of your current approaches to learning?s What data would you be willing to collect and report to AAMC in order to create a national database for the

cost of education that would allow comparison over time and benchmarking?s Many of the new approaches to learningpodcasts, Kahn Academy concept videos, massive open

online content (MOOCs), and peer collectivesallow learners at many sites to hear and view content asynchronously and reduce the need to produce content at every institution. What is the level of openness and readiness for implementing such measures at your medical school when the content is developed at another institution? What impact would such approaches have?

Group 2 How do we prepare faculty for a very different role as teachers?s The implementation of new approaches to learningpeer collectives, e-learning, interprofessional and service

learningrequire faculty to serve as learning guides, role models, mentors, and coaches. How prepared are the faculty at your institution for such roles? What do you see as the most pressing needs for faculty development?

s What role should AAMC play in addressing faculty development for skills needed in the new culture of learning?

s What impact will these new roles have on the promotion and tenure process? How rapidly can your promotion and tenure process adapt to changes in the external environment?

Group 3 How do we effectively implement a self-sustaining research mission, while staying aligned with the goals of the institution and the community in which it serves?s What could be the 3-5 guiding principles in making investment (both infrastructure and personnel) decisions

around the research mission?s What evidence can be used to define the research missions contribution to the community and the cost to

the community of research mission contractions?s If an institutions research mission has to be right-sized, how will other medical school and teaching

hospital missions be affected?s How should the research mission be evaluated in the short- and long-term?

Group 4 How can we design a clinical care system to effectively manage chronic disease?s How can we align incentives to promote patient centeredness and better outcomes? Where does changing

payment for care management and coordination fit in our care of complex chronic diseases in our patient populations? Are there unique challenges for AMCs?

s How do you see our faculty, services and sites of service, changing in the AMC of the future in order to more effectively manage chronic disease?

s What does the supportive payment model look like?



Discussion Questions (continued)

Group 5 How can we quickly and effectively prepare the number of leaders required to meet current and future challenges?s What do you see as the most urgent needs for change in behavior among positional leaders in academic

medicine? How can the top level leaders (deans and CEOs, in particular) best model and encourage the needed changes?

s Leaders are often defined not by their titles, but by their ability to create and sustain change. How can leaders create and encourage multipliers throughout academic medicine?

s Is preparation for different ways of working enough? What will it take for leaders to act in new, sometimes bold ways?



ACA Affordable Care Act (Health Care Reform)

ACO Accountable Care Organization

AHRQ Agency for Healthcare Research and Quality

BBA Balanced Budget Act of 1997

BCA Budget Control Act of 2011

BPBC Best Practices/Better Care (AAMC Initiative)

CBO Congressional Budget Office

CHGME Childrens Hospital Graduate Medical Education

CHIP Childrens Health Insurance Program

CAMC Congressional Academic Medicine Caucus

CMMI Center for Medicare and Medicaid Innovation

CMS Centers for Medicare & Medicaid Services

DGME Direct Graduate Medical Education

DHHS Department of Health and Human Services

DRG Diagnosis-Related Group

DSH Payments Disproportionate Share Hospital Payments

FFS Fee-For-Service

FMAP Federal Medical Assistance Percentage

GAO Government Accountability Office

GDP Gross Domestic Product

GME Graduate Medical Education

GRR Government Relations Representative

HHS Department of Health and Human Services

HOPD Hospital Outpatient Department

HRSA Health Resources and Services Administration

IME Indirect Medical Education

IPAB Independent Payment Advisory Board

IPPS Inpatient Prospective Payment System

MA Medicare Advanta

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