After a clumsy courtship, academic medical centers are beginning to passionately embrace the meaning of healthcare reform and the need to offer more value to patients and payers.
Everyone knows that teaching hospitals are a different breed. Their overhead expenses, location, commitment to research and snooty image have produced a reputation for high-priced, quality care. But in the frenzy of cost containment, payers frankly don't give a hoot about the high cost of running a teaching institution. Like all providers, academic medical centers must ratchet down costs, prove quality claims and look for partners to improve their mix of services.
Some interesting relationships already have bloomed, and others are budding. For instance, the famed Johns Hopkins Health System has signed a collaborative agreement with U.S. Healthcare, the Blue Bell, Pa., managed-care organization. U.S. Healthcare and Baltimore-based Johns Hopkins will build an information system and share quality assessment data. The deal should elevate the HMO's image while the hospital benefits from patient referrals.
Meanwhile, Columbia/HCA Healthcare Corp. and the Medical College of Virginia are talking about a joint venture, lease or other business arrangement. The talks follow collaborative discussions between Columbia/HCA and another teaching facility, Atlanta's Emory University Hospital.
As Virginia Commonwealth University President Eugene P. Trani succinctly put it: "Clearly, we (the Medical College hospital) cannot be an island."
Dire projections of the impact of a federal healthcare reform package hang over academic medicine. If Medicare payment cuts are destined to fund universal coverage, teaching hospitals could be especially hard hit. A recent Lewin-VHI study showed a -0.3% Medicare margin for teaching hospitals in 1993. Under current law, that margin would fall to -7.1% by the year 2000. Under the Clinton reform bill, the margin in the year 2000 would plunge to -29.3%.
Crystal-ball gazing about Medicare tells only part of the story. But capitation, contracting and managed care are here to stay, which will make cost shifting a dubious exercise. Smart people run teaching hospitals. It's time they showcased their creativity and sense of reality.