Consolidations and mergers are the healthcare delivery cover story of the 1990s. Every type of patient-care entity is exploring the potential market power of new partnerships. The result is a spectrum of new organizational arrangements including hospital mergers and acquisitions, hospital and hospital-physician networks, alternative delivery systems, and marriages of providers to insurance and managed-care companies.
Major teaching hospitals and academic medical centers hardly are immune to this national trend. They are working to recast themselves to adapt to a highly value-orientated and price-focused market. They too face imperatives to improve patient-care costs, access, quality and consumer satisfaction.
Teaching institutions' responses to market pressures include agreements with other teaching facilities, community hospitals, investor-owned healthcare companies, insurance firms and a variety of other organizations.
Among the more notable examples are the joining of Massachusetts General and Brigham and Women's hospitals in Boston to form Partners HealthCare System; the formation of St. Louis-based BJC Health System, which is linked to Washington University School of Medicine; Columbia/HCA Healthcare Corp.'s acquisition of Tulane University Hospital and Clinics, New Orleans; and the consolidation of Indiana University Medical Center and Methodist Hospital of Indiana, both in Indianapolis.
On the horizon, some public facilities, such as University of Wisconsin Hospital and Clinics, Madison, will pursue changes in their legal status to provide them with greater flexibility in management, governance and developing new relationships.
The need to pursue new organizational structures among teaching facilities is likely to continue. However, responding to market forces is only part of the restructuring equation. Unlike their nonteaching counterparts, these institutions are more than just major patient-care providers-they are the nation's venues for medical education and clinical research. So, while the market may push them to change, how they respond has everything to do with upholding these academic missions.
Teaching institutions must change in ways that maintain their identities as environments for new knowledge. Each must ensure an adequate volume of patients so future physicians and healthcare professionals can be trained, so biomedical and behavioral research efforts can continue, and so health services research can be expanded. They must incorporate more ambulatory training sites and other nontraditional educational environments to provide hands-on experience in such settings. They also need to find ways to meet the requirement for generalist physicians.
Finally, because patient-care dollars will decreasingly support education, research, advanced technology and highly specialized services, teaching institutions must be partners in sufficiently large enterprises of services and patients to cover the costs of their academic missions.
Complex mergers.Mergers involving teaching institutions are simply more complex than those involving nonteaching facilities. Here are some reasons why:
Mission preservation. Academic institutions have a commitment to education and research. In a market focused primarily on efficiency and cost, these missions-and the expense of supporting them-often are viewed as potential barriers to the success of a consolidated entity.
Culture. A commitment to education and research changes the culture of an institution. The presence of students and residents affects the mix and number of hospital and medical staff. Responsibilities to teach and conduct research often affect the priorities and availability of physicians.
Special services. Teaching hospitals, on average, have greater commitments to caring for the poor; treating sicker, higher-cost populations; and providing urgent care and low-volume services.
Medical staff organization. Many teaching hospitals have medical staff organizations that are restricted to faculty. Some hospitals have melded faculty and nonfaculty staffs successfully, but it remains a major area of negotiation.
University relations. Teaching hospitals and medical schools often are intrinsic components of universities. The creation of new corporations and networks, therefore, often requires multiple levels of negotiation, which can be especially complicated if the hospital and university are public.
Public-sector politics. Public, and some private, teaching hospitals often face resistance when they align with a single facet of the community's healthcare system. Teaching facilities often are viewed as "public resources." Proponents of this view contend that these facilities must remain accessible to all facets of the delivery system and its population. It is often of little consequence to the opponents of changes that perpetuating a teaching hospital's isolation may undercut its long-term viability and thus the survival of these community resources.
The dean and department chair. Major teaching hospitals share a synergistic relationship with their local medical schools. Deans and clinical department chairs often serve integral roles in the hospital's management. In many instances, the department chairs also are the clinical chiefs. Joining with another organization requires careful assessment of this structure to ensure that the new entity provides parity to all partners.
Accepting the challenges.
Are the challenges of pursuing new organizational arrangements worth it? The answer, based upon the increasing number of such arrangements and their success, is clearly yes.
In the end, partnering with academic institutions can provide nonteaching entities with a wealth of opportunities to maintain and enhance quality, pioneer the new requirements of a market-driven system, bring unique capabilities to the fore for contracting and delivery system development purposes, and improve the quality of care available to the community.
For teaching institutions, these new relationships often provide a more effective and competitive structure through which they can continue to meet their multiple missions.