The pending combination of Arizona's only academic medical center with the state's largest not-for-profit hospital system is an early tremor in what may turn into a major shake-up of U.S. academic medicine.
Faced with the need to cut expenses, make new capital investments and subsidize the rising cost of medical research, the University of Arizona Health Network in Tucson late last month agreed to sell its operations to Phoenix-based behemoth Banner Health. UAHN has struggled financially so far this year and is scrambling for ways to begin delivering value-based care.
“The institution basically has been undercapitalized,” said Dr. Michael Waldrum, president and CEO of UAHN.
For Banner, the 30-year deal aligns its statewide network with the reputation, prestige and exclusivity of Arizona's only full-fledged academic medical center. Banner officials believe those attributes will be a useful complement to its long-term strategy of delivering better coordinated care.
“We see capabilities that UA has and can deliver for the direction that Banner is going—into a population health management company,” said Banner President and CEO Peter Fine.
Academic medical centers are often viewed as the crown jewels of American healthcare. Their advanced and transformational research, high-profile medical faculty and mesmerizing inpatient and ambulatory facilities all contribute to that perception.
But they are also high-cost, overly focused on tertiary care and suffering through cuts in government funding for graduate medical education and research, which come on top of declining reimbursement from Medicare and Medicaid that is hitting all hospitals. With healthcare reform dramatically shifting how hospitals operate, many industry experts believe the academic titans could become dinosaurs if they don't quickly adapt to today's economic realities.
Academic medical centers “risk becoming high-priced, anachronistic institutions in a landscape of highly organized health systems,” an advisory panel to the Association of American Medical Colleges reported earlier this year. The AAMC convened the panel to develop strategies to help AMCs become more sustainable.