Skip to main content
Subscribe
  • Sign Up Free
  • Login
  • Subscribe
  • News
    • Current News
    • Providers
    • Insurance
    • Government
    • Finance
    • Technology
    • Safety & Quality
    • Digital Health
    • Transformation
    • ESG
    • People
    • Regional News
    • Digital Edition (Web Version)
    • Patients
    • Operations
    • Care Delivery
    • Payment
    • Midwest
    • Northeast
    • South
    • West
  • Blogs
    • AI
    • Deals
    • Layoff Tracker
    • HIMSS 2023
  • Opinion
    • Breaking Bias
    • Commentaries
    • Letters
    • From the Editor
  • Events & Awards
    • Awards
    • Conferences
    • Galas
    • Virtual Briefings
    • Webinars
    • Nominate/Eligibility
    • 100 Most Influential People
    • 50 Most Influential Clinical Executives
    • Best Places to Work in Healthcare
    • Excellence in Governance
    • Health Care Hall of Fame
    • Healthcare Marketing Impact Awards
    • Top 25 Emerging Leaders
    • Top Innovators
    • Diversity in Healthcare
      • - Luminaries
      • - Top 25 Diversity Leaders
      • - Leaders to Watch
    • Women in Healthcare
      • - Luminaries
      • - Top 25 Women Leaders
      • - Women to Watch
    • Digital Health Transformation Summit
    • ESG: The Implementation Imperative Summit
    • Leadership Symposium
    • Social Determinants of Health Symposium
    • Women Leaders in Healthcare Conference
    • Best Places to Work Awards Gala
    • Health Care Hall of Fame Gala
    • Top 25 Diversity Leaders Gala
    • Top 25 Women Leaders Gala
    • - Hospital of the Future
    • - Value Based Care
    • - Hospital at Home
    • - Workplace of the Future
    • - AI and Digital Health
    • - Future of Staffing
    • - Hospital of the Future (Fall)
  • Multimedia
    • Podcast - Beyond the Byline
    • Sponsored Podcast - Healthcare Insider
    • Sponsored Video Series - One on One
    • Sponsored Video Series - Checking In with Dan Peres
  • Data & Insights
    • Data & Insights Home
    • Hospital Financials
    • Staffing & Compensation
    • Quality & Safety
    • Mergers & Acquisitions
    • Data Archive
    • Resource Guide: By the Numbers
    • Surveys
    • Data Points
  • Newsletters
  • MORE+
    • Contact Us
    • Advertise
    • Media Kit
    • Jobs
    • People on the Move
    • Reprints & Licensing
MENU
Breadcrumb
  1. Home
  2. Operations
April 29, 2019 02:59 PM

Academic medical centers face identity overhaul

Alex Kacik
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print
    Getty Images/OJO Images RF
    Surgeons performing operation in operating room

    As price becomes an increasingly important factor in where people seek care, many academic medical centers will have to transform their high-cost structures to remain viable, according to new research.

    Half of 1,250 consumers surveyed said they would not pay more for specialty medical care at an academic medical center, PricewaterhouseCooper's Health Research Institute found. Many academic institutions recognize that the status quo is unsustainable and are merging or affiliating with other providers to better manage lower-acuity care.

    "I expect many providers to be reevaluating their strategic identity," said Gurpreet Singh, a partner at PwC and its health services sector leader.

    PwC highlighted four business models that academic medical centers could follow: product leader, experience leader, integrator and health manager. The product leader, as defined by PwC, delivers the most advanced care and best outcomes; the experience leader achieves the greatest customer satisfaction; the integrator leverages scale and scope; and the health manager improves the health of entire populations.

    Academic medical centers have begun to transition as they try to expand their role, but the results likely won't pan out for several years, according to PwC's new report. Fifty-two percent of 48 academic medical center executives surveyed said they changed their operating model in the past five years to address a highly decentralized governance structure that made it difficult to adapt.

    Many are opting for the merger-and-acquisition route, evidenced by the latest tie-up between Atrium Health and Wake Forest Baptist Health. Fifty-eight percent of consumers surveyed said they are likely to choose a community hospital that is affiliated with an academic medical center. PwC estimates that 93% of metro markets are highly concentrated, which has narrowed the M&A field.

    Academic medical centers are not designed for high-speed change due to their complicated missions and governance structures, faculty dynamics and extensive fixed assets. Massachusetts, which is home to a significant number of academic medical centers, reversed a five-year trend in 2017 of more lower-acuity care flowing to academic medical centers rather than community-based providers. Still, the state is among the highest in the country in terms of academic medical center utilization, which has driven overall healthcare spending.

    If academic medical centers don't adapt, their margins will continue to erode, said Michael Merritt, chief operating officer of Penn Signature Services at the University of Pennsylvania Health System.

    "An AMC that is still relatively stand-alone would have to question its future as it's at risk to be essentially commoditized," Merritt said last year when he was with the law firm Manatt, Phelps & Phillips. "With more outpatient opportunities for the same type of therapy, you ask yourself, 'How can we be sustainable?' "

    Many academic medical centers are aligning with community-based practices that are better equipped to handle population health. There isn't much room to maximize reimbursement from commercial insurers, particularly as payers move toward site-neutral payments, Merritt said.

    Nationally, academic medical centers account for about $562 billion in annual economic impact, or 3.1% of the gross domestic product, according to the Association of American Medical Colleges. They are often where the sickest patients go as well as a large share of low-income individuals who qualify for charity care and Medicaid beneficiaries, at 37% and 26% respectively, a 2014 study published in the New England Journal of Medicine found. The country relies on them to produce the future health workforce, at a cost of about $16 billion a year, and to create new breakthrough therapies.

    "AMCs are very different than other competitive enterprises because they train the best and brightest clinicians on the latest techniques and advancements and then send them into the marketplace for free," Dr. David Chin, distinguished scholar at the Johns Hopkins Bloomberg School of Public Health, said in an interview with PwC's Health Research Institute. "These clinicians end up at community systems or for-profit health systems, and the AMCs rarely benefit from providing them with these resources."

    While the traditional brand of an academic medical center has been defined by specialty care, only about a quarter of its revenue is tied to specialty care—the rest is related to the highly competitive lower-acuity arena, PwC's Singh said.

    Executives have responded by broadening their clinical model to include holistic health and wellness, such as access to affordable housing or transportation, food and employment, 30% of survey respondents told PwC. Nearly three-quarters plan to invest more in extended care teams that include pharmacists, nutritionists, mental health professionals, and physical and occupational therapists.

    To that end, 93% said their affiliated medical school is emphasizing training in community health as 70% aim to improve the health of entire populations in the next five years. But not all academically anchored centers will be able to adapt successfully, experts cautioned.

    Cost management is becoming increasingly incorporated into medical school curriculum. Average deductibles have tripled over the last decade and are now almost $1,300 for an individual with employer-based insurance, according to PwC. Fifty-two percent of consumers with a high-deductible health plan say it would be hard to afford the deductible.

    "Increasingly, there is an assumption that the vast majority of providers provide a basic acceptable quality of healthcare; thus, as with commodities, price becomes the primary differentiator," Lilly Marks, vice president for health affairs at the University of Colorado and chair of the Association of American Medical Colleges, told PwC.

    As academic medical centers look to differentiate themselves, they may need to rebuild the organization's governance structure, combine key roles or hire a workforce that mirrors its community, PwC researchers recommended. Institutions should partner with community hospitals and clinics and in the process dismantle silos and facilitate collaboration, they said.

    They should be able to tell an engaging story on their organization's impact. Academic medical centers should also look to build out alternative revenue sources that align with their missions, such as investing in care delivery research, researchers said.

    Academic medical centers should also leverage their diverse data sets and artificial intelligence to forecast a community's healthcare needs and improve outcomes.

    When PwC asked what consumers liked least about clinical trials, 23% cited a study's location and 11% cited the time the visit took. Executives are looking to digital solutions to streamline the process.

    Eighty percent of academic medical center executives are aligning their research pipeline with clinical and business strategies while 61% are training their workforce to build new capabilities related to digital ventures and data analytics.

    "AI will be a major tool that will impact our diagnostic capabilities and predict outcomes in the future," Dr. Robert Grossman, the dean and CEO of NYU Langone Health, said in an interview with PwC.

    Letter
    to the
    Editor

    Send us a letter

    Have an opinion about this story? Click here to submit a Letter to the Editor, and we may publish it in print.

    Recommended for You
    hospital spending
    Capital costs increase for critical-access, acute-care hospitals
    Dr. Margaret Larkins-Pettigrew
    Why Highmark sees rising internal bias complaints as a good thing
    Most Popular
    1
    CMS tries luring providers to revamped Medicare ACOs
    2
    Oregon joins other states in setting ratios for nurse staffing
    3
    Blue Shield CA taps Amazon, Mark Cuban, CVS for new PBM model
    4
    A health innovation hub grows in Lake Nona Medical City
    5
    Hospital-at-home providers push for Medicaid coverage
    Sponsored Content
    Daily Finance Newsletter: Sign up to receive daily news and data that has a direct impact on the business and financing of healthcare.
    Get Newsletters

    Sign up for enewsletters and alerts to receive breaking news and in-depth coverage of healthcare events and trends, as they happen, right to your inbox.

    Subscribe Today
    MH Magazine Cover

    MH magazine offers content that sheds light on healthcare leaders’ complex choices and touch points—from strategy, governance, leadership development and finance to operations, clinical care, and marketing.

    Subscribe
    Connect with Us
    • LinkedIn
    • Twitter
    • Facebook
    • RSS

    Our Mission

    Modern Healthcare empowers industry leaders to succeed by providing unbiased reporting of the news, insights, analysis and data.

    Contact Us

    (877) 812-1581

    Email us

     

    Resources
    • Contact Us
    • Help Center
    • Advertise with Us
    • Ad Choices
    • Sitemap
    Editorial Dept
    • Submission Guidelines
    • Code of Ethics
    • Awards
    • About Us
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Modern Healthcare
    Copyright © 1996-2023. Crain Communications, Inc. All Rights Reserved.
    • News
      • Current News
      • Providers
      • Insurance
      • Government
      • Finance
      • Technology
      • Safety & Quality
      • Digital Health
      • Transformation
        • Patients
        • Operations
        • Care Delivery
        • Payment
      • ESG
      • People
      • Regional News
        • Midwest
        • Northeast
        • South
        • West
      • Digital Edition (Web Version)
    • Blogs
      • AI
      • Deals
      • Layoff Tracker
      • HIMSS 2023
    • Opinion
      • Breaking Bias
      • Commentaries
      • Letters
      • From the Editor
    • Events & Awards
      • Awards
        • Nominate/Eligibility
        • 100 Most Influential People
        • 50 Most Influential Clinical Executives
        • Best Places to Work in Healthcare
        • Excellence in Governance
        • Health Care Hall of Fame
        • Healthcare Marketing Impact Awards
        • Top 25 Emerging Leaders
        • Top Innovators
        • Diversity in Healthcare
          • - Luminaries
          • - Top 25 Diversity Leaders
          • - Leaders to Watch
        • Women in Healthcare
          • - Luminaries
          • - Top 25 Women Leaders
          • - Women to Watch
      • Conferences
        • Digital Health Transformation Summit
        • ESG: The Implementation Imperative Summit
        • Leadership Symposium
        • Social Determinants of Health Symposium
        • Women Leaders in Healthcare Conference
      • Galas
        • Best Places to Work Awards Gala
        • Health Care Hall of Fame Gala
        • Top 25 Diversity Leaders Gala
        • Top 25 Women Leaders Gala
      • Virtual Briefings
        • - Hospital of the Future
        • - Value Based Care
        • - Hospital at Home
        • - Workplace of the Future
        • - AI and Digital Health
        • - Future of Staffing
        • - Hospital of the Future (Fall)
      • Webinars
    • Multimedia
      • Podcast - Beyond the Byline
      • Sponsored Podcast - Healthcare Insider
      • Sponsored Video Series - One on One
      • Sponsored Video Series - Checking In with Dan Peres
    • Data & Insights
      • Data & Insights Home
      • Hospital Financials
      • Staffing & Compensation
      • Quality & Safety
      • Mergers & Acquisitions
      • Data Archive
      • Resource Guide: By the Numbers
      • Surveys
      • Data Points
    • Newsletters
    • MORE+
      • Contact Us
      • Advertise
      • Media Kit
      • Jobs
      • People on the Move
      • Reprints & Licensing