- Email: [email protected]
Restructuring the academic department of internal medicine
APM Perspectives
APM Perspectives The Association of Professors of Medicine (APM) is the national organization of departments of internal medicine at the US medical schools and numerous affiliated teaching hospitals as represented by chairs and appointed leaders. As the official sponsor of The American Journal of Medicine, the association invites authors to publish commentaries on issues concerning academic internal medicine. For the latest information about departments of internal medicine, please visit APM’s website at www.im.org/APM.
Restructuring the academic department of internal medicine Arthur M. Feldman, MD, PhDa, Edward J. Benz, Jr., MDb a
Department of Medicine of Thomas Jefferson University Medical College, Philadelphia, Pa, and the bDanaFarber Cancer Institute, Boston, Mass.
At the turn of the 20th century, Drs. Osler, Kelley, Welch and Halsted established a departmental structure for the Johns Hopkins University School of Medicine that was borrowed in large part from European medical schools.1 Later modified with the formation of the departments of pediatrics and psychiatry and the eventual inclusion of obstetrics with gynecology, this early organizational strategy supported the belief of Osler that physicians should be generalists before becoming specialists2 and the view espoused by Abraham Flexner that the pre-clinical sciences should be distinct and separate from clinical education.3 The founding of academic departments and full-time faculty at Hopkins provoked great angst amongst the medical staff. Many of the practitioners were unwilling to relinquish their private practices and become full-time employees of the hospital or the medical school.4 Despite these early concerns, this organizational structure was subsequently adopted throughout the United States and has persisted without significant change for nearly 80 years. Over the past 2 decades, advances in patient care, development of new educational strategies, an explosion of basic and clinical research, and re-alignment of incentives among academic physicians and their respective health centers has led to major changes in the Requests for reprints should be addressed to Arthur M. Feldman, MD, PhD, Magee Professor and Chair, Department of Medicine, Jefferson Medical College, 1025 Walnut Street, Suite 822, Philadelphia, PA 19107. E-mail address: [email protected]
0002-9343/$ -see front matter © 2005 Elsevier Inc. All rights reserved. doi:10.1016/j.amjmed.2005.10.002
health care environment and substantial financial stresses on academic departments. These changes led academic medical centers to assess their strengths and weaknesses,5-7 resulting in significant and ongoing efforts to re-engineer their administrative and financial infrastructure.8-11 However, restructuring has largely occurred at the institutional and hospital levels rather than at the departmental level.12 Academic departments of medicine differ little in their present form from their anatomy in the early part of this century. This lack of restructuring has polarized many faculties, contributed in part to financial crises in many departments of internal medicine, limited the ability to recruit and retain talented medical specialists, provoked the secession of medical subspecialties from some departments of medicine, and led to the replacement of academic specialists by community practitioners at other centers.13-16 However, departments of medicine remain critical to the success of academic medical centers because they play an important role in essential activities that link housestaff education for certification, medical student teaching in clerkships, and research to the clinical missions. In order to preserve the academic role and missions of departments of medicine while at the same time supporting their economic competitiveness, it becomes critically important to devise new administrative paradigms that will facilitate the ability of academic departments of medicine to fulfill their clinical, educational, and research missions as well as to objectively study the effectiveness of academic restructuring.17,18 Ideally, restructuring of a department of medicine
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would be guided by empiric research that compared success in research or clinical care among departments with different organizational structures in order to identify those structures that were most successful or to, conversely, support the hypothesis that success was independent of structure. Such studies are limited if not problematic because virtually all departments of medicine have had the same structure without major innovation or restructuring, and as non-profit institutions, financial information that would be an important marker of success is not publicly available. While the business and management structures of academic departments of medicine have gone largely unchanged, American businesses have undergone a continuous process of benchmarking, self-assessment and restructuring over the past century.19 Furthermore, as public companies, the results of these restructuring efforts have been somewhat transparent and have allowed academicians in the business community to assess the real value of change.20 Indeed, many businesses have adopted the concept of deconstruction—restructuring before rather than after critical changes in the competitive and economic environment have occurred.21 Therefore, the lessons from the realm of business can be used to support and serve as models for potential changes in academic structure. Indeed, a recent report from the Commonwealth Fund noted that academic medical centers must develop alternative approaches to management and governance by identifying the best practices among different types of institutions and incorporating them into their own activities.17
Critically assessing the administrative structure of departments of medicine Departments of medicine consist of individual divisions each representing a distinct medical subspecialty. Each division often has its own administrative structure; however, there is usually centralized administrative and fiscal responsibility. In some departments of medicine, well over 50% of the clinical revenues are accrued by procedural specialties including cardiology and gastroenterology, yet these 2 subspecialties usually represent less than 25% of the total faculty. These procedurally oriented subspecialties account for an even greater proportion of hospital revenues and profits because their procedural activities result in substantial technical fees. Often, salaries and promotions are adjudicated at the institutional or departmental level, despite the fact that there are often broad differences in clinical responsibilities, academic expectations, coverage schedules, and clinical demands of the various specialties. The most contentious issue has been the ubiquitous practice of cost shifting from the more remunerative procedurally-based subspecialties to support the less remunerative non-procedural subspecial-
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ties and/or to support the missions of the school of medicine. Such cost shifting may support faculty salaries, non-funded research efforts, or subspecialty training. This practice has become increasingly untenable as reimbursements have decreased, profits have plummeted and overheads have increased for most procedural subspecialties.17,22 The various medical specialties are further drawn apart by the development of collaborations with non-medicine faculty and community practitioners that often emphasizes the disparities in compensation between the different groups. Furthermore, academic subspecialty groups may be required to improve their competitive stature by developing aggressive economic relationships with community practitioners (eg, physician leasing arrangements that are not confounded by Stark II prohibitions) and/or development of managed care contracting that may be based on quality assessments.22 For example, academic gastroenterology divisions have recently begun to discuss the benefits of developing off-site free-standing ambulatory surgical centers (personal communication: A.J. DiMarino). Discussions of department of medicine restructuring traditionally use the term “non-proceduralist” pejoratively as these groups are often considered to be loss leaders in academic departments. However, non-procedurally oriented specialists have been faced with many of the same challenges as their procedurally oriented colleagues. The combination of medical school and departmental taxations, high overheads for space and support staff, and tariffs to support non-medical center university functions preclude the ability of even the clinically productive faculty members to support their salaries. Indeed, it is the general internist that often bears the brunt of the unassigned and uninsured patients in both the urban and rural academic medical center.23,24 Furthermore, the inability of these practitioners to bill for either the performance or interpretation of radiologic procedures and diagnostic tests in an academic medical center abrogates their ability to compete economically with community practitioners. Finally, because the hospital receives no technical component for these outside and sometimes competitive clinical activities and because ancillary referrals are difficult to track, they have little economic leverage within the health system. Thus, the problems facing the department of medicine cannot be solved by simply addressing the revenue-generating capabilities of the procedure-based specialists or by increasing the number of patient encounters of the non-procedure– based faculty in order to enhance their cash flow. Rather, efforts must be focused on restructuring in such a way that increased revenues are available to support the core mission of the department. Furthermore, like successful businesses, the various silos of the academic department must be horizontally integrated and the hierarchical
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structure flattened so that new agendas can be moved forward in an environment in which everyone feels accountable for the department’s success.25,26
Historical attempts to re-engineer academic departments The first academic department to undergo substantive re-organization was the department of surgery, as numerous surgical specialties transitioned from divisions to departments. These changes were not brought about by the altruism of the departments of surgery but rather were leveraged by the substantial income that could be accrued by a relatively small number of surgical subspecialists and the portability of these programs to competing medical centers. Subspecialty surgical departments have been both economically and intellectually successful as demonstrated by the fact that of the orthopedic surgery, ophthalmology, and otolaryngology programs listed among the top 20 programs in the United States by U.S. News and World Report in 1998, over 90% have departmental status.27 Similarly, the median rank for these departments when assessing National Institutes of Health (NIH) funding levels was substantially higher than that of programs not having departmental status. Furthermore, there was a direct correlation between the NIH funding for these subspecialty departments and the departments of surgery at their respective institutions, suggesting that the parent departments of surgery have not been harmed by reorganization. However, the restructuring of departments of surgery might not be applicable to departments of medicine because of inherent differences in the 2 departments: 1) the department of surgery can remain profitable in the absence of surgical subspecialties; 2) in contrast to medicine, education during the medical student and early housestaff years does not involve extensive training in the subspecialties; 3) in contrast to departments of medicine, most “independent” surgical subspecialties (eg, ear, nose, and throat, ophthalmology, orthopedics) have residency programs that are not linked to the core general surgery program; and 4) the department of surgery manages the operating rooms in many medical centers thus providing overall administrative continuity. Under the surgical model, the department of medicine would lose responsibility for reimbursed hospital facilities and have only modest association with the inpatient services of the hospital. Such restructuring would have adverse consequences for housestaff training and might preclude resident training in some subspecialty areas. Substantive changes have also occurred in the relationship between oncology programs and departments of medicine.28 Here too, altruism played a lesser role in reorganization than economic realism. In 1971, the National Cancer Center Act provided substantive funding
for the development of a group of geographically diverse cancer “centers.”29 The initial model for these centers came from established free-standing institutions, such as cancer specialty hospitals, and thus the guidelines established by the National Cancer Institute mandated fiscal and administrative independence.30 These centers of excellence provide national leadership in clinical care and research, include nearly 90% of the top programs in the United States,27 and maintain distinct economic and marketing advantages over traditional oncology divisions and community-based programs. However, it is unclear how uniformly successful the stand-alone oncology centers have been in fulfilling their missions. As a separate entity it becomes more challenging to fulfill their teaching missions, especially at the student and early residency levels, developing collaborative research activities with other campus departments including the department of medicine, and there may be increased administrative complexity and bureaucracy costs from managing many new and smaller departments. Furthermore, the separateness of the cancer center may preclude the ability to provide rapid and timely consultative care for patients with multi-system disease. Finally, by decondensating departments of medicine, the dean of the school of medicine could be overwhelmed with a myriad of new and unwelcome reporting relationships.
Redefining and restructuring the department of medicine While departments of medicine have been able to survive with the status quo, increasing economic pressures are being leveraged by health systems and academic practitioners to bring about significant changes in the structure and organization of academic medicine. At the most fundamental level, successful re-engineering of academic departments of medicine requires a transition from “cost-shifting” to “cost-sharing.” “Costshifting” is defined as transferring funds from one division (or department) to another to “subsidize” otherwise unfunded or under-funded faculty positions or research expenses often in the absence of transparency. By contrast, “cost-sharing” is similar to structures for cross-subsidization that occur in successful businesses. In successful businesses, “cost-sharing” has several key features that distinguish it from cost-shifting: 1) it is used to support under-funded efforts that are important for the overall core mission of the business or department31; 2) the fund flows are totally transparent31,32; 3) the shift of funds is for a pre-determined time period, not in perpetuity; and 4) the group receiving the funds are held accountable for how they are used and for restoring the economic integrity of their fiscal unit in a time-sensitive manner.19,31,33 As occurs in successful businesses, the sharing of support is far
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more palatable than taxation, allows for rational utilization of increasingly limited funds, and allows each group to contribute to a fiscally responsible budget that can be supported by appropriate financial documentation.31,34 To be successful, this transition requires an end to the practice of supporting non-competitive research activities with clinical funds and can best be effected by decentralization of fiscal accountability while fiscal authority remains centralized.35,36 However, cost-sharing must also occur at many levels throughout the health system. For example, there must also be inter-departmental cost-sharing if individual departments (eg, radiology or pathology) receive exclusivity for performing and/or interpreting diagnostic tests that would alternatively be performed by the treating physician in a community practice. In addition, departments that have collaborative or symbiotic services must cost-share so that each part can be supported in order to strengthen the whole. For example, a clinical oncologist who is a leading authority on the diagnosis and treatment of ocular melanoma attracts patients from around the world but accrues limited reimbursements for services because of the low payment rate for services rendered. By contrast, the interventional radiologist who delivers the chemotherapy to the appropriate artery is very well remunerated because they have provided an “interventional procedure,” yet they did not attract the patient to the center. Thus, cost-sharing revenues between the oncologist and the radiologist allows the program to survive and grow, whereas it might be threatened if either department takes a provincial view of “what is mine is mine.” Finally, as the professional fee/technical fee ratio continues to decrease, there must also be cost-sharing between the medical specialists and the academic health center/hospital when procedural activities are performed exclusively in the academic center. Such cost-sharing can occur through the hospital’s support of educational activities or support for hospital or program leadership without infringing on the legal restrictions placed by Stark II. Institutional cost-sharing also provides the necessary resources to recruit and retain talented specialists who are in high demand in the private sector. The research activities of the department of medicine should also undergo extensive re-structuring to enhance inter- and intra-departmental collaboration while at the same time eliminating redundancy, improving the success of center and programmatic applications, and embracing administrative efficiency. Some departments of medicine will be able to support research in multiple subspecialty areas due to extensive extra- or intra-mural support and/or robust research endowments. Alternatively, some programs may center research activities in a division of medical research, a center for translational medicine or a multidisciplinary research foundation to ensure high quality with a nar-
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rower and collaborative focus. Such centralization can result in optimal space utilization and decreased costs while the development of collaborative research and training activities with other clinical and basic science departments can provide for a more global research exposure for students and trainees. For example, at Jefferson Medical College, we used new institutional investments and development dollars to create The Center for Translational Medicine. This multi-disciplinary center was created to focus research efforts on common themes including gene discovery and genomics, gene transfer, molecular imaging and stem cell biology and through the development of novel institutional cores to provide a platform for broad collaborative translational projects. Opened only 2 years ago, the center has contributed to a 30% increase in extra-mural departmental funding and importantly over 50% of all new grant applications have involved multiple departments and/or divisions. Economic exigencies may preclude the development of basic research programs in some departments of medicine; these departments can pursue excellence in teaching and clinical research. The path chosen is less critical than the approach, and each department must delineate its mission in the context of its economic, academic, and clinical environment. Indeed, it has been shown that the most successful businesses are those that can define their core mission and use it as a guide for investment of both time and money.31 The survival of academic departments of medicine may also rest on the ability of independent academic centers to rationalize regional services through collaboration with other academic centers. Ongoing mergers in industry and a recent study of academic medical centers provide clear lessons that duplicative and competitive programs within a single geographic region cannot survive in the current economic marketplace.24 Therefore, academic medical centers must put aside their historic animosities and rationalize services to ensure economic viability. Indeed, in some geographic regions it might also be important to rationalize specialty training, particularly in over-served specialties or alternatively, to establish collaborative initiatives in which the research component of specialty training programs is located at a single institution.
Increasing importance of institutes and centers of excellence An organizational structure that has been highly successful in supporting multi-disciplinary clinical care and state-of-the-art clinical and basic research is the institute or center of excellence. First applied to cancer centers nearly 30 years ago, the institute concept has more recently been developed by other specialists at an increasing number of institutions across the United
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States. Although modeled to adapt to the infrastructures of selected academic centers, the successful institutes share several common features: 1) fiscal and administrative responsibility for research and clinical service; 2) horizontal multidisciplinary integration across clinical groups that mirrors service line development; 3) accountability for identifiable research space and financial resources; 4) an administrative reporting structure to a committee most often composed of appropriate chairs and the dean; and 5) an academic relationship with parent departments. These institutes have distinct advantages including an ability to: 1) rapidly respond to changes in local and national economies; 2) segregate multi-disciplinary research teams focusing on common goals; 3) coordinate the intra- and extra-mural activities of an interdisciplinary clinical group; 4) lobby effectively for resources and funding; 5) dominate the local clinical marketplace; 6) pursue aggressive development programs; and 7) bypass traditional academic bureaucracy to forge adoptive economic relationships. Perhaps the greatest strength of the center of excellence is its ability to focus on a single core mission37 and to have a structure that allows for a disciplined approach without excessive hierarchy or bureaucracy, characteristics that have been associated with success in business.20,31 However, it is important that institutes and centers of excellence be designed to add value to the existing departments and the health system.28 Indeed, this is one of the great conundrums facing the centers of excellence. For example, they should augment the total resource pool by pursuing and procuring new independent endowed funding. However, funding must be shared with appropriate departments to ensure that the broader areas of education and collaborative research are supported. In order to ensure that freestanding institutes are not built at the expense of departments, institute leaders must have an incentive to interact synergistically to ensure success and growth of all programs, and the medical center must commit to the continued support of the academic missions of the parent departments. In addition, institutes must not “cherry pick” the highly remunerative specialties but rather should cross multiple departmental boundaries consistent with a service line approach, thereby providing support for under-funded clinical programs. The success of the center will be dependent upon its ability to develop multidisciplinary approaches to medical care and research through horizontal collaboration across the health system—an approach that might be equally successful through a matrix design.17 The development of competition between institutes and departments for shrinking internal resources or the financial collapse of individual departmental structures would be a cardinal sign of structural failure of the new framework. Finally, it should be noted that a structure that works in one cultural and economic environment may not work in
others; therefore, the structural design of centers of excellence must be individualized for each academic center. Finally, proper structural design is absolutely essential, but is not sufficient to guarantee the viability of new administrative arrangements. Equally crucial will be the emphasis placed on the characteristics and style of the leaders of these entities.20 The reality is that some individuals who could lead traditional departments or centers will be unable to lead effectively in this new milieu, one with inherent ambiguities in line management authority and resource control. To be effective, the leaders of both the departments and the centers or institutes must be highly flexible, sharing, and collaborative. They must be cognizant of, dedicated to, and prepared to defend the shared core values and vision of the larger institution— even when this dedication could create disadvantages to the leaders’ area of responsibility. Conversely, the institution must design properly aligned incentives for leaders so that one is rewarded rather than punished for a systems approach to stewardship. Performance assessment and compensation should depend more on the shared successes of interactive programs and somewhat less on traditional quantitative markers of success of the traditional silos of the institution. Collins found that the ideal leader in American business embodied a paradoxical mix of personal humility and professional will who more often that not came from inside the company.20
Conclusions Each department of medicine faces unique challenges from environmental forces both within and outside of the academic medical center. These rapid changes in the delivery of medical care will eventually result in restructuring of the century-old administrative structure that has become increasingly less competitive in a crowded health care arena. Indeed, the value of restructuring is clearly seen in the success of businesses that have redefined their mission and critically assessed their structure. However, each restructuring approach will be determined by the individual environment. Change is inevitable; therefore, by openly addressing restructuring in a collaborative and collegial manner the educational and research strengths of the traditional department of medicine will be able to survive into the future. The role of the department of medicine as the coordinator and nexus for interrelating both the organ- and disease-specific subspecialties and the tripartite missions of academic health centers will be best reaffirmed and enabled by a lesser focus on hierarchical direct control of programs and a greater focus on horizontal integration. Departments must focus more sharply on enabling individual groups to relate to the whole with far more degrees of freedom and with total
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transparency. In return, the overarching institutions must devise ways to promote autonomy while maintaining coherence so that the synergy arising from collaborative faculty interaction is maximized. The effectiveness of restructuring in developing vertical and horizontal collaborations within the health system will be the ultimate determinant of the fate of academic medicine.
References 1. Chesney A. The Johns Hopkins Hospital and The Johns Hopkins University School of Medicine, Volume I. Baltimore, MD: Johns Hopkins Press, 1943. 2. Berney RE. The Student Life, the Philosophy of Sir William Osler. Edinburgh, United Kingdom: Livingston, 1957. 3. Flexner A. Medical education in the United States and Canada. Boston, MA: The Merrymount Press, 1910. 4. Chesney A: The Johns Hopkins Hospital and the Johns Hopkins University School of Medicine, Vol. II. Baltimore, MD: Johns Hopkins Press, 1963. 5. Iglehart JK: Rapid changes for academic medical centers: Part I. NEJM. 1994;331(20):1391-5. 6. Iglehart JK. Rapid changes for academic medical centers: Part 2. NEJM. 1995;332(6):407-11. 7. Kassirer J. Academic Medical Centers Under Siege. NEJM. 1994;331:1370-1371. 8. Weitekamp MR, Thorndyke LE, Evarts CM. Strategic planning for academic health centers. Am J Med. 1996;101(3):309-15. 9. Norlin C. Organizational Responses to Managed Care: Issues for Academic Health Centers and Implications for Pediatric Programs. Pediatrics. 1998;101:805-811. 10. Wachter RM, Katz, P, Showstack J, Bindman AB, Goldman, L. Reorganizing and Academic Medical Service: Impact on Cost, Quality, Patient Satisfaction, and Education. JAMA 1998;279: 1560-1565. 11. Chessare JB. Business Strategies for the Survival of the Academic Medical Center. Acad Med. 1996;71:215-217. 12. Porter ME. Redefining competition in health care. Harv Bus Rev. 2004;82:64-76. 13. Markel H. Multiple Missions Put Teaching Hospitals at Risk. The New York Times. 2004. 14. Denn J. Albany Med Becomes Part of Giant Cardiology Practice. Times Union. 1997;December 10; E4. 15. Hughes C. Physicians Demand More Power. Times Union. 2002; February 19; B1. 16. Maniace L. Physician jobs next to go at medical center. The Journal News. 2003;December 18, 2003.
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17. Task Force on Academic Centers. Envisioning the Future of Academic Health Centers. The Commonwealth Fund, 2003. 18. Longnecker DE, Henson DE, Wilczek K, Wray JL, Miller ED. Future directions for academic practice plans: Thoughts on organization and management from Johns Hopkins University and the University of Pennsylvania. Acad Med. 2003;78(11):113043. 19. Case J. The Open-book Experience: Lessons from over 100 Companies who Successfully Transformed Themselves. Cambridge, MA: Perseus Publishing, 1999. 20. Collins J. Good to Great, 1st ed. New York: HarperCollins, 2001. 21. Foster R. The Welch Legacy: Creative Destructions. Wall Street Journal. 2001; September 10, 2001. 22. Watson RT. Managed education: An approach to funding medical education. Acad Med 1997;72(2):92-3. 23. Porter ME, Teisberg EO. Redefining competition in health care. Harv Bus Rev. 2004;82(6):64-76, 136. 24. Legnini MWW, Emily K. Academic Medical Centers and the Culture of Local Markets. Washington, DC: Economic and Social Research Institute, 1999. 25. Slater R. Jack Welch and the GE Way. New York, NY: McGrawHill, 1999. 26. Rodin J. A revisionist view of the integrated academic health center. Acad Med. 2004;79(2):171-8. 27. America’s Best Hospitals. US News and World Report. 1998; 125(4):67-91. 28. Crist TB, LaRusso NF, Meyers FJ, Clayton CP, Ibrahim T. Centers, institutes, and the future of clinical departments: Part II. Am J Med. 2003;115(9):745-7. 29. United States. Cong. Senate. National Cancer Center Act. 1971. Washington: GPO 1971. 30. National Cancer Institute Policies and Guidelines 2004. Cancer Center Branch relating to Cancer Center Support Grant. Online. http://www3.cancer.gov/cancercenters/download/P4rev05.doc. Accessed 09/07/05. 31. Charan LR. Execution: The Discipline of Getting Things Done. New York, NY: Crown Business, 2002. 32. Niven PR. Balanced Scorecard: Step-By-Step for Government and Nonprofit Agencies. Hoboken, NJ: John Wiley & Sons, 2003. 33. Mariotti JL. Allocating Corporate Capital Fairly. Best Practice. Cambridge, MA: Perseus Publishing, 2003. 34. Liker JK. The Toyota Way. New York, NY: McGraw-Hill, 2004. 35. Meals RA. Why orthopaedic surgeons leave full-time academic positions for private practice. J Bone Joint Surg Am. 2001;83A(3):456-60. 36. Greaver MF. Strategic outsourcing: A structured approach to outsourcing decisions and initiative. New York, NY: AMACOM, 1999. 37. Berlin I. The Hedgehog and the Fox. Chicago, IL: Elephant Paperbacks, 1993.
APM Perspectives The Association of Professors of Medicine (APM) is the national organization of departments of internal medicine at the US medical schools and numerous affiliated teaching hospitals as represented by chairs and appointed leaders. As the official sponsor of The American Journal of Medicine, the association invites authors to publish commentaries on issues concerning academic internal medicine. For the latest information about departments of internal medicine, please visit APM’s website at www.im.org/APM.
Restructuring the academic department of internal medicine Arthur M. Feldman, MD, PhDa, Edward J. Benz, Jr., MDb a
Department of Medicine of Thomas Jefferson University Medical College, Philadelphia, Pa, and the bDanaFarber Cancer Institute, Boston, Mass.
At the turn of the 20th century, Drs. Osler, Kelley, Welch and Halsted established a departmental structure for the Johns Hopkins University School of Medicine that was borrowed in large part from European medical schools.1 Later modified with the formation of the departments of pediatrics and psychiatry and the eventual inclusion of obstetrics with gynecology, this early organizational strategy supported the belief of Osler that physicians should be generalists before becoming specialists2 and the view espoused by Abraham Flexner that the pre-clinical sciences should be distinct and separate from clinical education.3 The founding of academic departments and full-time faculty at Hopkins provoked great angst amongst the medical staff. Many of the practitioners were unwilling to relinquish their private practices and become full-time employees of the hospital or the medical school.4 Despite these early concerns, this organizational structure was subsequently adopted throughout the United States and has persisted without significant change for nearly 80 years. Over the past 2 decades, advances in patient care, development of new educational strategies, an explosion of basic and clinical research, and re-alignment of incentives among academic physicians and their respective health centers has led to major changes in the Requests for reprints should be addressed to Arthur M. Feldman, MD, PhD, Magee Professor and Chair, Department of Medicine, Jefferson Medical College, 1025 Walnut Street, Suite 822, Philadelphia, PA 19107. E-mail address: [email protected]
0002-9343/$ -see front matter © 2005 Elsevier Inc. All rights reserved. doi:10.1016/j.amjmed.2005.10.002
health care environment and substantial financial stresses on academic departments. These changes led academic medical centers to assess their strengths and weaknesses,5-7 resulting in significant and ongoing efforts to re-engineer their administrative and financial infrastructure.8-11 However, restructuring has largely occurred at the institutional and hospital levels rather than at the departmental level.12 Academic departments of medicine differ little in their present form from their anatomy in the early part of this century. This lack of restructuring has polarized many faculties, contributed in part to financial crises in many departments of internal medicine, limited the ability to recruit and retain talented medical specialists, provoked the secession of medical subspecialties from some departments of medicine, and led to the replacement of academic specialists by community practitioners at other centers.13-16 However, departments of medicine remain critical to the success of academic medical centers because they play an important role in essential activities that link housestaff education for certification, medical student teaching in clerkships, and research to the clinical missions. In order to preserve the academic role and missions of departments of medicine while at the same time supporting their economic competitiveness, it becomes critically important to devise new administrative paradigms that will facilitate the ability of academic departments of medicine to fulfill their clinical, educational, and research missions as well as to objectively study the effectiveness of academic restructuring.17,18 Ideally, restructuring of a department of medicine
Feldman and Benz
Restructuring the department of medicine
would be guided by empiric research that compared success in research or clinical care among departments with different organizational structures in order to identify those structures that were most successful or to, conversely, support the hypothesis that success was independent of structure. Such studies are limited if not problematic because virtually all departments of medicine have had the same structure without major innovation or restructuring, and as non-profit institutions, financial information that would be an important marker of success is not publicly available. While the business and management structures of academic departments of medicine have gone largely unchanged, American businesses have undergone a continuous process of benchmarking, self-assessment and restructuring over the past century.19 Furthermore, as public companies, the results of these restructuring efforts have been somewhat transparent and have allowed academicians in the business community to assess the real value of change.20 Indeed, many businesses have adopted the concept of deconstruction—restructuring before rather than after critical changes in the competitive and economic environment have occurred.21 Therefore, the lessons from the realm of business can be used to support and serve as models for potential changes in academic structure. Indeed, a recent report from the Commonwealth Fund noted that academic medical centers must develop alternative approaches to management and governance by identifying the best practices among different types of institutions and incorporating them into their own activities.17
Critically assessing the administrative structure of departments of medicine Departments of medicine consist of individual divisions each representing a distinct medical subspecialty. Each division often has its own administrative structure; however, there is usually centralized administrative and fiscal responsibility. In some departments of medicine, well over 50% of the clinical revenues are accrued by procedural specialties including cardiology and gastroenterology, yet these 2 subspecialties usually represent less than 25% of the total faculty. These procedurally oriented subspecialties account for an even greater proportion of hospital revenues and profits because their procedural activities result in substantial technical fees. Often, salaries and promotions are adjudicated at the institutional or departmental level, despite the fact that there are often broad differences in clinical responsibilities, academic expectations, coverage schedules, and clinical demands of the various specialties. The most contentious issue has been the ubiquitous practice of cost shifting from the more remunerative procedurally-based subspecialties to support the less remunerative non-procedural subspecial-
1431
ties and/or to support the missions of the school of medicine. Such cost shifting may support faculty salaries, non-funded research efforts, or subspecialty training. This practice has become increasingly untenable as reimbursements have decreased, profits have plummeted and overheads have increased for most procedural subspecialties.17,22 The various medical specialties are further drawn apart by the development of collaborations with non-medicine faculty and community practitioners that often emphasizes the disparities in compensation between the different groups. Furthermore, academic subspecialty groups may be required to improve their competitive stature by developing aggressive economic relationships with community practitioners (eg, physician leasing arrangements that are not confounded by Stark II prohibitions) and/or development of managed care contracting that may be based on quality assessments.22 For example, academic gastroenterology divisions have recently begun to discuss the benefits of developing off-site free-standing ambulatory surgical centers (personal communication: A.J. DiMarino). Discussions of department of medicine restructuring traditionally use the term “non-proceduralist” pejoratively as these groups are often considered to be loss leaders in academic departments. However, non-procedurally oriented specialists have been faced with many of the same challenges as their procedurally oriented colleagues. The combination of medical school and departmental taxations, high overheads for space and support staff, and tariffs to support non-medical center university functions preclude the ability of even the clinically productive faculty members to support their salaries. Indeed, it is the general internist that often bears the brunt of the unassigned and uninsured patients in both the urban and rural academic medical center.23,24 Furthermore, the inability of these practitioners to bill for either the performance or interpretation of radiologic procedures and diagnostic tests in an academic medical center abrogates their ability to compete economically with community practitioners. Finally, because the hospital receives no technical component for these outside and sometimes competitive clinical activities and because ancillary referrals are difficult to track, they have little economic leverage within the health system. Thus, the problems facing the department of medicine cannot be solved by simply addressing the revenue-generating capabilities of the procedure-based specialists or by increasing the number of patient encounters of the non-procedure– based faculty in order to enhance their cash flow. Rather, efforts must be focused on restructuring in such a way that increased revenues are available to support the core mission of the department. Furthermore, like successful businesses, the various silos of the academic department must be horizontally integrated and the hierarchical
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structure flattened so that new agendas can be moved forward in an environment in which everyone feels accountable for the department’s success.25,26
Historical attempts to re-engineer academic departments The first academic department to undergo substantive re-organization was the department of surgery, as numerous surgical specialties transitioned from divisions to departments. These changes were not brought about by the altruism of the departments of surgery but rather were leveraged by the substantial income that could be accrued by a relatively small number of surgical subspecialists and the portability of these programs to competing medical centers. Subspecialty surgical departments have been both economically and intellectually successful as demonstrated by the fact that of the orthopedic surgery, ophthalmology, and otolaryngology programs listed among the top 20 programs in the United States by U.S. News and World Report in 1998, over 90% have departmental status.27 Similarly, the median rank for these departments when assessing National Institutes of Health (NIH) funding levels was substantially higher than that of programs not having departmental status. Furthermore, there was a direct correlation between the NIH funding for these subspecialty departments and the departments of surgery at their respective institutions, suggesting that the parent departments of surgery have not been harmed by reorganization. However, the restructuring of departments of surgery might not be applicable to departments of medicine because of inherent differences in the 2 departments: 1) the department of surgery can remain profitable in the absence of surgical subspecialties; 2) in contrast to medicine, education during the medical student and early housestaff years does not involve extensive training in the subspecialties; 3) in contrast to departments of medicine, most “independent” surgical subspecialties (eg, ear, nose, and throat, ophthalmology, orthopedics) have residency programs that are not linked to the core general surgery program; and 4) the department of surgery manages the operating rooms in many medical centers thus providing overall administrative continuity. Under the surgical model, the department of medicine would lose responsibility for reimbursed hospital facilities and have only modest association with the inpatient services of the hospital. Such restructuring would have adverse consequences for housestaff training and might preclude resident training in some subspecialty areas. Substantive changes have also occurred in the relationship between oncology programs and departments of medicine.28 Here too, altruism played a lesser role in reorganization than economic realism. In 1971, the National Cancer Center Act provided substantive funding
for the development of a group of geographically diverse cancer “centers.”29 The initial model for these centers came from established free-standing institutions, such as cancer specialty hospitals, and thus the guidelines established by the National Cancer Institute mandated fiscal and administrative independence.30 These centers of excellence provide national leadership in clinical care and research, include nearly 90% of the top programs in the United States,27 and maintain distinct economic and marketing advantages over traditional oncology divisions and community-based programs. However, it is unclear how uniformly successful the stand-alone oncology centers have been in fulfilling their missions. As a separate entity it becomes more challenging to fulfill their teaching missions, especially at the student and early residency levels, developing collaborative research activities with other campus departments including the department of medicine, and there may be increased administrative complexity and bureaucracy costs from managing many new and smaller departments. Furthermore, the separateness of the cancer center may preclude the ability to provide rapid and timely consultative care for patients with multi-system disease. Finally, by decondensating departments of medicine, the dean of the school of medicine could be overwhelmed with a myriad of new and unwelcome reporting relationships.
Redefining and restructuring the department of medicine While departments of medicine have been able to survive with the status quo, increasing economic pressures are being leveraged by health systems and academic practitioners to bring about significant changes in the structure and organization of academic medicine. At the most fundamental level, successful re-engineering of academic departments of medicine requires a transition from “cost-shifting” to “cost-sharing.” “Costshifting” is defined as transferring funds from one division (or department) to another to “subsidize” otherwise unfunded or under-funded faculty positions or research expenses often in the absence of transparency. By contrast, “cost-sharing” is similar to structures for cross-subsidization that occur in successful businesses. In successful businesses, “cost-sharing” has several key features that distinguish it from cost-shifting: 1) it is used to support under-funded efforts that are important for the overall core mission of the business or department31; 2) the fund flows are totally transparent31,32; 3) the shift of funds is for a pre-determined time period, not in perpetuity; and 4) the group receiving the funds are held accountable for how they are used and for restoring the economic integrity of their fiscal unit in a time-sensitive manner.19,31,33 As occurs in successful businesses, the sharing of support is far
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more palatable than taxation, allows for rational utilization of increasingly limited funds, and allows each group to contribute to a fiscally responsible budget that can be supported by appropriate financial documentation.31,34 To be successful, this transition requires an end to the practice of supporting non-competitive research activities with clinical funds and can best be effected by decentralization of fiscal accountability while fiscal authority remains centralized.35,36 However, cost-sharing must also occur at many levels throughout the health system. For example, there must also be inter-departmental cost-sharing if individual departments (eg, radiology or pathology) receive exclusivity for performing and/or interpreting diagnostic tests that would alternatively be performed by the treating physician in a community practice. In addition, departments that have collaborative or symbiotic services must cost-share so that each part can be supported in order to strengthen the whole. For example, a clinical oncologist who is a leading authority on the diagnosis and treatment of ocular melanoma attracts patients from around the world but accrues limited reimbursements for services because of the low payment rate for services rendered. By contrast, the interventional radiologist who delivers the chemotherapy to the appropriate artery is very well remunerated because they have provided an “interventional procedure,” yet they did not attract the patient to the center. Thus, cost-sharing revenues between the oncologist and the radiologist allows the program to survive and grow, whereas it might be threatened if either department takes a provincial view of “what is mine is mine.” Finally, as the professional fee/technical fee ratio continues to decrease, there must also be cost-sharing between the medical specialists and the academic health center/hospital when procedural activities are performed exclusively in the academic center. Such cost-sharing can occur through the hospital’s support of educational activities or support for hospital or program leadership without infringing on the legal restrictions placed by Stark II. Institutional cost-sharing also provides the necessary resources to recruit and retain talented specialists who are in high demand in the private sector. The research activities of the department of medicine should also undergo extensive re-structuring to enhance inter- and intra-departmental collaboration while at the same time eliminating redundancy, improving the success of center and programmatic applications, and embracing administrative efficiency. Some departments of medicine will be able to support research in multiple subspecialty areas due to extensive extra- or intra-mural support and/or robust research endowments. Alternatively, some programs may center research activities in a division of medical research, a center for translational medicine or a multidisciplinary research foundation to ensure high quality with a nar-
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rower and collaborative focus. Such centralization can result in optimal space utilization and decreased costs while the development of collaborative research and training activities with other clinical and basic science departments can provide for a more global research exposure for students and trainees. For example, at Jefferson Medical College, we used new institutional investments and development dollars to create The Center for Translational Medicine. This multi-disciplinary center was created to focus research efforts on common themes including gene discovery and genomics, gene transfer, molecular imaging and stem cell biology and through the development of novel institutional cores to provide a platform for broad collaborative translational projects. Opened only 2 years ago, the center has contributed to a 30% increase in extra-mural departmental funding and importantly over 50% of all new grant applications have involved multiple departments and/or divisions. Economic exigencies may preclude the development of basic research programs in some departments of medicine; these departments can pursue excellence in teaching and clinical research. The path chosen is less critical than the approach, and each department must delineate its mission in the context of its economic, academic, and clinical environment. Indeed, it has been shown that the most successful businesses are those that can define their core mission and use it as a guide for investment of both time and money.31 The survival of academic departments of medicine may also rest on the ability of independent academic centers to rationalize regional services through collaboration with other academic centers. Ongoing mergers in industry and a recent study of academic medical centers provide clear lessons that duplicative and competitive programs within a single geographic region cannot survive in the current economic marketplace.24 Therefore, academic medical centers must put aside their historic animosities and rationalize services to ensure economic viability. Indeed, in some geographic regions it might also be important to rationalize specialty training, particularly in over-served specialties or alternatively, to establish collaborative initiatives in which the research component of specialty training programs is located at a single institution.
Increasing importance of institutes and centers of excellence An organizational structure that has been highly successful in supporting multi-disciplinary clinical care and state-of-the-art clinical and basic research is the institute or center of excellence. First applied to cancer centers nearly 30 years ago, the institute concept has more recently been developed by other specialists at an increasing number of institutions across the United
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States. Although modeled to adapt to the infrastructures of selected academic centers, the successful institutes share several common features: 1) fiscal and administrative responsibility for research and clinical service; 2) horizontal multidisciplinary integration across clinical groups that mirrors service line development; 3) accountability for identifiable research space and financial resources; 4) an administrative reporting structure to a committee most often composed of appropriate chairs and the dean; and 5) an academic relationship with parent departments. These institutes have distinct advantages including an ability to: 1) rapidly respond to changes in local and national economies; 2) segregate multi-disciplinary research teams focusing on common goals; 3) coordinate the intra- and extra-mural activities of an interdisciplinary clinical group; 4) lobby effectively for resources and funding; 5) dominate the local clinical marketplace; 6) pursue aggressive development programs; and 7) bypass traditional academic bureaucracy to forge adoptive economic relationships. Perhaps the greatest strength of the center of excellence is its ability to focus on a single core mission37 and to have a structure that allows for a disciplined approach without excessive hierarchy or bureaucracy, characteristics that have been associated with success in business.20,31 However, it is important that institutes and centers of excellence be designed to add value to the existing departments and the health system.28 Indeed, this is one of the great conundrums facing the centers of excellence. For example, they should augment the total resource pool by pursuing and procuring new independent endowed funding. However, funding must be shared with appropriate departments to ensure that the broader areas of education and collaborative research are supported. In order to ensure that freestanding institutes are not built at the expense of departments, institute leaders must have an incentive to interact synergistically to ensure success and growth of all programs, and the medical center must commit to the continued support of the academic missions of the parent departments. In addition, institutes must not “cherry pick” the highly remunerative specialties but rather should cross multiple departmental boundaries consistent with a service line approach, thereby providing support for under-funded clinical programs. The success of the center will be dependent upon its ability to develop multidisciplinary approaches to medical care and research through horizontal collaboration across the health system—an approach that might be equally successful through a matrix design.17 The development of competition between institutes and departments for shrinking internal resources or the financial collapse of individual departmental structures would be a cardinal sign of structural failure of the new framework. Finally, it should be noted that a structure that works in one cultural and economic environment may not work in
others; therefore, the structural design of centers of excellence must be individualized for each academic center. Finally, proper structural design is absolutely essential, but is not sufficient to guarantee the viability of new administrative arrangements. Equally crucial will be the emphasis placed on the characteristics and style of the leaders of these entities.20 The reality is that some individuals who could lead traditional departments or centers will be unable to lead effectively in this new milieu, one with inherent ambiguities in line management authority and resource control. To be effective, the leaders of both the departments and the centers or institutes must be highly flexible, sharing, and collaborative. They must be cognizant of, dedicated to, and prepared to defend the shared core values and vision of the larger institution— even when this dedication could create disadvantages to the leaders’ area of responsibility. Conversely, the institution must design properly aligned incentives for leaders so that one is rewarded rather than punished for a systems approach to stewardship. Performance assessment and compensation should depend more on the shared successes of interactive programs and somewhat less on traditional quantitative markers of success of the traditional silos of the institution. Collins found that the ideal leader in American business embodied a paradoxical mix of personal humility and professional will who more often that not came from inside the company.20
Conclusions Each department of medicine faces unique challenges from environmental forces both within and outside of the academic medical center. These rapid changes in the delivery of medical care will eventually result in restructuring of the century-old administrative structure that has become increasingly less competitive in a crowded health care arena. Indeed, the value of restructuring is clearly seen in the success of businesses that have redefined their mission and critically assessed their structure. However, each restructuring approach will be determined by the individual environment. Change is inevitable; therefore, by openly addressing restructuring in a collaborative and collegial manner the educational and research strengths of the traditional department of medicine will be able to survive into the future. The role of the department of medicine as the coordinator and nexus for interrelating both the organ- and disease-specific subspecialties and the tripartite missions of academic health centers will be best reaffirmed and enabled by a lesser focus on hierarchical direct control of programs and a greater focus on horizontal integration. Departments must focus more sharply on enabling individual groups to relate to the whole with far more degrees of freedom and with total
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transparency. In return, the overarching institutions must devise ways to promote autonomy while maintaining coherence so that the synergy arising from collaborative faculty interaction is maximized. The effectiveness of restructuring in developing vertical and horizontal collaborations within the health system will be the ultimate determinant of the fate of academic medicine.
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