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chapter 1 INTRODUCTION In the fall of 2001, the Institute of Medicine appointed a study commit- tee to examine the roles of academic health centers (AHCs) in the coming decades. While AHCs have made important contributions to health1 through their combined roles in education, research, and patient care,2 the future will present a very different set of demands on those roles. The aging of the population is shifting the burden of disease from acute to chronic care. Continued advances in biomedical and information technology will essentially redefine our concepts of medicine and health. Concerns regard- ing the rising costs of health care, evidence of quality gaps, and worries for many about access to care continue to challenge the health care system. The goal of this committee was to consider how the environment in which health care is provided is changing, what those changes mean for future demands on the health care system, and implications for how AHCs will carry out their roles in the future to continue to serve the public interest. Other studies of AHCs have generally examined the challenges they face and the implications for the future. Rather than starting with the AHCs themselves, this committee began with the developments and trends occurring in the external environment, focusing on the roles and activities 1 The term health is used broadly here to include both health and health care. 2 Patient care includes care for all people, including the poor and uninsured and other vulnerable groups. 19

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20 ACADEMIC HEALTH CENTERS performed by AHCs rather than the institutions themselves. This is not a study of clinical education or research or patient care, nor does it focus primarily on any specific organizational component of the AHC, such as a professional school or teaching hospital. Rather, the focus is on the AHC itself and how it will carry out those roles in the future. Definition of an Academic Health Center There is no generally accepted definition of an AHC (Anderson et al., 1994). According to the Association of Academic Health Centers, an AHC consists of an allopathic or osteopathic medical school, at least one other health professions school or program, and at least one affiliated or owned teaching hospital (Association of Academic Health Centers, 2002a). The work of the Commonwealth Task Force on Academic Health Centers rep- resents one of the most comprehensive analyses undertaken to better under- stand the functions of AHCs. That task force defined an AHC as the medi- cal school and its affiliated or owned clinical facilities (The Commonwealth Fund Task Force on Academic Health Centers, 2002). The Association of American Medical Colleges does not explicitly define an AHC, but focuses its efforts on medical schools and their teaching hospitals. These definitions of an AHC typically start from its organizational components, which consist most commonly of a medical school, other health professions schools (e.g., nursing, pharmacy), and a clinical enter- prise. However, the committee recognizes that the organization of AHCs has and will continue to evolve, as it should, and we do not wish to limit their definition to any particular organizational form, especially since the changing environment and demands made on AHCs will likely foster inno- vative organizational arrangements in the coming years. For example, all AHCs have an owned or affiliated clinical enterprise. In today's environ- ment, the clinical enterprise is most often a hospital, but in the future, it may not have an institutional or hospital base. Similarly, an AHC that is committed to improving the health of patients and populations will be urged to establish relationships and integrate its activities with multiple professional schools, forging linkages through common ownership under a single university or through some other arrangement. Regardless of how the components of any given AHC are assembled, however, the challenges faced will be similar. For this report, the committee views an AHC not as a single institution, but as a constellation of functions and organizations committed to improv- ing the health of patients and populations through the integration of their roles in research, education, and patient care to produce the knowledge and evidence base that become the foundation for both treating illness and improving health. The core of the AHC constellation is its academic or

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INTRODUCTION 21 university-related roles in education and research, which, in combination with patient care, are ultimately aimed at improving the health of people. Because the committee has defined an AHC by its purpose and function, this report focuses on the roles and responsibilities of AHCs rather than their organizational components. A BRIEF DESCRIPTION OF AHCS As noted in the definition presented above, today's AHCs link several functions and responsibilities. These linkages came about through a series of events during the 20th century that together produced the AHC we recognize today. First, the Flexner Report of 1910 called for reform of medical education to include a 4-year curriculum comprising 2 years of basic sciences and 2 years of clinical teaching; university affiliation (instead of proprietary schools); requirements for entrance to medical schools; en- couragement of active learning, with limited use of lectures and learning by memorization; and emphasis on problem solving and critical thinking (Regan-Smith, 1998; Ludmerer, 1999). By the 1920s, medical education at the hospital bedside had become mandatory (Rosenberg, 1987). Second, during World War II, the federal government increased funding to univer- sity research laboratories as a means of supporting the war effort (Korn, 1996). Funding expanded after the war, and increased funding from the National Institutes of Health (NIH) provided support to individual re- searchers at universities, a pattern that continues today. Third, the passage of Medicare and Medicaid in 1965 ensured revenues for a significant por- tion of patient care services that had historically been provided as charity care to patients who also helped students learn (Ludmerer, 1999). Signifi- cantly, the Medicare program also included support for graduate medical education (Korn, 1996). The result of these three events is that AHCs found a steady revenue stream for their primary activities and were able to grow their enterprise during the decades that followed (Korn, 1996). Between 1960 and 2000, the U.S. population grew by 54 percent (Centers for Disease Control and Prevention, 2002). During the same period, the number of medical school graduates grew by about 120 percent, the number of basic science faculty grew by more than 330 percent, and the number of clinical faculty grew by more than 1,000 percent (The Commonwealth Fund Task Force on Aca- demic Health Centers, 1997b, 2002). Total funding support from the NIH to medical schools grew by more than 1,500 percent between 1970 and 2000 (National Institutes of Health, 2001). The AHC, as recognized today, then, is a relatively young organization that developed mainly in the latter half of the 20th century. AHCs have provided important benefits to both local communities and

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22 ACADEMIC HEALTH CENTERS the nation, benefits that accrue to diverse population groups. According to The Commonwealth Task Force on Academic Health Centers, AHCs repre- sent only 3 percent of nonfederal, acute care hospitals in the United States; however, they: Care for almost one-third of uninsured patients in their hospitals (The Commonwealth Fund Task Force on Academic Health Centers, 1997a). Account for a significant share of the nation's specialized services, such as burn units, transplant programs, and neonatal units (see Appendix A). Account for almost one-third of national health-related research and development funds (The Commonwealth Fund Task Force on Aca- demic Health Centers, 1999). Produce approximately 16,000 medical school graduates and are the dominant providers of graduate medical education (GME), sponsoring 58 percent of all GME programs (The Commonwealth Fund Task Force on Academic Health Centers, 1997a). Graduate about 15,000 nursing school graduates (American Asso- ciation of Colleges of Nursing, 2002). Each year, almost 40 percent of these graduates are prepared at the master's and doctoral levels, representing an important supply of faculty for all nursing schools (American Association of Colleges of Nursing, 2002). Graduate about 6,000 public health professionals annually (Asso- ciation of Schools of Public Health, 2001). AHCs also contribute to their local economies. One medium-sized AHC estimated an economic impact on its region of $3.05 billion in a single year through the direct and indirect generation of jobs and spending in its local area (University of Cincinnati Medical Center, 2002). It is estimated that funding from extramural grants by NIH, much of which goes to AHCs, was responsible for providing more than 330,000 jobs in 1999 (Association of American Universities, 2000). Additionally, the development of biomedical campuses by private industry often occurs around AHCs, as in Baltimore and San Diego, for example. Just over half of AHCs are publicly sponsored organizations; the re- mainder are private (Osterweis, 1999). Most AHCs are located in urban areas, although a few are rural. AHCs vary in the emphasis placed on each of their roles (see Appendix A). The greatest variation among AHCs is in the size of their research endeavors, in particular, the amount of support they receive from NIH. AHCs also vary in how they combine their roles. One analysis examining the amount of overlap among the top 100 hospitals engaged in teaching, the top 100 hospitals engaged in research, and the top 100 hospitals serving low-income patients revealed that only 25 AHCs rank

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INTRODUCTION 23 in the top 100 for all three activities. Of the top 100 hospitals serving low- income patients, 53 are not among the top 100 hospitals in education or research (Anderson, et al., 2001). AHCs comprise many different organizational components. First, all AHCs have a medical school, at a minimum. For some AHCs, that is the only professional school they sponsor; however, the majority of medical schools are located on campuses that have multiple health professions schools and also train nurses, public health or allied health professionals. Second, all AHCs contain one or more hospitals. Third, AHCs also typi- cally have faculty practice plans. These are organizations that focus on delivery of care, and provide a mechanism for structuring a financial rela- tionship between the medical or nursing school and the hospital and be- tween the clinical departments and their clinical faculty (Cohen and Fox, 2003; Rimar, 2000). Most faculty practice plans were developed over the last decade, and their organization and functions continue to evolve. Some AHCs may also have separate research centers (Magill et al., 1998). These various organizational components come together to form an AHC in a variety of ways. The various components can be independent entities linked together contractually. Alternatively, all the components can come under a single ownership umbrella. A number of AHCs fall in be- tween these two forms, with two of the three components coming under common ownership and contracting with the third component. Organiza- tional variation is also found in the AHCs' governance structure. Individual components may have their own governing boards (which may or may not be linked through coordinating committees), or a single governing board may oversee the entire AHC enterprise. It is not known how many AHCs operate under various forms. Most are loosely affiliated arrangements, with each entity having considerable independence and autonomy (Norlin, et al., 1998). In many cases, the AHC functions rather like a holding company (Zelman, et al., 1999). Support for the activities of AHCs is not provided to the AHC itself, but goes to its individual components to support specific activities. Support for research generally comes from grants or other programs funded by private industry as well as public agencies, predominantly NIH. Most of these funds go to the medical or other professional school. Support for educational activities and patient care services goes the AHC hospital(s). Support for the direct costs of graduate medical education is provided predominantly by Medicare and some Medicaid programs, as well as spe- cial payments, that are made to support the higher patient care costs asso- ciated with the sponsorship of training programs. Support for patient care is provided through direct payment for services, as well as special payments from public payers to support care for a disproportionate share of poor and uninsured patients. Private payers usually do not differentiate their support

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24 ACADEMIC HEALTH CENTERS for specific AHC activities, but support the various activities through higher prices paid to AHCs for patient care. Within the AHC, funds are disbursed through a complex arrangement of cross-subsidies to support the particular mix of activities undertaken. For most AHCs, revenues from patient care activities subsidize activities in research and education (The Commonwealth Fund Task Force on Academic Health Centers, 1997b). Funding issues are discussed in greater detail in Chapter 6 of this report. The committee believes the variability that currently exists among AHCs is likely to continue into the future. The advantage of this situation is the potential for AHCs to respond to varying local demands and to collec- tively provide a breadth of resources for the nation. This variability, how- ever, created a unique challenge for the committee. Few data are available on the AHCs overall. Information can be obtained about the activities of an AHC hospital or medical school, for example, but there is no data source that provides an overall picture of the AHC enterprise. In conducting its analysis and considering its recommendations, the committee had to recog- nize that any single prescription would be unlikely to fit all AHCs. At the same time, the committee needed to lay out a future vision and broad direction that would be relevant for all AHCs. As noted earlier, the committee chose to focus on the roles performed by AHCs and how they fit together, rather than the AHCs' organizational components. Furthermore, the committee chose to focus on how trends in the external environment (as outlined in the next section) will alter expecta- tions for the overall AHC enterprise in the coming decades, rather than on the current pressures facing on the individual AHC organizations. The committee sought further to balance a recognition of the contributions made by AHCs in the past with an emphasis on the demands that will require change in the future. STUDY FRAMEWORK The framework for this study assumes that a set of factors in the external environment affects the expectations and demands placed on the health care system overall (see Figure 1-1). These external factors are var- ied, but the strongest of them can be grouped under three broad categories: (1) people's health care needs are changing as a result of the aging of the population and other demographic developments; (2) technology, including both information and biomedical technologies, is advancing rapidly; and (3) the organization and financing of health care are evolving. These external factors affect people's health needs and their expecta- tions for the health care system, as well as the capabilities of the system. As the population ages, the burden of disease shifts from acute to chronic illness, and as technology advances, peoples' expectations rise. In addition,

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25 patients Roles for populations AHC Education Care and Research is is care the care care provides care provided Care Delivery What provided How provided Who the Where is people system Needs preferences System the expectations offer Public and Capabilities Services need; and What can AHCs. of Roles are and Changing and changing is advances care costs The burden of concerns are uninsured of 1-1 Environmental Changes People Disease Demographics labor Technology advancing Biomedical Information technology Organization financing evolving Increasing Quality Size population FIGURE

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26 ACADEMIC HEALTH CENTERS technological advances, combined with changes in the organization and financing of care, provide the health system with additional capabilities. These changing needs, expectations, and capabilities have their most direct impact on care delivery--what care is provided, how it is provided, by whom, and where. For example, services that used to be provided only in a hospital are now offered in ambulatory settings. Likewise, services that may have been provided only by a physician may now be provided by nurse practitioners or nurse anesthetists. The pressures on care delivery ultimately affect the AHC roles in education, research, and patient care. The care provided by AHCs also changes, and as that happens, health professionals must be prepared differently, and research inevitably seeks to answer new questions. While external forces ultimately affect how AHCs carry out their roles, the actions of AHCs also affect care delivery and peoples' needs and expec- tations, and even interact with other factors in the external environment (see Figure 1-1). The circular flow of the figure illustrates that AHCs can interact with the external environment in both reactive and proactive ways. For example, information technology affects how health professionals should be trained for practice, but as health professionals receive more training that incorporates information technology, changes can occur in clinical care that affect future training needs. Similarly, genomics is ex- pected to have a significant impact on the care delivered to patients, and health professionals must therefore be trained to deliver the new forms of care. At the same time, as health professionals learn more about the field and gain more experience in applying the science of genomics to people, the care they deliver will also evolve. STUDY PROCESS The committee's statement of task is presented in Box 1-1. The com- mittee held six meetings during the course of the study. One meeting was a 2-day workshop at which input was received from AHC leadership, repre- sentatives of key constituents served by AHCs (e.g., patients, low-income populations, health plans), and experts in health policy and financing. The workshop agenda is presented in Appendix B. The proceedings of this workshop were published separately and are available at www.nap.edu/ catalog/10383.html. The committee also heard from a number of experts at its other meet- ings. Leaders from several universities, varying in size, ownership, and organizational structure, offered their views on the risks and rewards of sponsoring an AHC. Presentations were made by Judith Rodin, president, University of Pennsylvania; Lee Bollinger, president, Columbia University (formerly president, University of Michigan); Leonard Sandridge, executive

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INTRODUCTION 27 BOX 1-1 Committee Statement of Task This study will examine the current role and status of academic health centers in American society, anticipate intermediate and long-term opportunities and chal- lenges for these institutions, and recommend to the institutions themselves, to policy makers, to the health professions, and to the public scenarios that might be undertaken to maximize the public good associated with these institutions. The committee will: (1) Assess the development, contribution, and performance of AHCs in teaching, research, and technology development, patient care including the pro- vision of specialized care, and community service including caring for under- served populations. (2) Evaluate whether AHCs are prepared to meet societal needs and expec- tations over the coming decades in the areas of a) an educated and trained profes- sional work force; b) assessment of the value and cost effectiveness of new tech- nologies and facilitation of their dispersion; c) provision of health care services to populations dependent upon them (e.g., uninsured, poor); and d) provision of lead- ership in relation to ethical and social aspects of health. (3) Assess the capacity of AHCs to carry out their multiple functions in an effective and efficient manner. (4) Identify steps that can be taken by AHCs themselves, and by communi- ties, policy makers, and others to maintain and enhance the performance of AHCs. vice president, University of Virginia; and Stephen Joel Trachtenberg, presi- dent, George Washington University. Bill Gradison, vice chair of The Commonwealth Fund Task Force on Academic Health Centers, provided his perspective on the policy issues facing AHCs in the future. Robert Galvin from General Electric provided the committee with a perspective on managing large, complex, and diversi- fied organizations. Catherine Dower of the Center for Health Professions, University of California, San Francisco, discussed with the committee how the workforce is changing generally, as well as within the domain of health care. The committee relied on a variety of sources for data on the status of AHCs. Requested data were provided by the Association of Academic Health Centers, the Association of American Medical Colleges, and the American Association of Colleges of Nursing. Gerard Anderson of Johns Hopkins University, Bloomberg School of Public Health, conducted an analysis of the extent of variation among AHCs on selected dimensions of their activities in education, research, and patient care. The tables he pro- vided to the committee during its deliberations are included in Appendix A.

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28 ACADEMIC HEALTH CENTERS The committee also received an analysis conducted by Bruce Steinwald3 on alternatives for financing the activities of AHCs. His analysis formed the basis for Chapter 6 of this report. Finally, the committee was able to take advantage of information produced by The Commonwealth Task Force on Academic Health Centers. All of its reports that contained recommenda- tions were provided to the committee for reference, serving as a body of knowledge that enabled the committee to conduct its work efficiently with- out duplicating previous efforts. The work of this committee was funded through the generous support of The Rockefeller Brothers Fund, with additional support from The Com- monwealth Fund, the Institute of Medicine, and the National Research Council. ORGANIZATION OF THE REPORT As noted earlier, this report starts not with the AHCs themselves, but with the trends and developments in health care that will affect AHCs in the years ahead. In Chapter 2, the key forces driving these changes are de- scribed. This review is followed by chapters examining in turn each of the main roles performed by AHCs, including the status of those activities and the challenges the AHCs will face in carrying out that role in the future. In Chapter 3, the education role is examined, with attention to the approaches used today to educate health professionals for practice tomorrow. Of the three roles performed by AHCs, the education role is expected to face the most profound changes in the coming decades. In Chapter 4, the patient care role is examined, with emphasis on the organizational innovation needed to create better models and approaches for care and to design care around an explicit goal of improving health. In Chapter 5, the research role is examined, with a focus on the importance of spanning the continuum of research--including basic, clinical, health services, and prevention re- search--to make it possible to translate research findings into practice. Chapter 6 examines how the AHC roles are currently financed and whether those approaches will be able to support the types of changes that will be needed in the future. Chapter 7 synthesizes the information from the prior chapters to offer a set of recommendations for transforming the roles of AHCs to meet the challenges of the changing environment of health care. Chapter 8 considers the management and leadership challenges facing AHCs as they contend with having to undergo that transformation. 3At the time that Mr. Steinwald prepared the analysis for the committee, he was working as an independent consultant.

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INTRODUCTION 29 Each of the topics considered by the committee could have been ad- dressed by a separate study. For example, the challenges facing health professions education or biomedical research have been and will continue to be the subject of focused study. The goal of this committee was to synthesize across these major issues and develop a broad future vision and direction for the roles of AHCs in the 21st century. The challenges are complex; thus it is inevitable that some issues will remain unaddressed in any single report.