Academic health systems (AHS) are a vital component of the U.S. healthcare delivery network. Among their various missions, AHS promise the delivery of extraordinary clinical care, innovation, and discovery while educating the next generation of providers. Often, AHS serve as a community’s safety net provider, offering clinical care that other local and regional systems cannot provide.
But AHS are facing increasing challenges to their traditional business model. Site of service trade-offs (e.g., the movement to ambulatory care), erosion of the “academic premium” in contract negotiations, and an increasing proportion of Medicare reimbursement due to the aging population has resulted in slowed revenue growth. Couple that with expense growth that exceeds revenue growth and many AHS are coping with significant margin erosion as well.
On the value side, recent analysis suggests AHS have shown improvement in quality metrics but still lag non-AHS counterparts in overall cost and quality. There is also an increasing desire by patients for a consumer-friendly, technology-enabled experience — including improved access, online appointments, and virtual visits — that challenges the historical academic delivery model. All these factors require AHS to look critically at their business model moving forward.
As a former CEO of an academic health system, I believe AHS will need to focus on several key areas in the next year and beyond.
Enterprise strategic and economic alignment
Cost and quality
Faculty workforce optimization
This is a challenging time for academic health systems. However, those that embrace these challenges and welcome transformation will not only survive…they will thrive.
Daniel DeBehnke, MD, MBA, is a managing director at Navigant, overseeing the firm’s academic health system solutions. A board-certified emergency medicine physician, Dr. DeBehnke most recently served as CEO of the Nebraska Medicine health system and CEO of Medical College Physicians, a faculty practice plan affiliated with Froedtert Health and the Medical College of Wisconsin. He also was senior associate dean for clinical affairs and chief clinical integration officer at the Medical College of Wisconsin and has practiced on the front lines of Level 1 trauma centers, led a research laboratory, and participated on U.S. National Institutes of Health review panels.