by Brian Herder – Executive Creative Director
Today’s academic medical centers (AMC) face myriad financial, organizational and market issues, whose convergence poses an existential dilemma. To find evidence of this is hardly difficult – one needs only to read today’s headlines.
Financial: According to the Association of American Medical Colleges (AAMC), it is anticipated that once the Patient Protection and Affordable Care Act (PPACA) is fully in effect in 2015, the shortage of physicians across all specialties will have quadrupled, from 39,600 to nearly 63,000, with a worsening of the situation through 2025. As Congress wrestles with deficit reduction, sustained graduate medical education funding as well as direct and indirect medical education payments may well be on the chopping block.
Meanwhile, the U.S. Census Bureau projects a 36 percent growth in the number of Americans over age 65, and nearly one-third of all physicians are expected to retire in the next decade. Following this trend line, unless Congress supports at least a 15 percent increase in residency training slots, many Americans could find timely access to high-quality health care entirely out of reach.
To help cover the cost of the newly insured, Centers for Medicare and Medicaid Services (CMS) will reduce payments to hospitals by $158 billion over the next 10 years. For those centers with “safety net” hospitals in their systems, Disproportionate Share Hospital (DSH) payments by Medicare and Medicaid will be phased out. Although these funds are meant to compensate hospitals for the costs of caring for the uninsured and indigent patients, the increase of those insured under PPACA is projected to offset DSH payment cuts. Even the most optimistic projections, however, still point to a significant decrease in academic medical center revenues. With operating margins averaging five percent for many AMCs, a further decline in profit margins represents a serious dilemma.
Structural: To address the political and financial concerns facing AMCs, dynamic and flexible organizational, business and market models are needed. Yet most AMCs are far from achieving this level of response. Being typically comprised of multiple related entities, highly fragmented and fractured models of governance emerge, creating complex processes that can actually inhibit timely decision-making as well as opportunistic market and service innovations. In this environment, streamlining of governance structures, operations and the integration of service lines and processes becomes essential, requiring levels of collaboration well beyond current practice.
Marketing: Despite significant challenges, opportunities exist to emerge stronger, offering better, more highly valued services to the betterment of patients, communities and medical professionals. For AMCs to effectively compete in a managed care environment, patient satisfaction represents an essential guidepost. Price-competitive, user-friendly services certainly go a long way toward ensuring high marks from patients, and AMC entities often enjoy a “halo effect” through association with their larger organization. Patients typically expect – and perceive – higher levels of care and expertise from prestigious teaching hospitals.
This, however, suggests a shift in clinical training, to prepare physicians for a practice that is highly competitive and relevant to their patient’s experience. It also points to a strategic mindset, one more native to an emerging practice than an academic environment. Though trained to serve individuals, new physicians must recognize they also serve populations, evaluating not only the health of patients, but the health of the overall groups – whether geographic, cultural or economic – with which their patients identify.
While often seen as separate from actual medical practice, marketing must be incorporated into the care continuum, and regarded as part of an ongoing dialogue with patients and communities. In particular, social media has blurred any distinction between clinical and “real life” experience for many patients, who are accustomed to fluid, always-on engagement with individuals and organizations.
Medical technology promises to drive this dynamic even further through online consultation, diagnosis and at-home treatment options. AMCs are uniquely positioned to deliver on this trend, introducing high-profile innovations designed to serve patients, enhance their experience and secure greater loyalty. This is important to individual practices and for the compounded effect of earning patient esteem. The goal of any AMC must be to become the most valued and most worthy of support, whether by patients or legislators.
Regardless of an organization’s complexities, its marketing messages must continually point to a single raison d’être – its reason for being. Perhaps the best such example is found in the Mayo Clinic’s mantra, “The needs of the patient come first.” This intentionally broad statement serves the global work of Mayo well, informing research, technology and service enhancements. But its true strength lies in the organization’s delivery on its mission – it enjoys a deliberate, carefully crafted reputation for innovation and exceptional patient care.
Ultimately, AMCs must claim relevance by mastering their worlds, great and small; from breaking down “big data” silos to delivering highly personalized mobile device experiences. Although everyone wants plentiful healthcare options and convenient access, few actually want to be in the position of needing it; this means delivering value beyond traditional patient encounters, finding new ways to enter and impact entire communities. For AMCs, success lies in being considered a part of a larger equation – owning a share of community definition – while enhancing individual relationships. Fortunately, the technologies exist to not only make this balance possible, but to offer compelling new dimensions in medical care.