Two academic medical centers describe how they are centralizing their governance structures to enable the nimble and strategic decision making required as healthcare organizations move toward value-based payment systems.

The emergence of value-based payment methodologies and the increased emphasis on transparency will have profound implications for academic medical centers (AMCs), according to the latest research report from HFMA's Value Project. AMCs have unique attributes that represent both opportunities to be leveraged in the emerging payment environment and challenges to be overcome as they move toward value-based business models.

One key challenge that emerged was the need for AMCs to develop a centralized governance structure. AMCs often have different boards, leadership structures, and mission statements governing each of their teaching, research, and care delivery functions. These distinct governance structures make it challenging for AMCs to make decisions nimbly and strategically. Furthermore, many AMCs report the absence of dialogue among academic departments, specialists, the hospital, and other potential elements of a coordinated, detailed approach to care management.

The CFO of one academic center noted, "We are using the possibility of a bundled payment project not because we think it will be a big winner for our system, but just to get an early dialogue going between the key elements of our system."

The goal should be a centralized leadership structure that can make critical decisions on behalf of the AMC.

Two Approaches

UAB Hospital, part of UAB Health System in Birmingham, Ala., is taking a step in this direction: A centralized structure exists, but leaders need greater authority to make decisions on behalf of the system. In addition, UAB's system leaders require more agile decision-making capabilities. Like other academic medical centers, UAB is instituting a funds-flow model that combines all revenue from clinical practice and hospitals into one operation. Key benefits of this approach include the following:

  • Streamlining of decision making
  • Ending the practice of clinical departments directly contracting with outside entities
  • Enabling the development of an integrated financial planning process

Partners HealthCare in Boston operates within an active state governmental and legal environment and illustrates the following examples of how AMCs may need to change over time to form a more highly integrated organization.

  • Partners has a single board with responsibility for all key aspects of clinical care-including all hospitals, faculty and non-faculty employed physician practices, and other elements of the continuum of care.
  • The systemwide strategy envisions coordinating a broad group of evidence-based care activities across hospital, specialty, and primary care.

The Partners strategy also envisions:

  • Cutting costs and containing the rate of cost increases to the rate of inflation
  • Enhancements to care access
  • Changes in reporting relationships
  • Changes in physician and other incentives structures
  • Revised reporting and dashboards (patient satisfaction and financial dashboards)
  • Leveraging Partners' new EHR system
  • Movements of selected patient populations out of the academic medical centers to other, less resource intensive care settings

Next Steps

Additional mechanisms to bolster centralized leadership are to develop a common strategic plan and to determine management-level goals and incentives that help align the care delivery, research, and academic functions of the AMC.

This article is an excerpt from The Value Journey: Organizational Road Maps for Value-Driven Health Care, published by HFMA.  



Publication Date: Friday, December 14, 2012