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Challenge in Carolina

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Stanley Mandel, MD, spent 38 years at the University of North Carolina Hospitals. He was a surgeon and a member of the faculty. He even performed the hospital’s first kidney transplant and calls the blue-deviled rivals down the road in Durham the “four-letter word.”

Mandel retired from UNC several years ago to take a lucrative job as medical director of a device company. His work week lasted four days. Money was good. The work had the indirect rewards of improving people’s health. But people in Chapel Hill kept tugging at him to come back.

He decided to drop by the hospital to tell them he had no interest in returning as medical director of the operating room.

“I said I didn’t really want to go back to all that chaos. But I did come back to be polite—to tell them this wasn’t for me. I looked around and saw a lot of people I had known for 35 years. Then I looked in the OR, which was probably a mistake. I said, ‘Jeez, what they are doing there is relevant and is important. Maybe if I can help in the remaining years I have my health, I will do it.’”

UNC is more than an academic medical center responsible for teaching and research; it is the area’s safety-net hospital, with a mission to treat the citizens of North Carolina. If there is a reason why academic medical centers like UNC continue to play such a dynamic role in healthcare delivery, it may be because their unique combination of chaos, cutting-edge technology, complex cases and a public mission continues to be a magnet for people like Mandel, who did return as UNC’s OR medical director, unable to resist the challenge. AMCs rely on their unique culture because their competitive outlook is less sunny. According to the Association of American Medical Colleges, the nation’s 400 teaching hospitals, including 125 academic medical centers, comprise less than 6 percent of all hospitals but provide nearly half of all hospital charity care in the United States. AMCs are most often saddled with a complex case mix, accounting for 47 percent of all organ transplants, 60 percent of all level-one trauma centers and 67 percent of all burn beds. If the hospital industry was punched by the Balanced Budget Act of 1997, then AMCs were knocked unconscious. One notable AMC went bankrupt, while many others took years to recover.

The maxim goes: “If you have seen one academic medical center, you have seen one academic medical center.” UNC Healthcare, with 708 licensed beds, 1,188 attending physicians and 5,768 employees, faces the same issues that its academic brethren do across the country: rising uninsured debt, staff challenges and a competitive research grant market. But UNC also has a few issues of its own. It is not the only academic medical center in the very competitive Raleigh/Durham/Chapel Hill market, sharing that distinction with Duke. The third market player, WakeMed, is a community hospital system based in the booming Wake County piece of the market.

To become more competitive locally and nationally, UNC’s hospitals and the clinical programs of the medical school were combined in 1998 under the UNC Health Care umbrella.

Bill Roper, MD, whose résumé includes White House policy adviser, Health Care Financing Administration director, Centers for Disease Control and Prevention director and current chairman of the National Quality Forum, was tapped in 2004 to hold the simultaneous titles of chief executive officer of the healthcare system, dean of the medical school, and even chairman of the faculty practice plan.

Roper immediately set about creating a small inner circle of senior leaders who were either new to the system or in new roles—including the hospital president, system chief financial officer, president of the physicians and associates, vice-dean of academic affairs and a senior adviser. Two years later, Roper admits he is impatient with the UNC system’s integration.

“I would say we are not fully there yet, but we have made real progress,” Roper says, a trace of his native Alabama lingering in his measured statements. “It’s not so much to combine efficiencies but to align incentives and make sure we are all singing from the same sheet of music and joined in the execution of our plans. An academic medical center is, by its very nature, an integrated set of institutions focused on research and education and patient care. While this is a place that has a proud history and tradition of quality in each of those areas, we simply no longer have the luxury of functioning in silos.”

Roper admits his biggest internal challenge has been to inculcate a sense of systemness down through the organization. “What that means is not just looking out for the hospital’s interest, but asking how this touches the medical school’s academic purposes or the medical group’s physician practice efforts, and then reaching out and partnering in a constructive way with all of the entities of the organization. That integration is an hour-to-hour way of doing business.” Roper says he knows the culture change will have been achieved when it happens as a natural course of events and he no longer has to “bang them over the head” with reminders to cooperate.

Externally, the bumps have been frequent and public. Public ire was raised over what some critics saw as excessive executive compensation for Roper and his team. Such grievances are not uncommon for leaders of nonprofit organizations, but what came last year was a more direct assault—a retired professor of medicine alleged that a policy change requiring patients at UNC clinics to submit co-payments and other deductible fees up front would intimidate and, in effect, deny access to low-income patients. UNC was essentially accused of abandoning its historic mission to serve those in need.

Roper and UNC initially responded with numbers, reminding critics that UNC took on $185 million worth of uncompensated care in 2005, and, by industry standards, a relatively low profit margin of 1.4 percent. In retrospect, however, Roper says he should have realized the pain was not about numbers.

“We shifted gears and said, ‘We are not going to try to argue away our critics. We are not going to try to prove them wrong.’ Rather we said, ‘This is an opportunity for us to get better at serving the underserved, those who depend on us as a safety-net institution,’” he says. The system crafted a document and policy called, “Assuring Access at UNC Health Care,” which outlines improvements in communications about financial assistance and more patient-friendly changes to the collections process. But UNC still asks patients to “play ball with us,” Roper says, by providing all information they can about their ability to pay and eligibility for assistance programs.

A future of growth

John Lewis gets the calls from neighbors and friends of friends. Can they get him in to see the specialist? Can their sick child get an NICU bed? Even though he is not involved in clinical care as senior vice president and CFO for UNC Hospitals, he gets the calls. These are not, he says, “amorphous people.”

The need for growth is beyond being just a strategic question mark; it has become an imperative tied to the system’s mission. Creative use of beds—such as opening a handful of extended recovery beds in radiology and for procedures—has helped UNC ease its capacity crisis. Still, the system is dealing with double-digit growth, including a 12 percent year-over-year jump in inpatient surgeries. UNC has an average daily census of about 85 percent, which, given the nature of the place, is an effective rate of 100 percent. With 61,200 ER visits, 22,347 surgical cases and 741,980 clinic visits a year, UNC is trying to keep up with a growing area demand.

Lewis says he is worried about more than just the people who are in the hospital. “It is not only taking care of the patients who are here and making sure they have good outcomes,” he says. “It is the 22 patients who needed to get transferred here today but were not. If we are going to provide the care to the people who need the care, we need to grow our capacity.”

Brian Goldstein, MD, chief of staff for UNC Hospitals and executive associate dean for clinical affairs at UNC School of Medicine, says that 17 years of hospital closures, rising populations and denied certificates of need for additional beds continue to drive the need for inpatient space. Creativity only helps so much when volume grows. “We moved things out of the hospital that didn’t need to be in the hospital, but I think we have squeezed most of what we can get out of that,” says Goldstein. Demand is expected to grow even more acutely as the Raleigh/Durham/Chapel Hill Triangle area has become a popular destination for relocated retirees.

Bruce Gordon, senior vice president of the public finance healthcare ratings group of Moody’s Investors Service, says some current and future market demands help UNC, while others may not. Gordon—himself a UNC alum—says that while North Carolina in general is considered a good state for hospital business, the Triangle market is the only one with three major competitors. UNC’s acquisition of Rex Healthcare in 2000 gives it a foothold in the lucrative Raleigh submarket, but other players in the market are expanding, as well. On the plus side, UNC does get an annual injection from the state worth around $40 million, and its Medicaid patients are reimbursed at cost.

Where UNC’s mission and its financial future intersect is the ability to attract private-pay customers—often the most difficult for a safety-net hospital like UNC. “While being an AMC has some pluses, it also has some drawbacks. Some people with lower-acuity stuff don’t want to be in an AMC. If you are delivering a baby or getting your knee worked on, you may not want an AMC. They want to be in a community hospital that is high-end service,” Gordon says.

Already UNC has asked for and received two CON requests for an additional 43 and 68 beds. In addition, the new 320,000-square-foot North Carolina Cancer Hospital is scheduled to open on campus in 2009. UNC has hired two consulting firms—Cambridge, MA-based Tsoi/Kobus & Associates and Portland, ME-based Stroudwater Associates—to investigate and detail plans that could see an expansion of as many as 200 beds at a reported cost of $350 million, both on campus and at satellite locations.

“The answer has to be we are going to build additional capacity, inpatient and outpatient, OR and ER—and all of those things,” Roper says. “What to do and over what time horizon and how to finance it are questions we are debating and discussing right now.”

A quality mandate

If growth is the imperative of the future, then quality is the order of the day. Roper makes no bones about his place as a nationally recognized face in the quality and patient safety movement and wants UNC to be no less than a national leader in the movement to reduce errors and improve outcomes.

“As I have repeatedly said to people internally here, it would be embarrassing in the extreme if I am out there at the national level hectoring people about the need to improve healthcare quality if we can’t do it here in our own institution. So I am saying don’t embarrass me.”

UNC has worked through some programs usually associated with community hospitals, including the Institute for Healthcare Improvement’s 100,000 Lives campaign. In addition to having administrative oversight of the residency program and the system’s self-funded malpractice plan, Goldstein oversees the system’s quality initiatives. Beyond the IHI, Leapfrog and similar initiatives, UNC is working in a patient safety consortium of other AMCs including University of Pittsburgh Medical Center and Baylor University Medical Center. Pushing quality and evidence-based medicine has its own set of difficulties in any hospital, but imagine trying to preach evidence to those who consider themselves the authors of it.

“The idea of saying, for example, that we want you to pick from this menu of antibiotics preoperatively for this type of patient is a different way to think about practice—that an organization can help standardize processes that were previously the exclusive domain of the individual doctor,” says Goldstein. “As a group practice, we have a little bit of experience with that, but as an academic practice, we have people who are especially free-thinking.”

On the other hand, projects like a home-grown electronic medical record have helped get the physicians used to constant change, and physician satisfaction levels remain high. “Against that culture, I think we are like every other academic medical center in the country—we are feeling more pressure, but we start from a very low stress level at baseline,” Goldstein says.

Resistance, if any, has been mostly passive, Roper says.

“For the most part people like where we are and what we are doing,” he says. “To the extent we are not fully there yet, it is not so much because of pushback, but because of some people saying, ‘I am not sure I really have to play ball this way. I will just continue to do my old way of business.’ ”

The wheels on the bus

Mandel wears a button on his scrubs that says, “I am on the Bus.” A lot of people in the hospital wear them. It’s an acknowledgement of sorts—a little round label that says you are a team player.

“We can’t have separate groups each trying to do their own mission—anesthesiologists in one hole, nurses in another, surgeons in another. We need to get under the same tent on a common mission,” Mandel says. “The bus is a journey. Everyday we try to make it run a little bit faster and more efficiently. We only have one kind of employee here. Either you are on the bus or it left without you.”

Mandel is proud to call the OR “hallowed ground.” But he’s not blind to its continuing challenges as the procedural epicenter of a busy, public AMC.

“What are the problems here? Plenty. Do we ever give up? No. Do we seek incremental improvement each day? You bet your ass.”

Despite what UNC graduate Thomas Wolfe wrote, Mandel believes that you can go home again. “I believe in the cause. There is something about going back that is not just about the compensation. That is part of it. It’s the identity you have with the cause. I understood what they were doing. I knew why they were doing it. I thought I could perhaps help, and I hope I have.”

Jim Molpus is editor of HealthLeaders magazine and HealthLeaders Online News. He may be reached at jmolpus@healthleadersmedia.com.



Blue versus Blue

Sports loyalty and academic medicine usually don’t carry strong links. But like everything else in Chapel Hill, Tar Heel loyalty is part of life at UNC hospitals.

Of course, everything from the hospital logo to the background color of the web site is “Tar Heel blue.” But the hospital tends not to make overt marketing ties to North Carolina fans. After all, the system’s mission is to treat all the citizens of the state, even those whose loyalties may lean toward North Carolina State in Raleigh or Duke in Durham.

But the basketball mania helps when it comes to luring employers and physicians to the region.

“Basketball helps. Seriously,” CEO Bill Roper, MD, says. “They know of UNC, and also Duke, because of NCAA March Madness.”

Roper emphasizes that while a business rivalry of sorts exists between UNC and Duke on the health system front, the passion that defies the split between Tar Heel and Blue Devil fans is absent.

“People in leadership at other institutions in this area understand there are times when we need to be fierce competitors, and there are other times we need to be keen collaborators. We have to be able to manage both parts of that.”

—Jim Molpus