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The Academic Medical Center Model is Broken. Here's How to Fix It.

Analysis  |  By Philip Betbeze  
   August 10, 2017

The CEO of Banner UMC Phoenix is counting on a ground-up redesign of the academic medical center model—from the healthcare consumer's point of view.

The academic medical center may be an endangered species.

According to Steve Narang, MD, it's the healthcare business model most at risk for failure, because it's monolithic, highly complex, difficult to change, and expensive.

Indeed AMCs have been struggling in recent years, relative to their highly profitable history.

Narang should know, because he runs an academic medical center, specifically, Banner University Medical Center Phoenix. But they can be reformed, he insists.

As the medical center's CEO, he expects disruptive changes to the AMC model in the coming years. So instead of waiting for an emphasis on customer service and value-based principles to force radical change on the organization, Narang wants to help precipitate it.

Redesign and Restructuring

Redesign of its academic medical center business model is important to Banner Health, the 28-hospital, six-state health system, because it signed a 30-year affiliation with the University of Arizona College of Medicine. More than a billion dollars has been invested in three academic medical centers in Phoenix and Tucson.

Not only that, but Banner has had a rough go of things financially in recent times. It completed a restructuring that eliminated nearly 1% of its workforce, including senior management positions, at least in part due to losses from its insurance arm.

"Banner Good Samaritan was always a teaching hospital, but it was rebirthed as Banner University Medical Center so we could start from the beginning and engage physicians in helping in its redesign," says Narang.

A pediatrician by training who also has a master's degree in healthcare management, Narang says the traditional academic medical center structure, is outdated and too expensive in an era where payers, including patients, are seeking value.

In a traditional structure, built on the department model, with surgery, medicine, education and research as its main pillars, "often research and education tend to dominate. But customers don't come here saying, 'I need to see a department of surgery physician.'"

Instead, patients come or are referred because of a specific health issue or problem that the highly specialized AMC medical team is ideally suited to treat.

These patients may not know what type of treatment they need, so academic medical centers should stop forcing them to conform to a structure designed decades ago for the benefit of the institution.

The challenge now is how to make AMCs attractive to patients regardless of their acuity level.

The Institute Model

In order to improve their value to those who pay for healthcare, AMCs should adapt to what the consumer is looking for. Narang says what's been developed at Banner University Medical Center as the Institute Model can help patients navigate their way through an expensive and confusing experience.

For Banner, this means collapsing the structure of traditional academic medicine departments.

The design mantra is simple, if difficult to execute. "If the customer has a condition, let's develop a center for it," he says.

To facilitate that redesign and to make quality and reductions in cost the basis of change, he and his executive team began to hire data analysts and engineers more than a year ago.

In concert with physician leaders who are excited to redesign the system, those engineers and data analysts came up with 13 specialized-care institutes, each focused on specific health conditions, with multiple sub-specialty centers.

Each institute is made up of medical experts who deliver coordinated care that is focused on the individualized needs of each patient, and which allows patients and their families, ideally, to find all the care they need in one location:

We have been recruiting people from all over the country who believe academic medicine can thrive," he says. "The most important principle we've used is that it's redesign around the customer, but has to be physician-led."

While being a physician himself has made it easier to translate the vision to colleagues, he says he hasn't had to create a sense of urgency, because evidence of healthcare delivery undergoing transition and being disrupted is everywhere—just not usually in AMCs themselves.

"You see one system after another undergoing transition, and you can wait to be told, or you can lead it. You can create, innovate, and transform versus corporate healthcare telling physicians what to do," he says. "That's where we've gotten momentum. Not success, because it's early, but momentum."

The experience from the patient's point of view is that one patient touch point, in the form of a nurse navigator, will help design the patient's care pathway.

"The real magic isn't the fact it's all under one roof, it's that behind the scenes we're redesigning the model," says Narang.

Better, Cheaper, Faster

For example, at the Neuroscience Institute, doctors are heavily involved in planning the business strategy. "What are the top products we'll do better, cheaper, and faster than anyone else in the market?"

They came up with epilepsy, stroke, sleep medicine, and headache.

Each of the other institutes has come up with up to five areas of specialty that they are focusing on for the next two years as well, Narang says, based on what the customer needs. Banner's insurance network helps with data that supports those areas of emphasis, based on what services patients are choosing from outside its network.

The real challenge isn't unique to Banner or even academic medical centers in general, he says.

"We have to make healthcare more affordable. There's a role for AMCs because they're outstanding structures to solve complex problems, but they do it slowly and expensively. The institute model is just one substructure that takes the physicians under one roof and collapses the artificial, expensive silos."


Philip Betbeze is the senior leadership editor at HealthLeaders.

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