A new measure of the impact of managed care on healthcare markets.

BACKGROUND: Most studies of managed care impact have used health maintenance organization (HMO) penetration or index of competition as the marker of managed care impact. However, little empirical evidence has been found to support the validity of these or other measures in current use. In addition, as managed care evolves to forms other than HMOs and managed care penetration in large metropolitan areas approaches 100% of commercially insured patients, the utility of the most commonly used measure, HMO penetration, will decrease still further. OBJECTIVES: To provide a preliminary analysis of the use of premiums as a measure of market impact of managed care. STUDY DESIGN: Retrospective analysis (quartile, correlation, multiple-variable linear regression) of publicly available datasets. METHODS: Labor market-adjusted HMO premiums from 3 publicly available sources, for the 56 largest metropolitan areas in the United States, were compared with penetration and index of competition as predictors of the dependent market variable, hospital bed-days per 1000 population. RESULTS: Health maintenance organization premiums in the Federal Employees Health Benefits Program emerged as the best predictor of HMO market impact. Average HMO premiums reported in the Interstudy database and for the Medicare+Choice program also outperformed penetration or index of competition in relating to several commonly available markers of competition such as bed-days per 1000. CONCLUSIONS: Premiums charged by HMOs are a useful measure of the impact of managed care on healthcare markets in large metropolitan areas.

The effects of a changing environment on relationships between medical schools and their parent universities.

Medical schools differ from other university graduate schools in that community settings, hospitals, and ambulatory care facilities are required for medical education, and most of these settings are either owned by or closely affiliated with the university. Thus, the extraordinary changes in recent years in the organization, delivery, and financing of health care have required the attention not only of the leadership of academic medical centers (i.e., medical schools and their owned or closely affiliated teaching hospitals) but also of the administrators and boards of their parent universities. Many university-wide structures and policies that previously served the medical school well in accomplishing these missions may now be viewed as inflexible by the faculty and administration of the school. Conversely, the historically distant governance and administrative oversight of the medical school has become a concern for some at the university, given the huge budgets of the school, its faculty practice, and its affiliated hospital(s). From information derived mainly from annual visits to 14 medical schools from 1996 through June 2000, the authors review the issues between medical schools and their parent universities and the strategies being used to resolve them. These strategies include changes in the governance, organization, and management of the medical school, such as unified authority for health affairs, reengineered administrative systems, and increased autonomy in decision making. The authors conclude that these strategies appear to be working on behalf of not only the medical school but, in some instances, the university at large. They also comment on possible negative implications of the greater separation of the medical school from its parent university.

Distribution of research awards from the National Institutes of Health among medical schools.

BACKGROUND: Previous studies have demonstrated that a small number of the 125 medical schools in the United States receive a disproportionately large share of the research awards granted by the National Institutes of Health (NIH). We assessed whether the distribution of NIH research awards to medical schools changed between 1986 and 1997. METHODS: We used NIH data to rank medical schools in each year from 1986 to 1997 according to the number of awards each school received (as a measure of each school's activity in research, also referred to as research intensity). The proportion of awards received by schools ranked 1 to 10, 11 to 30, 31 to 50, and 51 or lower in research activity was then calculated, and changes over time were examined. We also examined changes in the distribution of awards and changes in award amounts according to the type of department, the type of academic degree held by the principal investigator, and the awarding institute. RESULTS: Between 1986 and 1997, the proportion of research awards granted by the NIH to the 10 most research intensive medical schools increased slightly (from 24.6 percent of all awards to 27.1 percent), whereas the 75 least research intensive medical schools (those ranked 51 or lower) received proportionately fewer awards (declining from 24.3 percent to 21.8 percent). The increased proportion of awards to top-10 schools consisted primarily of increases in awards to clinical departments, awards to physicians, and awards from highly competitive NIH institutes. Basic-science departments received a smaller proportion of awards than clinical departments, both in 1986 and in 1997. CONCLUSIONS: Research funded by the NIH is becoming more concentrated in the medical schools that are most active in research.

Trends in specialized surgical procedures at teaching and nonteaching hospitals.

Teaching hospitals are the principal site of many specialized surgical procedures. The recipients of these procedures tend to be younger, male, and nonwhite and tend to reside in either the poorest or the most affluent neighborhoods. Although the numbers of these procedures performed at major teaching hospitals increased dramatically between 1989 and 1995, they accounted for only a modest proportion of hospital discharges and patient days. Concentration of specialized surgical procedures in major teaching hospitals will likely continue. This trend has implications not only for these hospitals but for health care purchasers, policymakers, medical educators, and clinical researchers as well.

Academic health centers on the front lines: survival strategies in highly competitive markets.

The authors describe approaches that five academic health centers (AHCs) have taken to reduce costs, enhance quality, or improve their market positions since the onset of price competition and managed care. The five AHCs, all on the West Coast, were selected for study because they (1) are located in markets that had been highly competitive for the longest time; (2) are committed to all the major missions of AHCs; and (3) own or substantially control their major clinical teaching facilities. The study findings reflect the status of the five AHCs during the fall of 1998. Although some findings may no longer be current (especially in light of ongoing implementation of the Balanced Budget Act of 1997), they still provide insights into the options and opportunities available to many AHCs in highly competitive markets. The authors report on the institutions' financial viability (positive), levels of government support (advantageous), and competition from other AHCs (modest). They outline the study AHCs' survival strategies in three broad areas: increasing revenues via exploiting market niches, reducing costs, and reorganizing to improve internal governance and decision making. They also report how marketplace competition and the strategies the AHCs used to confront it have affected the AHCs' missions. The authors summarize the outstanding lessons that all AHCs can learn from the experiences of the AHCs studied, although adding that AHCs in other parts of the country should use caution in looking to the West Coast AHCs for answers.

Clinical research in medical schools: seizing the opportunity.

Academic medical centers (AMCs) face challenges to the achievement of their potential in clinical research. These challenges include reduced support of research from clinical revenue, cultural impediments to clinical research within the traditional value system of research-intensive AMCs, and potential problems of patient access to clinical research in intensive managed care environments. This article considers options to strengthen clinical research that have been developed at some medical centers. While much attention is being directed to the expansion of clinical trials in many AMCs, this effort needs to be linked to a cohesive strategy for clinical research being conducted in an academic environment. The article also addresses the subject of training and career development. It concludes with the opinion that the "crisis" in clinical research in academic medical centers provides the opportunity to define, more explicitly, the nature and scope of the investment in clinical research, and to define strategies that will bring added value to knowledge generated from basic research and to the teaching and patient care missions of these centers.

Reforming the structure and management of academic medical centers: case studies of ten institutions.

The authors describe a variety of strategies that academic medical centers (AMCs) are using to preserve their missions in the face of changing demands and declining resources. The report is based on comparative studies of ten centers conducted by the authors in 1997 and 1998. (AMCs are defined as medical schools and their owned or closely affiliated clinical facilities.) The studies show that the kinds of reforms that AMCs are making in the conduct of their missions and the results they are aiming for are often characteristic of successful organizations described by experts in organizational change and management. The major reforms found included balancing planning and opportunism; developing new approaches for faculty participation in governance; experimenting with the organization of core functions; listening to the customer; aligning incentives; creating a sense of urgency for change; and reducing the emphasis on paper credentials when recruiting for management positions. While these findings are encouraging, it seems clear that AMCs will need to change and adapt at an ever-increasing rate. Competitive pressures will require them to continuously improve the ways they achieve all their missions. New technologies such as informatics will threaten AMCs' near-monopoly in teaching and research. The new environment will require rapid decision making, the setting aside of traditional professional or departmental structures when they inhibit efficiency or quality, and more effective communication with external publics. How well AMCs can maintain their commitment to core values while adopting new methods in pursuit of those values will determine their futures.

Organizational, financial, and environmental factors influencing deans' tenure.

At a time when continuity of leadership in medical schools is most crucial, the tenures of deans continue to decrease. In the present study of factors influencing the tenures of 382 U.S. medical school deans from 1985 to 1994, the authors focused on issues that were likely to have had a greater impact on deans' tenures in recent years. They assumed that longer tenures are associated with less complex organizational factors and more stable environmental factors. Conversely, they assumed that deans and their tenures are adversely affected by an institution's declining financial health, a complex organizational structure, and a changing clinical marketplace where there is rapid growth of managed care. The authors compared the relationships between these factors and the length of deans' tenures during the ten-year period studied. Among the most important findings were the fact that schools that were less healthy financially, that had the same owner as the primary teaching hospital, and that had smaller numbers of faculty tended to have shorter dean's tenures and higher turnovers of deans. While the reason for shorter tenures of deans at schools that are less financially healthy is understandable, the effect of common ownership of the school and teaching hospital is less obvious, but perhaps the greater preoccupation of deans with the clinical enterprise in that circumstance is a significant constraint. The authors hope that the insights from their findings will be useful to future candidates for deanships in their negotiations with university officials and will help all parties reach more explicit agreements on such issues as expectations for financial performance of the medical school and the roles and relationships of the dean and the teaching hospital director.

New bottles for vintage wines: the changing management of the medical school faculty.

Medical schools are being challenged to develop innovative mechanisms of faculty governance and management that enlist faculty in meeting the demands of a competitive marketplace. The authors describe some of these mechanisms in this article, which is the result of case studies made in 1997 of ten schools. Measures to increase the accountability of faculty to the strategic directions of the school include having appointment letters that specify explicitly the roles and responsibilities of the faculty member, conducting annual performance reviews based upon more objective criteria, tying salary to performance, lengthening the pre-tenure probation period, instituting post-tenure review, and redefining the salary guarantees of tenured faculty. Equally important is balancing these policies with initiatives to strengthen the accountability of schools to their faculty. Improved methods of communication between administrators and faculty and more efficient processes to enable faculty to participate in decision making are appearing. Formal approaches to mentoring and faculty development are being implemented. Recognition and reward programs are being strengthened. Alternatives to tenure are being developed in recognition of the need for increasingly diverse roles of faculty and to ensure job security. The reengineering of the processes that will lead to shared vision and accountability will require massive cultural change. The realization of these goals is likely to depend on the skill of medical school managers and the ability and willingness of faculty members to work collaboratively and creatively in designing new methods to accomplish old missions. Next month's AAMC Paper will explore changes in the structure and management of medical schools and their owned or closely affiliated facilities to improve the efficiency of achieving their core missions.

Market influences on internal medicine residents' decisions to subspecialize.

BACKGROUND: Managed care reduces the demand for internal medicine subspecialists, but little empirical information is available on how increasing managed care may be affecting residents' training choices. OBJECTIVE: To determine whether increased managed care penetration into an area where residents train was associated with a decreased likelihood that residents who completed general internal medicine training pursued subspecialty training. DESIGN: Secondary logistic regression analysis of data from the 1993 cohort of general internal medicine residents. SETTING: U.S. residency training sites. PARTICIPANTS: 2263 U.S. medical school graduates who completed general internal medicine residency training in 1993. MEASUREMENTS: The outcome variable (enrollment in subspecialty training) was derived from the Graduate Medical Education Tracking Census of the Association of American Medical Colleges (AAMC). Health maintenance organization (HMO) penetration (possible range, 0.0 to 1.0; higher values indicate greater penetration) was taken from the Interstudy Competitive Edge Database. Individual and medical school covariates were taken from the AAMC's Student and Applicant Information Management System database and the National Institutes of Health Information for Management Planning, Analysis, and Coordination system. The U.S. Census division was included as a control covariate. RESULTS: 980 participants (43%) enrolled in subspecialty training. Logistic regression analyses indicated a nonlinear association between managed care penetration into a training area and the odds of subspecialization. Increasing managed care penetration was associated with decreasing odds of subspecialization when penetration exceeded 0.15. The choice of subspecialty training increased as HMO penetration increased from 0 to 0.15. CONCLUSIONS: Local market forces locally influenced the career decisions of internal medicine residents, but the influence was small compared with the effects of age and sex. These results suggest that market forces help to achieve more desirable generalist-to-specialist physician ratios in internal medicine.

Relationship between National Institutes of Health research awards to US medical schools and managed care market penetration.

CONTEXT: Medical research conducted in academic medical centers is often dependent on support from clinical revenues generated in these institutions. Anecdotal evidence suggests that managed care has the potential to affect research conducted in academic medical centers by challenging these clinical revenues. OBJECTIVE: To examine whether empirical evidence supports a relationship between managed care and the ability of US medical schools to sustain biomedical research. DESIGN: Data on annual extramural research grants awarded to US medical schools by the National Institutes of Health (NIH) from fiscal years 1986 to 1995 were obtained, and each medical school was matched to a market for which information about health maintenance organization (HMO) penetration in 1995 was available. MAIN OUTCOME MEASURES: Growth in total NIH awards, traditional research project (R01) awards, R01 awards to clinical and basic science departments, and changes in institutional ranking by NIH awards were compared among schools located in markets with low, medium, and high managed care penetration. RESULTS: Medical schools in all markets had comparable rates of growth in NIH awards from 1986 to 1990. Thereafter, medical schools in markets with high managed care penetration had slower growth in the dollar amounts and numbers of NIH awards compared with schools in markets with low or medium managed care penetration. This slower growth for schools in high managed care markets was associated with loss of share of NIH awards, equal to $98 million in 1995, and lower institutional ranking by NIH awards. Much of this revenue loss can be explained by the slower growth of R01 awards to clinical departments in medical schools in high managed care markets. CONCLUSIONS: These findings provide evidence of an inverse relationship between growth in NIH awards during the past decade and managed care penetration among US medical schools. Whether this association is causal remains to be determined.

Academic medical centers and the care of underserved populations.

As the number of Americans at risk of being underserved continues to rise, a better understanding of safety-net providers of health care is needed to help ensure continuing care for the underserved. In this article, the authors have begun the process of defining the role of academic medical centers (AMCs) as a group in the care of those persons most at risk of being underserved--the medically indigent and members of minority and poor populations--by quantifying the amount of inpatient care that AMCs provide to these individuals. The study went beyond previous work by using nationally representative sources of data (from 1989 to 1994) and by examining more than one underserved population rather than only the medically indigent. The study focused on AMCs and other hospitals in urban areas and excluded hospitals in rural areas. The detailed findings confirm previous observations that urban AMCs of all types provide a large and disproportionate share of care for the medically indigent and the underserved members of minority and poor populations and that members of these populations constituted the majority of patients cared for in many AMCs in recent years. The findings show that the proportion of patients from underserved groups admitted to all urban hospitals is rising and that this growth is faster among AMCs than other hospitals. The authors comment that AMCs, because of their prominent and historical role in caring for the underserved, have the opportunity to lead efforts to continue such service through innovative approaches to health care and the prevention of illness. Whether AMCs can seize this opportunity when confronted by price competition and government policies that reduce AMCs' capacity to care for the underserved remains to be seen.

The volume and mix of inpatient services provided by academic medical centers.

This is the first in a series of AAMC Papers that analyze the clinical spectrum of patients treated in the nation's teaching hospitals. As stated in the separate Introduction, "The Transformation of Data into Knowledge," subsequent papers will examine trends in the provision of care to the indigent and make comparisons of quality of care among teaching and non-teaching hospitals. These analyses, carried out by the AAMC's Center for the Assessment and Management of Change in Academic Medicine (CAMCAM), are made possible by a reorganization of the AAMC's information infrastructure, in which many formerly separate databases have been linked. The Introduction concludes with a description of specific AAMC-CAMCAM initiatives that are being planned. This initial analysis examines the volume and mix of clinical services provided by AMCs, examines trends in these services over time, and compares services provided at different AMCs, in different markets, and between AMCs and non-teaching hospitals. Data from a variety of sources were used in these secondary analyses. The American Hospital Association's Annual Survey of Hospitals database was used to analyze volumes of inpatient services provided in AMCs and other hospitals. The AAMC's Clinical-Administrative Data Service database was used to analyze the volume and mix of clinical services provided in individual AMCs. The Agency for Health Care Policy and Research's Nationwide Inpatient Sample was used to compare the mix of clinical services provided in AMCs and other hospitals. Volumes of inpatient services in AMCs changed little between 1991 and 1994 and totaled six million hospitalizations, 41 million inpatient days, and two million inpatient surgeries in 1994. The mix of inpatient services in AMCs also showed little variation over time among individual AMCs, in markets with both high and low managed care penetrations, between public and private AMCs, or between AMCs and non-teaching hospitals, with the ten most frequent diagnoses accounting for significant proportions of total services. In contrast, several specialized services were much more likely to be offered and provided by AMCs. Despite rapid change in the health care environment, the volume and mix of clinical services provided by AMCs have been relatively stable. Implications for hospital planners, service chiefs and administrators, medical educators, clinical investigators, and health policymakers are discussed.

Cost-effective health care: the Rochester experience.

Rochester, New York, has been cited repeatedly for having achieved one of the most cost-effective and efficient health care systems in the country. The determinants of the success of this system include a long history of comprehensive health planning; innovative hospital reimbursement programs; community-rated health insurance; and high levels of mutual cooperation among business, insurers, hospitals, and physicians. The Rochester system promotes the goals of access, quality, affordability, and provider satisfaction through a balanced approach to regulation and competition.

Predicting the need for hospitalization of ambulatory patients with pneumonia.

OBJECTIVE: To develop clinical guidelines to identify patients with pneumonia who might be safely treated as outpatients. DESIGN: Retrospective chart review to derive guidelines, with subsequent prospective validation. SETTING: Initial review completed for patients seen in the emergency room (ER) of a university hospital and a community-based internal medicine practice. Validation conducted in the ERs of a university hospital and a community teaching hospital. PATIENTS/PARTICIPANTS: Individuals aged 16 years and older presenting with newly diagnosed pneumonia. Follow-up obtained through mail or telephone contact and chart review. INTERVENTIONS: None. MEASUREMENTS AND MAIN RESULTS: During the initial retrospective review, 141 pneumonia patients without obvious reasons for hospital admission were identified and then classified as hospitalization necessary or unnecessary. Of these patients, 33 were classified as requiring admission. Multivariate analysis identified five variables that differentiated low-risk from high-risk study patients. These variables (and their relative weights) were: serious comorbid illness (3 points); preexisting lung disease (2 points); multilobar lung involvement by the disease by chest x-ray (2 points); observed or likely aspiration (2 points); and symptom duration of less than 7 or greater than 28 days (1 point). Risk scores were calculated using these variables. Patients with low scores (0-2 points) rarely had complications, and only one of 53 such patients (2%) was judged to require hospitalization. In contrast, patients with high scores (greater than or equal to 6 points) had frequent complications and 20 of 29 (69%) were felt to need hospitalization. Similar results were found during the validation phase. CONCLUSIONS: Clinical findings appear to help distinguish patients who need admission for treatment of pneumonia from those who do not. If validated in other settings, the clinical utility of these guidelines in assisting decision making about hospitalization should be determined.