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78 FINANCE 9 Questions on Strategy for Academic Medical Centers By Scott Becker and Molly Gamble e world of academic medical centers is quickly changing. is article briefly discusses core visions and goals for academic medical centers, as well as strategies and potential positions to aspire toward. Initial Questions. First, academic medical center CEOs and leaders can begin with four key questions: 1. Do you have a core plan or goal? 2. How committed are you and your board to that goal and plan? 3. Can you afford to implement the goal? 4. Do you desire to be a surviving party in your mission? Core Goals and Concepts. en, look at the goals and concepts from a perspective similar to the Maslow's hierarchy of needs. 1. The initial goal is financial survival. Hospitals and health systems affiliated with medical schools face some of the highest costs across all healthcare institutions. ey also face increased funding challenges, and many are located in urban areas with challenging results. AMCs oen end up treating a dispropor- tionate share of Medicaid or under- and uninsured patients for emergency, Level 1 trauma and psychiatric emergencies. Approx- imately 60 percent of AMCs' business on a national basis comes from Medicaid and Medicare. e most foundational question for any AMC leader today is whether their AMC can survive in its current form. A number of AMCs have come to the conclu- sion that they cannot survive or thrive in their current form, and many of them have been acquired. 2. Does the medical center aspire for greatness or leadership in a certain area? Is there an area that the AMC desires to be an absolute leader in? A core strategy beyond mere survival is to aim to be an absolute regional or national leader in a specific area — that is, an AMC that stands out in X or Y specialty. Rush University Medical Center in Chicago (ranked No. 6 nationally in orthopedics by U.S. News & World Report), for example, is a top-notch leader in orthopedics and spine. Tufts Medical Center in Boston has one of the top heart transplant centers in the country and does more heart transplants in Massachusetts than any other hospital. The ability to be an absolute leader in a specific area is a significant differentia- tor among AMCs, particularly those that are not regionally dominant, and also helps provide an academic medical center with a reason for being that helps them stand out and remain critical to the community. 3. Does the AMC aspire to have a dominant regional or local market position? A dominant market position allows an AMC to invest in quality across a certain scale, invest in leadership and maintain solid pricing. It can allow an AMC to maintain a great teaching institution and serve payers and patients well. A dominant market position — somewhat like Baylor Scott & White Health in Texas (49 hospitals), UPMC in Pittsburgh (ranked No. 13 nationally by U.S. News & World Report with 21 hospitals), BJC HealthCare in St. Louis (Barnes Jewish Hospital/Washington University ranked No. 10 nationally by U.S. News & World Report), Yale-New Haven (Conn.) Health System (ranked as top-performing hospitals in eight of 16 specialties by U.S. News & World Report) and Northwell (formerly North Shore-LIJ — 21 hospitals) in the New York metro area each have — allows an AMC to avoid being a com- modity participant and allows it to build its clout with payers. This way, it is harder for payers to go around the medical center and its system for care. 4. Can the AMC become a true leading international brand name? Institutions like Mayo Clinic (ranked No. 2 nationally by U.S. News & World Report), Cleveland Clinic (ranked No. 5), NewYork-Presbyterian Hospital (ranked No. 7), Stanford Health Care (ranked No. 15) and Massachusetts General Hospital (ranked No. 1) have essentially become internation- al brands. Stanford Health Care is now building a $5 billion dollar campus and tends to signal that it intends to be one of the few true international brands. A few of those brands wield their names in different ways than others. To be an interna- tional brand, one often needs to start with being great at home (i.e., hold a dominant local position as discussed above), and then be a leader in clinical innovation, research and patient care. The AMC might need to be a dominant regional system to begin international branding. 9 Questions on Strategy 1. Can you use the academic medical center as the base to develop an international brand and name? Some AMCs establish a brand name through clinical specialization, research and patient care. For example, MD Anderson Cancer Center has long focused on one clinical area and devoted its entire band- width to consistently deliver superior results around that arena. Others, like Mayo Clinic, John Hopkins Medicine (ranked No. 3 nationally by U.S. News & World Report) or Cleveland Clinic, have clinical excellence as their bedrock but also expand their global footprint through international, commercial and advisory relationships, in addition to patient care. A select few, such as Mayo Clinic and Cleveland Clinic, have expanded at a national level and developed true international brands. Here, one needs to query whether a system has the resources and platform and desire to attempt to become a truly international brand. 2. Can you use the academic medical center to develop a domi- nant local, regional or national local system? UPMC, Northwell, BJC and Baylor Scott & White are great examples of systems that have used acquisitions or mergers to develop a dominant local or regional system. is dominance can make a localized strategy difficult. 3. Will the center expand through ownership, affiliation or a mix of both? Here, some AMCs try to develop alliances with other systems without owning or becoming owned by the other sys- tem. Other entities attempt to develop systems through acquiring or combining fully with other systems. Baylor Scott & White Health completed a full merger between Baylor Health Care System and Scott & White Healthcare (now with 49 hospitals). University of Rochester Medical Center, in contrast, has pursued a mix of acquisitions and alliances. 4. Does the academic medical center desire to be a hub-and-spoke model or a multi-hospital system? A hub-and-spoke model in- cludes an AMC and several community hospitals that are clearly of a different stature than the AMC and serve as "feeders" to the