The Structure of Academic Health Systems and the Origins of IU Health

1
The Structure of Academic Health Systems and the
Origins of IU Health

• Prepared for American Dental Education
  Association
• 54th Annual Deans Conference
• Daniel F. Evans, Jr.
• President and Chief Executive Officer
• November 11, 2012

2
Structure and Organization of Academic Health
Systems

• Academic health systems a combination of a
  medical school and an owned or affiliated health
  care system (can also include other health
  professional schools)
• Two primary organizational models
• Fully integrated model education, research,
  and clinical functions report thru university
  leadership and university board of trustees
• Split model education and research functions
  report thru university but clinical functions (
  the health system) report thru an affiliated but
  separate and independent leadership structure and
  board
• University of Michigan is an example of first
  model. CEO of UM health system is also the EVP
  for Medical Affairs at the University
• IU Health is an example of the second model.
  The Dean of the Medical School and the health
  system CEO are two different people and report to
  separate Boards

3
Academic Health System
Benefits of Alignment
4
IU Health Governance Structure
Methodist Health Group, Inc Board of
Trustees (Methodist Class)
Indiana University Board of Trustees (University
Class)
Indiana University Health Board of Directors
Indiana University Health Indiana not-for-profit
501 (c)(3)
IU Health is sole corporate member of
affiliated hospitals and appoints majority of
their boards
IUHP Board Of Directors (Includes 2 reps from
IU School of Medicine)
IU Health Physicians (IUHP)
IU Health Hospitals (18 state- wide)
5
History of IU Health

• In 1997, Methodist Hospital of Indianapolis
  merged with two hospitals owned by Indiana
  University IU Hospital and Riley Hospital for
  Children to form Clarian Health
• The merger was a response to existing and
  anticipated changes in the health policy
  environment
• reductions in state funding for IUSM
• impact of managed care
• need for larger referral base for IU Hospital
• desire to increase market leverage and achieve
  efficiencies by combining resources
• important for IUSM to expand surplus from
  clinical services to support education and
  research missions
• A similar rationale has been used for other
  mergers and alliances between health systems and
  medical schools that occurred at this time and
  since

6
History of IU Health (cont)

• Clarian changed its name to IU Health in 2011 to
  better reflect the close relationship between the
  health system and the School of Medicine
• Indiana University Health has grown substantially
  since the formation of Clarian Health in 1997
  it is now largest health care system in Indiana
  and a top 10 academic health system in the U.S.
• 18 hospitals state-wide
• 5B in annual revenues
• More than 1,000 employed physicians
• IUH Methodist is largest tertiary/quaternary
  hospital in IN. More than 30 of patients
  uninsured or on Medicaid
• IUH Riley Hospital for Children is states only
  comprehensive childrens hospital

7
Challenges Facing Academic Health Systems

• Health Care Reform (the Affordable Care Act)
• Pricing Pressures Across Payer Classes
• Medicare and Medicaid affected by federal and
  state budget challenges
• Employers struggling to afford premiums and
  passing more costs onto employees. Impact of new
  health insurance exchanges in 2014?
• Payers showing greater willingness to exclude
  expensive providers, even of high quality (narrow
  networks)
• Shifting Payer Mix as Baby Boomers Retire and get
  Medicare
• Mantra among health system executives manage to
  Medicare margins 20-25 reduction in cost
  structures
• Big challenge for academic systems given
  education and research commitments and costs

8
The Transition to Accountable Care

• The term accountable care refers to health care
  delivery and payment models in which providers
  assume some level of financial risk for the
  clinical and financial outcomes of the care they
  provide to a defined population of patients.

9
Key Concepts of Accountable Care

• Keep patient well vs. treat patient when sick
• Emphasis on primary and preventive care
• Importance of oral health and hygiene
• Care management and coordination critical
• Use of evidence-based practice to reduce
  unnecessary clinical variation and improve
  quality of outcomes
• Manage utilization to control total cost of care
  per person
• Providers rewarded for quality and efficiency,
  not volume of care provided
• Expanded information technology robust decision
  support tools