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The Decade of the Nineties at the UCLA Medical Center: Responses to Dramatic Marketplace Changes

Karpf, Michael MD; Schultze, Raymond G. MD; Levey, Gerald MD

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Author Information

Dr. Karpf is vice provost, hospital systems, and director, University of California at Los Angeles (UCLA) Medical Center. Dr. Schultze is professor emeritus, Department of Medicine, UCLA School of Medicine, and was director of the UCLA Medical Center from 1980 to 1995. Dr. Levey is provost, medical sciences, and dean, UCLA School of Medicine.

Correspondence and requests for reprints should be addressed to Dr. Karpf, 10833 Le Conte Avenue, Suite 17-165 CHS, Los Angeles, CA 90095-1730.

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Abstract

The evolution of the health care marketplace in the nineties in Southern California is described, including the dominance of managed care at the decade's end. The marketplace, especially in Los Angeles, is now one of the most complex, competitive, and challenging medical marketplaces in the country. The University of California, Los Angeles (UCLA) Medical Center and the academic health center of which it is a part have had to respond appropriately and vigorously to survive and to position themselves for the future. This article focuses on the responses of the medical center to these marketplace pressures. The center has recognized single-signature contracting, cost containment, and an emphasis on ambulatory care as fundamental success factors for survival in a complex, organized managed care environment. Data on the medical, financial, and educational performances of the medical center are presented in terms of its responses to the marketplace. Preliminary information about quality of care is presented for three patient-population groups that have been heavily affected by managed care. The need for emphasis on quality and service for future success and the attendant need for emphasis on information systems are discussed. The importance of fundamental understanding of markets is also reviewed. The concomitant approaches to securing the center's academic missions are described, including changes in institutional governance for the entire health sciences center of which the medical center is a part and the establishment of priorities in research, clinical care, and teaching programs, especially teaching programs in primary care.

Since the decade of the nineties, California has been at the forefront of change in health care delivery, and Los Angeles has been and continues to be one of the most complex, competitive, and challenging medical marketplaces in the country. The University of California, Los Angeles (UCLA) Medical Center and the academic health center of which it is a part have had to respond appropriately and vigorously in order to survive and to position themselves for the future. (The medical center is the main clinical facility of the UCLA Center for Health Sciences and is an academic medical center.) Although no two medical marketplaces evolve in the same way, and no two academic medical centers or academic health centers are identical, an understanding of the evolution of health care in Southern California and the UCLA Medical Center's responses to the pressures of change should offer some insights to institutions that are still in less mature and less organized marketplaces as they anticipate change and as they formulate their strategies. Because of the anxieties of the past, the medical center recently has become more proactive in looking toward the future and trying to anticipate future pressures and crafting appropriate strategies.

In this article, we

▪ describe the Southern California medical marketplace as it has evolved;

▪ describe the UCLA Medical Center's responses to market pressures;

▪ analyze the impacts of these pressures on the medical center in terms of patient volume and financial performance;

▪ describe preliminary data on the effects of these changes on the quality of care;

▪ speculate on future pressures and anticipated responses; and, finally,

▪ describe the impacts on the clinical, research, and education missions of the entire academic health center of which the medical center is a part, and the development of an appropriate governance structure.

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THE SOUTHERN CALIFORNIA MARKETPLACE

Southern California is truly an advanced medical marketplace. Managed care now dominates. As the decade comes to an end, an estimated 93% of commercial enrollees are in a managed care plan, with approximately 79% in a traditional health maintenance organization (HMO). Enrollment of seniors in Medicare HMOs has now surpassed 40% of eligibles1 and is predicted to continue to increase. In 1999, 54% of the state's Medicaid recipients were in managed care programs; this percentage will surely grow as the state's counties mature their efforts to herd recipients into such programs. It is now estimated that individuals with traditional indemnity insurance represent less than 7% of all insured individuals in Southern California. At the UCLA Medical Center indemnity patients account for less than 3% of inpatient admissions.

Unfortunately, the rise of managed care has not ameliorated the crisis of the uninsured or underinsured. Approximately 31% of non-senior Southern Californians lack health coverage.2 Programs aimed at addressing this moral dilemma by offering coverage to selected limited elements of the uncovered population invariably use managed care techniques and vehicles to control costs.

Paralleling the growth of managed care has been a consolidation of payers, health plans, physician providers, and hospitals. Through consolidation, the number of major payers in the Los Angeles market place has shrunk from 23 to eight over the decade. Further consolidation of payers is probable. In 1990, there were over 20 HMOs actively pursuing patients in the Los Angeles marketplace. By 1998 six major HMOs in that same marketplace were responsible for 84% of the covered lives (i.e., enrolled individuals). Again, further consolidation of HMOs is not only possible, but probable.

Hospital consolidation was not a prominent part of the health care landscape in Southern California until recently. Early on, Tenet Healthcare Corporation was an active consolidator of hospitals in Southern California, and it presently has 30 health facilities. Columbia/HCA Healthcare Corporation never really took hold in this region. Until recently, Catholic Healthcare West had a modest stake in Southern California. However, with the acquisition of the UniHealth Hospitals in 1998, Catholic Healthcare West now has 12 hospitals in this region. More limited systems have evolved on a regional basis, such as Memorial Health Services in Long Beach, the St. Joseph Health System in Orange County, and the Southern California Healthcare Systems in Pasadena. The recent emergence of Catholic Healthcare West as a significant hospital consolidator may, in fact, fuel continued interest in hospital mergers and acquisitions. Individual hospitals and the smaller systems may feel more threatened and less capable of dealing with the vagaries of the marketplace.

Physician provider consolidation has been an important hallmark in the Southern California marketplace (Table 1). The Southern California Permanente Medical Group, a very large physician organization, has more than 2.3 million enrollees in Southern California. MedPartners, up until its recent failure, was an incredibly important force in Southern California. Its medical groups and independent practitioners' associations (IPAs) also provided care to more than 1.2 million individuals. Even as MedPartners fractured, the groups and IPAs re-emerged as smaller organizations. KPC Global, one of the MedPartners successor organizations, is expected to represent more than 2,800 physicians and care for 834,000 individuals. Numerous other groups and IPAs exist that serve significant numbers of individuals. The totally independent practitioner who does not have a relationship with either a medical group or an IPA has become an endangered if not extinct species in Southern California.

Table 1
Table 1
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The brutality and competitiveness of the marketplace will continue to force consolidation of all elements of the health care system.

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RESPONSE OF THE MEDICAL CENTER

Early in the decade, the leadership at the UCLA Medical Center realized that it would have to negotiate aggressively with an ever-decreasing number of ever-increasingly powerful entities, be they payers, health plans, physicians, or hospital consolidators. Although the medical center had to stay attractive to individual practitioners, more and more patients would come in bulk through contracts, emulating a commodity market. The medical center had to develop an effective negotiating and contracting mechanism to deal with this changing paradigm of patient referral.

The critical institutional response to the consolidation and to the need to act collectively was the development of the Medical Group by the faculty. Although the Medical Group did not represent the emergence of a single practice plan, it did, however, represent the acquiescence of all clinical providers, full-time faculty as well as clinically affiliated faculty, in contractual matters. Through the Medical Group, all of the physician providers and the hospitals that are part of the UCLA Center for Health Sciences negotiate and contract through a single-signature process. The capabilities of the Medical Group to do single-signature contracting avoided the crisis of forging a single practice plan, which the medical school was not prepared to do.

The ability to effectively contract in the evolving marketplace enabled the medical center to compete and led to a rapid growth in the proportion of patients coming to the center on a contracted basis. In 1990, 23% of the medical center's patients came through contracts; by 1999 this proportion had risen to 54% (Figure 1). Clearly, the formation of the Medical Group with the ability to do single-signature contracting was one of the most critical adaptations that allowed the medical center to survive and gave it hope that it could ultimately thrive.

Figure 1
Figure 1
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Commodity markets are very sensitive to the tenets of supply and demand and create intense competition. In Southern California the health care market was not immune to these economic principles. Southern California had and continues to have a substantial oversupply of physicians, in both primary care and subspecialty care, and an oversupply of hospital beds. Given this oversupply of providers and given payer consolidation, patients were moved in bulk through contracts, while price competition emerged quickly and intensified immediately. From 1990 to 1999, the UCLA Medical Center's contract reimbursement percentage declined from a net of 76% to 46% (Figure 2). During this period, hospital charges were essentially stable. Therefore, for the same caseload of patients in 1998, if the institution had been reimbursed at 1990 rates, UCLA would have received an additional $168,000,000 (Figure 2).

Figure 2
Figure 2
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Given the racheting down in reimbursement by the private sector, the necessity of cost containment for survival became evident.

Through an organized program labeled “Operation Excellence,” the medical center's administration and medical staff worked collaboratively to control the cost of care at the institution. The medical center re-engineered its workforce in order to control salary costs. Physicians and staff worked together to minimize supply costs. Of critical importance was the development of guidelines and clinical pathways and the commitment of the faculty to streamline care through process analysis. This collaboration led to dramatic results. The success of clinical process-improvement efforts then and now is dependent on the identification of specific faculty champions and the unqualified support of the department chairs. Champions must be senior clinicians and opinion leaders, not necessarily chairs; usually they volunteer for their roles in this process but sometimes they must be recruited by the hospital administrators or the chief medical officer.

Over the decade of the nineties, the average length of stay at the UCLA Medical Center decreased from 6.7 days to less than six days and is presently approaching 5.8 days. This decrease in length of stay was accomplished while the case-mix index (CMI), which is a measure of the severity of patients' illnesses, dramatically increased from 1.69 (FY1992) to 1.86 (Figure 3). The organizations that contracted with the medical center were clearly sending sicker and sicker patients, and the center had to respond by taking care of these more intensively ill patients in a more efficient manner.

Figure 3
Figure 3
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During the 1990s, the cost per case has actually stayed essentially flat in absolute dollars, meaning that the institution has been able to absorb medical inflation. Over the last half of the decade, the actual cost per case, CMI-adjusted (i.e., severity adjusted) has stayed flat and when adjusted for inflation has actually decreased. The calculated decrease of cost per case, adjusted for severity and inflation over the last four to five years, approximates 14% to 15%. The critical collaboration between faculty and administration to commit to cost containment through process-of-care review was another fundamental factor in protecting the vitality and viability of the health care enterprise at the UCLA Medical Center. Once again, the physician champions for clinical process review and the unqualified support from the clinical chairs were essential to obtaining these results.

In order to be able to achieve this dramatic decrease in the length of stay in the face of increases in the intensity of illness, the medical center had to develop alternative care sites. Another critical factor in the medical center's recent success was the commitment in the early part of the nineties to a major ambulatory care program. Without an appropriate outpatient facility that included outpatient surgical and interventional suites, aggressive pre- and post-inpatient care programs could not have been developed. The commitment to ambulatory care also led to the development of Tiverton House, a hospital—hotel on campus that could be used by both patients and their families.

By the late nineties, the medical center was feeling reasonably confident that it had survived the financial and reimbursement pressures created by the growth of managed care with the attendant downward pressure on reimbursement. Although the center was hoping for a respite from further pressures, this respite never materialized, because new pressures in public-sector funding began compounding the previous demands from the private sector. Like all other health care institutions throughout the country, the medical center fell victim to decreasing reimbursements mandated by the Balanced Budget Act of 1997 (Figure 4) as well as to intensified efforts by the state in implementing managed care MediCal. The effects of the Balanced Budget Act (BBA) have had an immediate and dramatic impact, decreasing reimbursement by approximately $15 milliion in fiscal year 1999. The medical staff and administration at the medical center once again had to intensify their efforts at cost containment. Recognizing that the efforts through Operation Excellence had identified many of the easier targets, additional cost-containment efforts required innovative thinking from both administration and faculty to further streamline operations and patient care processes.

Figure 4
Figure 4
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The fundamental message to the medical center from the BBA and the pressures of continued consolidation in the marketplace was and is that cost containment will always be of paramount importance. If the medical center cannot be appropriately cost-competitive, it cannot survive. We at the medical center have come to understand that the cost differential between it and other providers must, in fact, be minimized or eliminated.

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IMPACT ON THE MEDICAL CENTER

During the early part of the decade, we at the UCLA Medical Center struggled to understand the pressures of an evolving market and to set appropriate strategy. Concurrently, the average daily census (daily inpatient count) also declined and reached a nadir of 357 in 1993. As the medical center implemented aggressive contracting and cost-containment strategies and expanded outpatient activity, the average daily census improved decidedly (Figure 5). By the end of the decade, the average daily census had surpassed any of the peaks of the past. We had been concerned about downsizing at the midpoint of the decade, and at the end of the century we were concerned about the adequacy of the number of beds in our center's system. In 1995, the medical center acquired Santa Monica Hospital as a community partner and incorporated the Neuropsychiatric Hospital, a mental and psychiatric hospital, forming a three-hospital system. Thereby, the UCLA medical center transformed itself from a struggling single-hospital facility in 1994 to a growing system by the end of the decade.

Figure 5
Figure 5
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As inpatient activity grew at a compounded rate of 3-4% annually, ambulatory care activity grew at the compounded rate of 10-15%, again reaffirming the importance of the commitment to robust ambulatory care programs.

The combination of expanding volume and an emphasis on cost containment dramatically improved margins and bottom-line performance. The projected bottom line and net margin for FY 2000 are substantially less than was the case in the previous three years. This decrease in performance anticipated in the budget for FY1999-2000 represents the impact of the BBA on top of all intensified private-sector pressures on reimbursement because of fiscally troubled medical groups and HMOs.

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EFFECT OF CHANGES ON THE QUALITY OF CARE

Considerable national consternation exists concerning the impact of managed care on the quality of health care. Difficulties with administrative issues, such as cumbersome mandatory pre-authorization processes, and clinical concerns, in terms of access to subspecialists, have led to a national effort to define a Patients' Bill of Rights. Physicians at the UCLA Medical Center have also struggled with administrative issues and paperwork created by managed care organizations. Nevertheless, our central concern has been the impact on the actual provision of care by the center, given the reduced average length of stay and lowered costs via the streamlining of the center's clinical processes. Although comprehensive data are not available at this time, we have had the opportunity to evaluate the impacts of our streamlined clinical processes on a number of programs. Below we present the data on three such programs.

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CLOT Team

Physicians at the medical center became concerned that the institution was not fully implementing evidence-based, best-practice strategies in the management of patients who were presenting in the emergency room with chest pains and suspected myocardial infarction. Physicians, nurses, and administrators came together to form the CLOT (Clot Lysis on Time) Team to analyze the processes of care for this population of patients and develop mechanisms to maximize the use of evidence-based best practices. The CLOT Team subsequently went through a process of care review for this patient population and established appropriate decision points and preferred strategies. Using the algorithms and clinical decision trees developed by this team, the time to a definitive decision about care for patients presenting with myocardial infarction—whether that be conservative care such as observation or aggressive care such as thrombolysis therapy or intervention via cardiac catheterization—was significantly decreased. Specifically, from 1993 to 1995, the median time to administer a thrombolytic agent or to arrival in the cath lab was reduced from 146 minutes to 46 minutes. This organized approach also led to a dramatic decrease in utilization of the critical care unit (CCU), with CCU days going from 3.4 in the pre-CLOT period to 2.2 in the post-CLOT period (Table 2). In addition, the average length of stay for these patients decreased from 9.2 days to 4.8 days.3 Clearly, there were economic gains from this process-improvement approach. Much more important, inpatient recurrent ischemia in this patient population decreased from 12% to 2.4%; the in-hospital mortality decreased from 16% to 3.6%. Improved clinical outcomes were more important than the economic savings obtained by process improvement.3 The economic and clinical results have been sustained and even enhanced as members of the CLOT continue to maintain and refine the clinical pathways and decision times.

Table 2
Table 2
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CHAMP Program

Despite scientific evidence that certain secondary preventive therapies can decrease mortality in patients with established coronary artery disease, these therapies were thought to be underutilized at the medical center. Once again, physicians, nurses, and administrators came together to develop approaches and guidelines focused on the initiation and continued use of these evidence-based modalities for this patient population. The Cardiac Hospitalization Atherosclerosis Management Program (CHAMP) was developed to initiate these secondary preventive measures prior to hospital discharge and to reinforce use on an ongoing ambulatory-care basis to improve utilization and, consequently, clinical outcomes. As can be seen from Table 3, aspirin use increased from 78% to 92%; beta blocker use increased from 12% to 61%; nitrate use decreased from 62% to 34%; calcium channel blocker use appropriately decreased from 68% to 12%; ACE inhibitor use increased from 45% to 56%; and statin use increased from 6% to 86%.4 In this patient population compared with a control group, recurring myocardial infarction decreased from 7.8% to 3.1%. The control group patients were a cohort or patients seen just prior to the initiation of the CHAMP program.

Table 3
Table 3
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Once again, a comprehensive clinical approach developed by our clinicians, nurses, and administrators trying to bring into practice the best of evidence-based medicine led to very substantial positive clinical outcomes for these patients and at the same time also decreased the occurrence of secondary major events, thereby decreasing subsequent hospitalizations. Cost efficiency and quality of care were both very positively affected.

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Renal Transplant Program

Renal transplant physicians, nurses, coordinators, and hospital administrators targeted renal transplantation for clinical process review with the hope of increasing efficiency and improving outcomes. A team composed of representatives of the above-named groups studied the critical success factors of renal transplantation and tried to identify the mechanisms that achieve these factors. That analysis revealed that minimizing cold-ischemic time was one of the most critical factors in successful transplantation. Working together, the team members developed processes that decreased cold-ischemic time (CIT) from 28 hours to 17 hours. Concomitant with the decrease in cold-ischemic time was the decrease in the proportion of patients with delayed graft function from 30% to 15% and an increase in graft survival of an additional 2-3%.5. By this and several other process improvements, length of stay decreased and cost per case decreased.

Once again, process-improvement techniques improved care and identified appropriate efficiencies. These improvements in renal transplantation were recognized in the community, and the market share for the medical center's transplant program grew from 14% in 1987 to 29% in 1996; this improved market share has been sustained and has even expanded.

Clearly, these three programs demonstrate that clinical process evaluation not only can achieve economic efficiencies, but is often coupled with improvements in patient care. Additional medical service lines that are heavily affected by managed care are currently being analyzed.

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A GLIMPSE FORWARD: ANTICIPATED PRESSURES AND RESPONSES

To summarize, the lessons we learned at the UCLA Medical Center during the last decade of the century were that

▪ appropriate contracting for access to patients is critical in a highly organized managed care environment,

▪ cost relevance is absolutely necessary and can never be forgotten, and

▪ ambulatory-care and innovative approaches to streamline care are fundamental.

As this new century begins, the medical center is trying to define the critical success factors for the future. A strategic planning process identified three areas of emphasis: (1) a commitment to and demonstration of quality care; (2) development of service standards for all customers, including patients; all providers (including trainees, such as medical students and residents); and payers; and (3) a clear definition of the role of our medical center in the marketplace and an understanding of its anticipated market shares.

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Quality

The UCLA Medical Center's definition of quality has always been predicated on the center's position as the preeminent clinical component of a nationally acclaimed school of medicine. Looking forward, quality will have to be defined much more precisely. The medical center anticipates that it will have to quantitatively define its commitment to the achievement of quality, compiling data on outcomes, complications, satisfaction, quality of life, and other appropriate measures. Every program will have to be able to demonstrate with hard data that it is truly a center of excellence. Reputation will no longer suffice. Large private-sector payers and organized purchasers, such as the Pacific Business Group on Health, are already aggressively evolving tools and techniques to measure quality. Public-sector payers such as the Healthcare Financing Administration and California's MediCal program will probably evolve approaches that reward defined centers of excellence.

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Service

Attention to service levels will be as fundamental to survival in the future as commitment to cost competitiveness has been in the past. Hospitals must be user-friendly to patients and their families. Physicians, while providing excellent service, will also demand excellent service themselves. Scheduling, patient care processes, and data management must be transparent and easy. Likewise, payers will also have to provide exemplary service, and they too will expect equivalent service from health care providers. The interchange of data between payers and providers will have to be fluid and easy, minimizing inconveniences for patients and decreasing paperwork for all parties.

These commitments to quantitative data analysis and to enhanced service in all aspects of interactions with patients, providers, and payers demand that the medical center streamline its business processes and commit to a major upgrade in information systems, in spite of economic constraints caused by reimbursement decreases.

Streamlined business and data management systems will be mandatory for survival. Effective medical management systems that aid providers in maximizing quality while emphasizing efficiency may be the most critical success factors in defining winners of the future.

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Markets and Market Shares
Sources and types of patients

The UCLA Medical Center has always viewed itself as an institution that could attract patients from a distance. It actually does so. One percent of our patients are from other countries, and 5% come from outside Southern California. For the most part, these patients come for marquee programs and practitioners that have added luster to the medical center's reputation as a leading-edge, internationally recognized institution.

However, the overwhelming majority of patients come from Southern California. These patients can be divided into two distinct groups, those who come on a regional basis and those who come from our primary service area. The sizes of these two markets are almost equal. The patients who come on a regional basis (everywhere in Southern California outside the limited primary service area) come to the medical center predominantly for advanced tertiary and quaternary care. These individuals are referred to the center for specific interventions and ultimately return to their community physicians. These patients are important to the medical center's specialists because they participate in the medical center's clinical research and subspecialty training programs. The advanced tertiary and quaternary programs that attract these regional patients are important in defining the medical center's perceived excellence and in achieving recognition for the center as a major driver in translational medicine, the movement of biomedical research findings, and the development of new techniques for bedside patient care.

As our center has formalized its strategies to enhance regional market share, it has come to understand that this regional strategy is dependent upon an appropriate partitioning of patient care. That is, the medical center must support physicians in keeping patients in local hospitals when it is appropriate to do so, and encouraging patients to come to our medical center only when services that these patients require cannot be obtained in a community because of lack of expertise or lack of volume to assure excellence. If physicians from the medical center try to recruit patients who can be appropriately served in the community, they damage their relationships with referring physicians and groups, which has a negative impact on referrals of appropriate patients. (In a future article we will describe these partitioning strategies.)

The importance of the primary service area to the medical center in fulfilling its tripartite missions of service, education, and research surprised many individuals. Prior to the medical center's acquisition of Santa Monica Hospital and the incorporation of the Neuropsychiatric Hospital into the center's present unified three-hospital system, the UCLA Medical Center had approximately a third of its patients coming from its primary service area. Approximately 47% of the patients of this organized three-hospital system come from the primary service area. Geographically, the primary service area extends from Manhattan Beach in the South along the ocean to Malibu in the North and eastward over to West Hollywood and the Culver City area. This geographic area can be easily encompassed by a circle using the UCLA Medical Center as the center that would have a radius of approximately eight miles. Approximately one million people live in this geographic domain.

Individuals from the primary service area tend to come for longitudinal care rather than episodic care. In order to maintain its service commitments to this area, the medical center understood that it would have to become more user-friendly and more available. Consequently, we undertook the task of trying to understand how to serve longitudinal-care patients in the future. Early in the process, the leaders of the medical center understood that longitudinal care requires more than just the commitment to primary care physician practice sites. Efficient and adequate longitudinal care requires the development of an integrated delivery network or system. In a future article we will discuss the critical success factors of an integrated delivery network and the development of the primary care component, which is part of the clinical architecture of the medical center's Integrated Delivery Network (described below).

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Primary care teaching and research

The primary service area and the commitment to longitudinal care are also important to the other missions of the UCLA School of Medicine. The medical school made a commitment through the Isenberg Memorandum to the state that 50% of its trainees will ultimately seek careers in primary care specialties. In order to make primary care attractive and appropriate to the medical students and to its graduate trainees, the medical center and the medical school had to develop appropriate resources: the sites, the mentors, and the role models in primary care. The establishment of the Integrated Delivery Network and the Primary Care Network is the backbone of the long-term commitment for enhancing the visibility and attractiveness of careers in primary care. Twenty-two primary care practice sites were established in the primary service area by recruiting both established internists and family practitioners as well as individuals who had recently finished their training.

These practitioners have extensive clinical care responsibilities but also teach students and residents for about 10-15% of their time. Consequently, the primary care sites have been critical resources for the purpose of exposing our students and residents to real-world primary care. The primary service strategy is also important for the research efforts at the medical center. Being one of the dominant health care providers in the cauldron of managed care that is Los Angeles, the center must be a full participant in and a commentator on change in health care. By exploring approaches and expediting improvement in health care services, the center can provide, through health services research and clinical research, insights to approaches that will have impacts on changes in health care delivery that have national implications. The center must participate aggressively in understanding, influencing, and driving the change process in health care to ensure that the evolving system serves Southern California and, ultimately, the country well.

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Three markets and an inherent difficulty

Thus, the strategic planning process identified three markets that had to be supported: (1) the marquee markets that attract both U.S. and international patients; (2) the regional market that emphasizes advanced quaternary and tertiary care, and (3) the primary service area market that emphasizes longitudinal care. The leadership at the UCLA Medical Center understands that the approaches vis-à-vis community physicians on a regional basis and in the primary service area are diametrically opposed. That is, while the regional strategy seeks cooperation with providers in the community, the primary service area market directly competes with community providers. The leaders at the medical center have to be extremely articulate and explicit in the messages they send about these differences in approach in order to make their interests clear and to minimize skirmishes.

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IMPACT ON THE ACADEMIC MISSIONS

Given the interdependence of the clinical and academic missions, the entire academic health center had to respond to the pressures created by the turbulence in the managed care environment.

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Governance

A governing structure needed to be developed that would (1) ensure effective decision making based on the broad overview of the entire organization, (2) develop clinical and research priorities, and (3) focus educational goals. Ultimately, this governance approach had to assure fiscal integration, responsibility, and accountability, as appropriate. A position of dean/provost for medical sciences was created, which has administrative oversight of the entire enterprise, including the school of medicine, the hospital system, the Medical Group, and the various research institutes.

An important result for our medical center was that this new model of governance permitted allocation or assignment of resources between and among units in order to encourage the development of cutting-edge research programs, appropriate clinical programs, the emergence of a primary care network, and the recruitment of outstanding clinical and research faculty. With the emergence of this model, it was possible to undergo a strategic planning process for the entire enterprise that helped set priorities for programmatic development and research initiatives, as well as to develop educational goals of the medical school: (1) to have 50% of the clinical trainees seek careers in primary care; (2) to train academically oriented specialists; and (3) to develop biomedical scientists who will have the appropriate expertise to be successful in the rapidly evolving field of biologic research.

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Key Programmatic Initiatives

The clinical implications arising from this planning process have been described above. As an outcome of this prioritizing process, ten areas of scientific endeavor and clinical research were identified as key programmatic initiatives.

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Genetics

With the elucidation of the human genome, genetics has not only emerged as one of the key areas of scientific endeavor but will most likely become one of the driving forces behind the clinical practice of medicine in the 21st century and revolutionize therapeutics and preventive medicine. Consequently, a fundamental priority was the development of the Department of Human Genetics as well as the establishment of a gene therapy program. In addition to support from the medical center and the medical school to create the department and program, a philanthropist provided funding for a research building to serve as a site to stimulate interdisciplinary research efforts in this field.

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Neurosciences

Neurosciences were also identified as an area requiring substantial development scientifically and clinically. The linkage between genetics and neurosciences was appreciated, and a new chairperson in psychiatry was recruited who had a particular interest in the molecular biology and genetics of human behavior. A Department of Neurobiology was established and the Brain Research Institute was reorganized under new leadership and provided space in the facility created for the Department of Human Genetics, thereby fully integrating that program with the genetics program. A stem-cell research program was also identified as an area for investment because of its promise for providing novel approaches to diseases of the brain and spinal cord.

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Positron-emission tomography

Because of its ability to simultaneously elucidate and map biologic processes, positron-emission tomography (PET) scanning has substantial promise in the future of biomedical imaging. Given that one of the inventors of PET scanning was already on the faculty, a commitment was made that considerable emphasis and resources would be placed in this research area. Consequently, a facility, the Crump Institute on Biomedical Imaging, was established with medical school, medical center, and phil-anthropic support. PET is being developed as a mechanism for mapping gene function. Interdisciplinary research teams and programs have arisen from this initiative.

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Biomedical engineering

A biomedical engineering program was collaboratively developed by the school of engineering and the school of medicine and an individual was jointly recruited to head that program. Teams of researchers and clinicians have been created; the teams for orthopedics, urology, cardiovascular sciences, and the neurosciences are the most actively involved.

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Organ transplantation

The medical center, which has long been a leader in the field of transplantation, reaffirmed its commitment to this clinical and scientific area. Given the interest in transplantation, a building will be constructed that will house programs in immunology, AIDS, and the biology of organ transplantation, thereby creating synergies for multidisciplinary efforts. In addition to elucidating organ rejection, new approaches will be studied, including the potential genetic altering of organs that would make them immunologically suitable for transplantation.

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Vaccines

Advances in vaccine technology will accrue from the intensive efforts to map the genomes of bacteria and viruses, which will ultimately provide the information about proteins critical for understanding the pathophysiology of bacteria and viruses. New genome-based vaccine technology will hopefully yield vaccines for many infectious diseases, including AIDS, tuberculosis, and malaria, and also provide innovative interventions for treating other diseases, including cancer. We are currently conceptualizing a multipurpose vaccine center that would augment an already-robust clinical trials center at one of our affiliated facilities.

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Geriatrics

An aging population will characterize the 21st century, and lifespans into the 80s and 90s and beyond may become more common, raising a whole host of issues that will have an impact on academic health centers, mandating that they develop expertise in geriatrics and gerontology. We have reconfirmed our commitment to geriatrics, traditionally a strong program at the medical center, and plan to make it an area characterized by true academic and clinical excellence. We also are developing methods to strengthen our Center on Aging.

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Cardiovascular diseases

Still the number-one killer in the United States, cardiovascular diseases comprise an area of continuing emphasis at our institution both clinically and scientifically. We are encouraging a variety of programs, from primary and secondary prevention to implantable devices and research on an artificial heart. The need for coordinated interdisciplinary programs involving various departments in the school of medicine and other schools, such as engineering, is clearly understood. Atherogenesis and the biology of intimal interfaces are areas of recognized emphasis.

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Cancer

The biology and genetics of cancers as well as clinical interventions to treat cancers are and will continue to be a major focus of research at our institution. In order to support translational medicine from tumor biology to clinical trials, we are planning an integrated facility that will bring the lab and clinical research programs under one roof.

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Health services research

Given that our medical center is in a crucible of managed care, health services research and research into evolving health care system are absolute priorities for our center.

Besides prioritizing areas of research, mechanisms have been developed to help identify and support young investigators and create bridges of support for them between research funding cycles or until they can get appropriate stable research funding. Considerable concern has been expressed about the impact of managed care on the ability to sustain the research mission. Through the process of prioritizing and by committing resources, we have been able to overcome the potential negative effects of the managed care environment, as measured by grant support from the National Institutes of Health (NIH) and total research support. NIH funding grew from $136 million in FY97 to $160 million in FY99, while total research support grew from $190 million to $228 million in the same period.

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Educational Programs

In recognition of (1) a perceived imbalance between the supply of primary care physicians and subspecialists and (2) a maldistribution of physicians between urban and rural areas, the state legislature and the governor in 1993 mandated the University of California via a Memorandum of Understanding to develop programs to assure that 50% of the medical students and postgraduate trainees of the UCLA School of Medicine would ultimately pursue careers in primary care. This mandate required the development of appropriate facilities and the recruitment of mentors and role models for primary care, as discussed earlier. The need for primary care teaching sites and large numbers of appropriate clinician—educators was a major driving force in the medical centers' establishment of the primary care network on the west side of Los Angeles.

The medical school and medical center have made tremendous strides in moving towards these mandated goals. In 1995, 48% of our trainees were in primary care programs and in 1999, 63% were in such programs. Therefore, we have come close to fulfilling the intent and goals of the Memorandum of Understanding.

Naturally, questions have been raised as to how advanced managed care marketplaces affect the educational mission of academic medical centers, including our own. We do not have definite quantitative data on this matter. However, thinking through our commitments to primary care education and subspecialty and research training has forced us to be more precise in planning and deploying training programs for students and residents, analogous to how clinical process review has positively affected patient care. We also feel that we are clearer with respect to the educational outcomes that we would like to produce (i.e., generalists, academic specialists, and biomedical scientists). The financial constraints of an advanced marketplace have certainly strained our resource base and forced us to appropriate resources for education more discretely and directly.

The medical center and medical school have also recognized that, given their research prominence, they also have the responsibility for training future medical scientists and clinical investigators. Because of the enhanced competitive environment for research funding, future investigators will have to have exceptional research skills. Consequently, the Department of Medicine conceptualized and supported (with some medical school assistance) the development of the STAR (Specialty Training and Advanced Research) program, which recruits postgraduate trainees into an MD-PhD program. To date, there have been 70 participants from five departments: medicine, surgery, obstetrics and gynecology, family medicine, and ophthalmology. Six participants have graduated from the program, and all six currently have full-time appointments on the academic faculty. Of the six graduates, five are women and two are African American.

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LOOKING BACK TO LOOK FORWARD

As part of the strategic planning process, it was clear that the institution would have to maintain the flexibility that would allow it to adapt to unanticipated changes in the future in an evolving health care system. As we look to the future, we will look back and try to understand the past while always being open to the need for change.

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REFERENCES

1. Health Care Financing Administration (HCFA) Beneficiary Encrypted Files (Market Penetration by Zipcode and Market Penetration by State/County/Plan). Washington, DC: HCFA, June 1998.

2. Schauffler HH, Brown ER, Rice T, McCenamin S, Cubanski J. The State of Health Insurance in California, 1998. Los Angeles, CA: UCLA Center for Health Policy Research, 1999:15. [Available also at 〈http://www.healthpolicy.ucla.edu/publications.html〉.]

3. Fonarow GC. Management of patients with chest pain and unstable angina. Cost and Quality. 1995;2:18–28.

4. Fonarow GC, Gawlinski A, Cardin S, Moughrabi S, Tillisch JI. Improved treatment of cardiovascular disease by implementation of a cardiac hospitalization atherosclerosis management program: CHAMP. Circulation. 1997;96(8):1–67.

5. Rosenthal JT, Danovitch GM, Wilkinson A, Ettenger RB. The high cost of delayed graft function in cadaveric renal transplant. Transplantation. Vol 51:1115, 91.

6. Fogelman AM. Strategies for training generalists and subspecialists. Ann Intern Med. 1994;120:579–83.

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© 2000 Association of American Medical Colleges

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