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Invited Commentaries

Governance of Academic Medical Centers Is Indeed a Complex and Unique Operation

Guzick, David S. MD, PhD; Wilson, Donald E. MD, MACP

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doi: 10.1097/ACM.0000000000001904
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Abstract

As academic medical centers (AMCs) have extended their operations into their communities, partnered with new organizations, and developed new modes of operation to achieve their missions, new governance approaches are required. In their paper appearing in this issue of Academic Medicine, Chari and colleagues describe the development and application of criteria to evaluate governance options and discuss alternative structures for the governance of the University of California (UC) AMCs.1 The UC has a unique system in which there is state oversight of a number of public AMCs, almost all of which are components of individual UC universities.

Although the analysis of alternative options for the governance of this large, multi-AMC system has limited generalizability due to the unique nature of the UC, the general question of the influence of AMC governance on AMC performance is pertinent to all health systems that are owned, governed, and/or affiliated with universities.

Criteria for Evaluating Governance Structures

Chari and colleagues1 begin their assessment of the UC AMCs’ governance by identifying seven criteria for evaluating governance structures and processes based on a review of the literature and interviews with 23 AMC or health system leaders at the UC and other institutions. Many of the criteria they identify for evaluating alternative governance structures for the UC system might also be applicable to the assessment of governance at individual AMCs. These criteria are (1) timeliness and efficiency of decision making, (2) ability to provide strategic guidance, (3) ability to take advantage of system-level efficiencies, (4) ability to maintain alignment across the triple mission, (5) responsiveness to local (market or community) conditions, (6) expertise (among board members), and (7) feasibility (or the costs and perceived risks of transitioning to a new governance system).

Many of these criteria will have different meanings depending on whether they are applied to the specified governance of an individual AMC or to the overall governance of a system of AMCs. For example, timeliness and efficiency of decision making for a statewide system of AMCs would presumably pertain to broad-based policy issues that would be applied system-wide, while this criterion as applied to an individual AMC might pertain more to policies around local faculty–hospital partnerships, academic tenure criteria, compensation plans, etc. Indeed, the more that a state- or system-wide board gets involved in such local policies, the greater the opportunity for tension and dysfunction. The same issue applies to strategic planning, system-level efficiencies, mission alignment, and the other criteria that Chari and colleagues1 identified.

Governance and Mission Alignment

When assessing the governance of individual AMCs, most of which are not part of a statewide, central governance system, it strikes us that a more individual approach to governance is required—that is, one must step back and first ask about the organization, structure, and goals of the entities to be governed. For example, it is easy to state that success in an AMC will be optimized when the hospital, medical school, faculty practice plan, research enterprise, educational enterprise, and university are fully aligned. However, depending on the organizational structure of the different entities comprising the AMC, the concept of alignment may play out to varying degrees in practice, and the type of governance structure will likely influence the extent of the alignment.

Predominant Governance Structures

The Association of American Medical Colleges Council of Teaching Hospitals and Health Systems represents nearly 400 of the nation’s major teaching hospitals. When one excludes federal hospitals and specialty or children’s hospitals from these, the remaining institutions are evenly split between those that are affiliated with but independent of their associated medical school and those that are integrated with their medical school in terms of common ownership or governance by the parent university.

Linkages Between AMC Component Entities

AMCs are increasingly reaching further into their communities to stabilize their own clinical practices and to achieve their education, research, and health care missions. As such, a robust partnership with their primary hospitals, whether the hospitals are integrated or independent, is becoming increasingly important, since the challenges, obstacles, and desired end points may be similar.

Important Questions to Be Considered in Governance Structure

Individual AMCs have commonality in terms of each having some level of linkage between its university, medical school, and hospital (or hospitals). However, depending on the AMC’s particular combination of factors affecting such linkage, as listed below, it will have unique characteristics that will influence its level of mission alignment.

  • Does the university own the affiliated hospital (or hospitals)?
  • To what extent is the hospital governed by the university in terms of by-laws, board appointments, reserve powers, etc.?
  • Is it stated in the hospital by-laws, and embraced by the hospital board, that the primary role of the hospital is to serve the university’s missions of research, education, and health care service?
  • Does the medical school dean have full authority over the faculty practice plan, with direct reporting of the practice plan director to the dean?
  • If not, what is the status of ownership, governance, and by-laws for the faculty practice plan?
  • Is the faculty practice plan embedded in the hospital, or is it part of a legally distinct health system entity that includes the hospital, the faculty practice plan, and/or the medical school?
  • Is there a single AMC leader (university employee) to whom the hospital chief executive officer (CEO) and medical school dean report?
  • If not, to whom do the hospital CEO and medical school dean report?
  • Is the university-affiliated hospital (whether owned or not) a stand-alone entity or a corporate system with subsidiary hospitals and other health facilities, joint ventures, and other contractual arrangements?
  • Is the medical staff employed by the medical school, the hospital, or some other entity?
  • Is there mutual appreciation of intellectual, as well as financial, capital?

Each AMC will answer these (and other related) questions in a manner that is uniquely its own, depending on its history, culture, and local environment. That is, not only does each question lead to nuanced answers that reflect differences between individual AMCs, even when there are apparent similarities, but from a numerical standpoint, there are a vast number of combinations of answers that are possible. Thus, the development of a successful governance structure will require identifying and appreciating many factors, and the governance structure best suited to one AMC might not be well suited to (or even possible for) another.

For example, in recent decades, some AMCs with the same macro health care environment have gone more in the direction of integration (e.g., University of Rochester, University of Florida, University of Wisconsin, Wake Forest University, Indiana University) while others have evolved to create more separation between the AMC and the parent university (e.g., Vanderbilt University). While there appears to be a trend toward functionally integrating medical schools (and other health science colleges) and hospitals under a single leader where possible, many AMCs have achieved tremendous growth and strength over many years under a partnership or affiliation model between the hospital and medical school (e.g., Harvard University, University of Maryland, Washington University, University of Pittsburgh, Columbia University/Cornell University).

Whether the medical school and hospital are integrated under a single leader or affiliated with one another under partner–leaders, both governance structures can work well. As in many other endeavors, it depends on the people and culture of the institutions. The single leader of an AMC is typically subject to oversight by a university president and a board, but vesting day-to-day and strategic authority over an entire AMC in one individual can play both ways: The right person can be transformational, and the wrong person can be disastrous. Similarly, a medical school dean and hospital CEO can be successful partner–leaders if they share the same values, goals, and leadership styles, but tension between these two leaders can lead to both entities underperforming. More broadly, even when governance structures for new institutional partners are worked out in great detail by experts in the field, a clash of cultures can lead to a speedy and costly divorce (e.g., New York University/Mt. Sinai Health System; Stanford University/University of California, San Francisco; Penn State–Hershey/Geisinger Health System).

In these times of greater frontline competition across all missions, increased community engagement, and enhanced performance expectations, the governance criteria described by Chari and colleagues1 will, we believe, be applicable to a greater or lesser extent to all AMCs. However, to succeed, it is absolutely critical that each AMC examine its governance structure and operational implementation in the context of its particular history, culture, and environment. Additionally, regardless of governance structure, the likelihood of success will, in great part, depend on the personal characteristics of institutional leaders and the strength and spirit of their relationships with each other.

Reference

1. Chari R, O’Hanlon C, Chen P, Leuschner K, Nelson CGoverning academic medical center systems: Evaluating and choosing among alternative governance approaches. Acad Med. 2018;93:192–198.
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