The Growth Channel

Your AMC's growth is at risk. Secure market share as an academic health system.

by Dick Wright, Senior Advisor, Advisory Board Consulting

You've probably heard this horror story: a top academic medical center (AMC) loses its market-leading position to increasingly consolidated competition.

Why? As competitors join forces, they form large networks that make it difficult for the traditional AMC to protect its market share and patient population.

To avoid the fate of this cautionary tale, AMCs must seek out a new growth strategy, pursuing different relationships and expanded services to compete for payer and consumer attention in today's environment. They'll need to transform into a new form of AMC: the academic health system.

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The modern AMC

Compared with the traditional AMC, the academic health system more aggressively pursues market share. It looks far beyond the tertiary care setting by bolstering primary care capabilities, creating urgent care centers, affiliating with nearby providers, and better aligning disparate entities, to name a few examples. Most importantly, the model academic health system is committed to growth through improving quality, lowering costs, and enhancing the patient experience—at all points of care.

To ensure you make this pivot to functioning as an academic health system successfully, incorporate these two lessons into your growth strategy:

1. Expect and prepare for changing management functions

Whether the best strategy is to merge or spin off, transforming into an academic health system requires centralized management functions that may affect existing relationships at all levels of your organization.

We recently partnered with a regional health system in the South with six hospitals and a school of medicine. This organization had been working over the past several years to assemble a physician network through a combination of acquisitions and recruitment. But the practices were only partially integrated and were running an annual operating investment of over $50 million.

Facing a budget reduction in the university, they needed to consolidate their employed physician practices into an efficient, integrated medical group. In order to unify management functions, funds flow, and physician compensation arrangements, the health system built a new organizational structure governed by an eight-person board of directors. This change in management led to some conflict, but they've overcome this challenge. The board now develops strategic initiatives across the health system, university, and medical group—and supports daily operations at all levels.

2. Take an honest inventory of your system goals and capabilities

As a planner, you've probably asked questions like:

  • Are we well-positioned and what are our deficiencies?
  • Do we have the right strategies in place or should we rethink the plan and the process?
  • Can we do this on our own or should we partner with others to create the system that will ensure long-term success?

Answering any of these questions first requires knowing the goal state of your academic health system. If the vision is to become a destination of choice for primary care, you'll need to ensure that key relationships and infrastructures are in place to support that goal. To pursue a new governance structure, you'll need leadership commitment and buy-in from the right stakeholders to ensure success. And if your goal is to reorient services and access points around the consumer, you must understand what you consumers actually want.

Learn more about the new perspectives and priorities for the modern AMC

Listen to Advisory Board experts discuss strategies for transitioning to an academic health system.

In the presentation, you'll hear examples of health systems that have pivoted from the historical AMC to a new and integrated model; benefits of re-thinking the affiliation between the academic hospital and the employed medical group; and common cultural and operational challenges that arise in pulling together new stakeholders under a common vision

Watch or Download the Presentation