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
4/8/2015
1
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
1. Fully integrated model – education, research, and clinical functions report
thru university leadership and university board of trustees
2. 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
Academic Health System:
Benefits of Alignment
Increased patient
referrals, clinical faculty,
improved outcomes &
overall success of clinical
enterprise.
Investment of clinical
practice &
health system income
in academic enterprise
Improved structure &
visibility for clinical &
research enterprises &
for the academic health
system as a whole.
Increased research
productivity,
technology transfer,
leverage to external
support.
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
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)
Indiana not-for-profit
501 (c)(3)
IU Health
Hospitals
(18 statewide)
IU Health
Physicians
(IUHP)
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
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 state’s only comprehensive children’s
hospital
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
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.
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