How one academic health center is successfully facing the future

The author maintains that the academic health centers (AHCs) that successfully weather the current vast changes in the health care environment will be stronger institutions. But to survive and prosper in the future, AHCs must come to terms with their entrenched cultures and create new forms of organization that are more flexible, more adaptive, and more agile. Even though each center confronts unique circumstances requiring unique solutions the author describes the changes made during the last six years at his center--the Allegheny Health, Education and Research Foundation (AHERF), in Pittsburgh, Pennsylvania--to show how one AHC is successfully facing change. The central problem facing AHERF (and all AHCs) is that revenues from all traditional sources are declining significantly. AHERF is dealing with the problem in part by actively seeking philanthropic and public funding for research and education. But such funding cannot be relied upon, and for AHERF to stay true to its mission, it must practice the "Three Rs" of modern academic medicine. First, the center is cultivating a more responsive organization. The author describes the organizational structure of the center; the emphasis on providing an environment that unleashes the creativity and productive potential of each employee and fosters teamwork; goals, objectives, and incentives; the way decisions are made; and the way revenue is allocated. Second, productivity must be improved through re-engineering. For example, AHERF oversaw the consolidation of two medical schools into one. The author describes the organizational changes that made the management of the resulting institution possible and cost-effective, and discusses changes in workflow, support functions, the use of information systems, and innovative supplier arrangements. Third, the revenue base must be secured. The author describes four of the main ways this is being done (e.g., the expansion of the center's large network of primary care physicians). The author provides a variety of statistics of AHERF's successes so far (e.g., patient revenues have gone from $500 million in 1989 to $1.3 billion in 1994). He concludes by emphasizing that AHCs cannot wait for outside help but must take their futures into their own hands, beginning now.