August 29, 2013

Rounds: A message from the Vice Chancellor for Health Affairs

Over the last several weeks, my comments about our cost reduction efforts have been extensive, and as a result, very public.

Dear Colleagues,

Over the last several weeks, my comments about our cost reduction efforts have been extensive, and as a result, very public. Vanderbilt is a family. I believe our sense of community trust should be paramount and demands that we communicate openly and plainly through this process. Through Evolve to Excel (E2E) we are actively engaging hundreds of our people across all mission areas to create more cost-effective ways to perform our missions. In many cases those solutions will require fewer positions. The anxiety this creates as we move forward is something we need to openly discuss as a community. It is part of our challenge, and we should address it “head on.”

Jeff Balser, M.D., Ph.D.

During this historic period in our industry, one the media has labeled a “health care recession,” we cannot deny the feelings we share acknowledging some of our friends and co-workers will leave VUMC in the process. To mitigate the impact on the lives of some our longest-serving employees, we announced an early retirement plan on July 23, and more than 200 people have decided to take this opportunity. In the coming weeks, we will describe ways we will assist and support those departing the organization that will help bridge the transition to new opportunities. Nonetheless, there is and should be a sadness that we hold together as a caring community. Like telling our patients the truth about their illnesses, we express our compassion even as we make very tough decisions that impact people’s lives.

While bearing the grief we experience through loss, other sources of anxiety, natural in periods of radical change, can be alleviated. These are often borne out of uncertainty or fear, and in many cases are not supported by facts.

It feels like this is only happening here? Are we alone in this?

While what we are experiencing at Vanderbilt may “feel local,” it is critical that we recognize the economic pressures forcing these cost reductions are national in scale and scope. The phrase I constantly hear from health care CEOs and deans around the nation is, “there is nowhere to hide.” Medical centers not aggressively working on cost effectiveness will be doing so, perhaps even more urgently, very soon.

In the Southeastern states that have not expanded Medicaid through the Affordable Care Act, hospitals are bearing an added burden related to rising uninsured care costs alongside myriad other factors reducing health care reimbursement, from aging of the population to reductions in payments from both Medicare and commercial insurance. Academic medical centers throughout the Southeast, including Duke and Emory, are messaging to their employees about undertaking significant cost cutting measures, with many articulating specific plans. Louisiana State University just announced it is eliminating 1,500 positions and more than $150 million from its budget, and Wake Forest Baptist has already eliminated 950 positions.

Within Tennessee, the economic warnings surrounding hospital job losses are now becoming a reality. According to the Tennessee Hospital Association, Medicare reimbursements to hospitals across the state will be reduced by $5.6 billion over the next decade. In addition, in 2011 alone, Tennessee’s hospitals provided $2.5 billion in uncompensated care. These are unsustainable losses, and some smaller community hospitals, major employers in their communities, are being forced to close. Although less publicized, layoffs have occurred at other large systems in our Nashville marketplace, and are likely to continue.

The August edition of Becker’s Hospital Review reported that seven of the nine largest for-profit hospital companies were reporting substantial earnings reductions, many despite increases in patient volume. While many of these companies are based in Nashville, their hospitals number in the hundreds and are spread all across the country. A recent review by Investor’s Business Daily reports workforce reduction announcements covering 75 hospital groups in 33 states and the District of Columbia. Since May, the U.S. Bureau for Labor Statistics has reported monthly record-setting nationwide health care job losses.

In the not-for-profit health care sector, it is clear that the magnitude of the revenue reductions transcends national rankings and surpasses the endowment resources of even the most prestigious academic health centers, requiring all institutions to find ways to reduce the cost for delivering services and performing their missions. In June, Barnes-Jewish Healthcare, the major hospital affiliate of Washington University in St. Louis, announced for the first time in the organization’s 20-year history there would be staffing reductions. Chicago’s Northwestern Memorial Hospital, the teaching affiliate for Northwestern University’s Feinberg School of Medicine, began layoffs last year as part of an effort to reduce costs by 25 percent. And UPMC, the highly ranked affiliate of the University of Pittsburgh School of Medicine, just reported its fiscal year 2013 operating margins fell by 50 percent. Unlike the 2008 recession, the causes cited included reductions in state and federal payments. Patient volumes at UPMC, like VUMC, are increasing.

Will VUMC remain a leader in health care, research and education even as it undergoes cost reductions?

The energy, vision and creativity pouring into the E2E strategic planning is affirming. In the coming weeks we will implement a vast number of process improvements that will make the Medical Center not only economically stronger, but operationally stronger. It is important to state clearly that we are doing this work proactively. With your support, our health system has managed unprecedented economic conditions without invading savings or lines of credit, and without reducing our financial commitments for core missions. Rather, we see the future clearly and are moving briskly to assure that we have the resources to move our leadership in health care, research and education forward without interruption. Our progress across all missions has gained national attention, and this impressive momentum must and will continue. It is vital for everyone at VUMC to be reassured this is the case, and to have this perspective.

To drive this point home, I provide below some highlights. We have such remarkable momentum that even a snapshot in time leaves one astounded at the pace of progress.

Our health care programs are achieving extraordinary outcomes for patients, reaching new milestones in service, quality and cutting-edge innovation while also managing record-breaking service volumes in all of our inpatient and outpatient facilities. Through E2E, we will continue to build key programs that assure our market strength and reputation as a local and national destination for health care only grows.

• Vanderbilt University Hospital and the Monroe Carell Jr. Children’s Hospital at Vanderbilt were again named among the nation’s best by U.S. News & World Report. Vanderbilt now has five specialty programs ranked among the nation’s top 10, improving each of the last three years, and remains No. 1 in Tennessee;

• For the ninth consecutive year, we have been named among the nation’s 100 “most-wired” hospitals and health systems for our innovative efforts in biomedical informatics. We also achieved Leapfrog “Top Hospital” designation for both the adult and children’s programs, the most competitive national hospital quality award in the country. This year’s Top Hospital list includes only 67 Top Urban (adult) Hospitals and 12 Top Children’s Hospitals.

• The Vanderbilt Eye Institute was recently chosen as one of 12 sites in the United States to offer the first FDA-approved bionic eye for the treatment of retinitis pigmentosa (RP). RP affects about 1.5 million people worldwide and is the most common cause of inherited blindness in the developed world.

• On July 30, the Vanderbilt Heart and Vascular Institute implanted a ventricular assist device into its 100th patient, making our program among the top 10 in the nation while the number of patients receiving heart transplants at VUMC has also reached an all-time high;

• This summer the organ transplant anti-rejection drug tacrolimus was added to the PREDICT personalized medicine program, the 5th drug where therapy for Vanderbilt patients is informed by their DNA. Since launching in August 2010, PREDICT has genotyped more than 14,000 Vanderbilt patients for 184 different genetic variations and stored this information in the electronic health record to be used at the moment a drug is ordered. Nearly 90 percent of these patients have genetic variations that increase their risk of adverse effects from at least one of the drugs currently screened. Adverse drug reactions cause the death, hospitalization or serious injury of more than 2 million people in the United States each year, including more than 100,000 fatalities, and are among the leading causes of death in the United States.

At VUMC, we train the nation’s next generation of leaders in health care and the biomedical sciences. Our commitment to train the leaders who will solve the problems of health care has never been stronger, and the financial resources mobilized through E2E will assure VUMC increasingly plays this vital role in the nation’s progress. Evidence of recent progress includes:

• The American Medical Association selected the School of Medicine as one of the nation’s 11 top medical schools (among 141) in transforming medical education;

• The School of Medicine’s Curriculum 2.0 has been fully implemented and is a revolutionary approach to educating doctors that transcends the 100-year-old Flexnerian model. We will fully leverage our cutting-edge biomedical informatics and decision-making capability, while giving far greater focus to interdisciplinary practice and a categorical focus on developmental experiences that engender leadership;

• Nearly 400 Vanderbilt University School of Nursing students received their master’s degrees in ceremonies this spring and summer, a record number. In addition, 39 students received either their Doctor of Nursing Practice or Ph.D. degrees this year. Vanderbilt graduate nurses are shaping the future of health care practice locally and across the U.S.

• All 12 of our NIH-funded basic science training grant applications for Ph.D. and postdoctoral research training have been funded this year, in spite of difficult circumstances at NIH. This summer Vanderbilt awarded 66 Ph.D. degrees to an accomplished group of students in VUMC-related departments and programs. We remain one of the very largest centers for education of Ph.D.’s in biomedical science disciplines in the U.S. Our students graduate as accomplished thought leaders, publishing an average of four major papers as a result of their thesis work.

The creativity and perseverance of our faculty and research staff are allowing VUMC to remain among the nation’s leaders in biomedical research. While funding through the National Institutes of Health is declining across the nation, our overall level of sponsored research has remained strong and continues to grow; suggesting market share is shifting to the strongest research-intensive institutions. The ability to make leading-edge discoveries that change reality for patients is a responsibility we take seriously. Efforts through E2E will assure the major resource investments required to continue our leadership role. Some of our most recent achievements include:

• Vanderbilt-Ingram Cancer Center investigators have been selected to receive $1 million in breast cancer research grant funds from Susan G. Komen, the largest nonprofit foundation supporting breast cancer research. These funds will support basic research and clinical trials aimed at identifying new biomarkers that will guide treatment decisions for patients with aggressive forms of breast cancer, further bolstering Vanderbilt-Ingram’s national leadership in personalized cancer treatment that specifically targets the unique features of each patient’s tumor.

• Researchers in our Department of Health Policy discovered that prescribing of “atypical” antipsychotic medications to children and young adults with behavioral problems or mood disorders have a threefold increased risk of developing type 2 diabetes within the first year of taking the drug; the findings have the potential to change prescribing behavior for this major class of drugs in children.

• Melinda Aldrich, Ph.D., MPH, one of our brilliant junior faculty members, has been awarded a prestigious National Institutes of Health Academic Career Award to investigate the genetic secrets behind greater risk of lung cancer among African-Americans compared with other racial and ethnic groups. To date, this represents the largest study of African-Americans with lung cancer;

• Vanderbilt vaccine researchers are using gold nanotechnology to develop a new approach to making vaccines. Nanoparticles are used to deliver many medical treatments in humans, but this is the first time gold has been used on the nanoscale to mimic a virus and produce an immune response.

The remarkable achievements mentioned here are only a small fraction of those that could have been highlighted, and are only from the past few months, during a period where we have been “knee-deep” in the hard work and anxiety of operational change across all missions. The breathtaking nature and scope of these accomplishments should remind us all that we are part of something very special – an institution that is resilient, committed and powerful in its far-reaching impact.

Through the proactive steps we are taking today, we will continue to lead. Our patients, our community and the nation are depending on us.

Jeff Balser, M.D., Ph.D.
Vice Chancellor for Health Affairs
Dean of Vanderbilt University School of Medicine