December 15, 2000

Jacobson outlines five-year plan

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Norman Urmy addresses the crowd at the capital plan meeting as Dr. Harry Jacobson listens. (photo by Dana Johnson)

Jacobson outlines five-year plan

by Jon Coomer

Increased volumes, efficiency, research, and philanthropic gifts are all necessary to help Vanderbilt University Medical Center reach a five-year capital goal, Dr. Harry R. Jacobson told department heads Tuesday morning at the Senior Clinical Leadership meeting

Jacobson, vice chancellor for Health Affairs, stressed that the medical center must build upon its strengths and focus on working as a team to continue its tradition of excellence and ensure financial security.

“The improvements needed to meet these goals will require us to do business in new ways from improving access to reducing variability,” he said.

“There is nothing more important to reaching our goals than making sure we all share them,” Jacobson said. “We are all in the same boat. Real progress is made only if we are pulling the oars in the same direction.”

The key components of the plan are:

•Investing in innovation and research. “It is not only our mission but also our competitive advantage,” Jacobson said.

•Hiring faculty on the cutting edge of their discipline who attract research grants.

•Increasing volumes and improving clinical earnings.

“We can make up for lots of rough edges if we can maintain volumes that offer us a positive margin,” he said. “We must invest in those things that improve volume. Whether it is expanded clinical facilities, more clinicians or simply marketing, we must do everything we can to fully utilize our capacity.”

Jacobson urged all faculty members to work as a team to help achieve the goal.

“The only approach that will be effective in the long run is for us to run the best medical center we can as a business,” he said. “Running a successful business means being efficient. It means generating and accommodating high volumes and it means investing in innovation and development.

He focused of financial resources: “First, it is important in and of itself. Second, for all its flaws, money can be an excellent scoring system for certain aspects of our operation. Finally, I agree that it is too narrow a measure to be sufficient in itself. We are all pushing for a more balanced scorecard that helps us display and interpret a broader sweep of indicators about how we are doing.”

Bret Perisho, director of Finance Strategic Business Development, outlined the specifics of the five-year, $1.1 billion plan.

The goals include: $339 million from existing debt and expected philanthropic gifts; $552 million operating cash flow for fiscal years 2001-2005; and $250 million in additional debt capacity. If these projections are realized, Vanderbilt will mark a $42 million gain in net cash flow.

The plan calls for significant improvements in VUMC’s annual operating cash flow to fund current capital commitments (the Children’s hospital and MRB III).

Academic and research enterprise growth will continue to need operating support from the clinical enterprise; however, enhanced funding levels and productivity for these activities could reduce future support requirements.

“We have huge challenges here,” said Norman B. Urmy, executive vice president for Clinical Affairs. “But they are achievable when we break them down and use the money wisely.”