April 16, 1999

Medical center’s performance outlined at Faculty Meeting

Medical center's performance outlined at Faculty Meeting


Dr. Harry Jacobson gave an update on the medical center's status at this week's Spring Faculty Meeting. (photo by Donna Jones Bailey)

Vanderbilt University Medical Center's 1999 Spring Faculty Meeting did indeed resemble the weather – if you didn't like what you were hearing, all you had to do was wait a few minutes and odds were it would change.

Dubbed the "Weather Report," the meeting in Langford Hall was a chance for VUMC personnel to get an updated forecast from members of the institution's leadership team on where the medical center stands and where it's headed.

Presenting updates were Dr. Harry R. Jacobson, vice chancellor for Health Affairs; Dr. John E. Chapman, dean of the School of Medicine; Dr. John S. Sergent, chief medical officer of Vanderbilt Medical Group; Norman B. Urmy, executive vice president for Clinical Affairs; and Lee E. Limbird, Ph.D., associate vice chancellor for Research.

Certain programs and areas of the institution reported sunny skies and calm winds while others called for mixed clouds with a chance of isolated showers.

Among the highlights were:

o Many of VUMC's individual clinics reported significant increases in patient visits. For example, the Diabetes Center was up 85 percent; Vascular Surgery rose 57 percent; the Voice Center was up 47 percent; CT Surgery was up 42 percent; and Oral Surgery rose 31 percent.

o In August, the Department of Obstetrics and Gynecology began a funds flow pilot project representing a new model for how individual departments could be funded. The project reduces the institution's tax on professional revenue and transfers budgetary responsibility and authority to the individual department. Benefits from improved productivity and efficiency stay with the department, as do deficits resulting from poor productivity and efficiency. Financial data on the experiment were not yet available.

o Admissions to Vanderbilt University Hospital have risen 5.6 percent so far this fiscal year when compared with the same period last year, the largest such increase in two years. Ambulatory visits are up 7.6 percent and visits to the Emergency Department are up 13.4 percent. The ED is up to an all-time high, brought on in part by last year's opening of the Pediatric Emergency Department. Average length of stay remains hovering in the five-day range.

o The charge per discharge – what it costs VUMC to treat each patient – remains high, averaging approximately $9,200, and is rising. This figure is worrisome because, according to officials, the case-mix index of VUH patients, or how acutely ill they are, is not increasing but expenses are. The situation is being addressed through several avenues, including re-contracting with payors and tightening controls over costs.

o The School of Medicine continues to successfully implement suggestions of the Strategic Plan for the Academic Enterprise. The Office of the Dean has slightly restructured with the addition of three Senior Associate Dean positions; for Medical Education; Academic and Administrative Affairs; and Education in the Biomedical Sciences.

o VUMC's research mission also accomplished several important goals so far this year, including the creation of an administrative structure to facilitate research; the success of the Intramural Grants Program; creation of a plan to build additional research space; development of core facilities and research support programs; and the development of an incentive program to reward faculty who garner outstanding extramural funding.

o Space, or more accurately the lack of space, is a pressing issue and will remain one for some time. The goals of the institution's research mission, however, remain the same – to move into the ranks of the nation's top 10 academic health centers by attracting the world's brightest scientific minds, building new knowledge and pursuing research that improves the quality of humankind.

The Spring Faculty Meeting could definitely be called a variable forecast. At an institution as large as VUMC, though, a bit of variability in the weather is expected.

But gathering strength and picking up speed are two storm systems that threaten every single aspect of the medical center's continuing quest to provide the region's highest quality education, patient care and research.

The twin cells looming above VUMC – TennCare and Medicare – hold the potential to have a devastating financial impact in the form of plummeting reimbursement rates for health care services provided to patients covered by the programs.

The rain from TennCare – the state's alternative to Medicaid that provides medical insurance for low-income Tennesseans – has been falling steadily for nearly six years. For the first two years, losses associated with TennCare averaged about $3 million per year. Then, as reimbursement rates plummeted due to the removal of state Disproportionate Share (DSH) payments, losses per year began averaging more than $15 million.

DSH is critical. Across the state, academic medical centers such as VUMC account for only 6 percent of hospitals. They care for 17 percent of all patients yet account for 40 percent of all charity care performed. VUMC, by the way, provides more hospital care under TennCare than any center in Tennessee – averaging more than $40 million per year. That figure is higher than the Med in Memphis and double that of Middle Tennessee hospitals such as Baptist Hospital and Centennial Medical Center.

In previous years, TennCare and its predecessor, Medicaid, gave academic medical centers such as VUMC a disproportionate share of reimbursements to offset the amount of charity care they provided. That practice was halted four years ago, leaving Tennessee as the only state in the country without a vehicle to fairly compensate those who actually do most of the charity care in the state.

The state recently reviewed its own program and the results of the survey came as no surprise in health care circles – TennCare is underfunded by $289 million; providers, including physicians, safety net hospitals such as VUMC and rural hospitals, are woefully underpaid; and continued provider participation is a serious concern, one that threatens the viability of the program.

Through intensive efforts to educate state policy makers, VUMC and Tennessee's other top charity care providers last summer received a one-time lump sum DSH payment. It was small, but it was something, and VUMC officials are working to try to increase the amount this year.

Jacobson offered several paths to a solution aside from reinstating DSH. They include: funding 24-hour eligibility and access; ensuring funding increases flow to providers and not managed care organizations (MCOs); requiring MCOs to contract for essential services; requiring MCOs to contract a complete physician panel; and boosting GME funding by $15 million.

The impact from continuing cuts in Medicare reimbursement – mandated by the 1997 Balanced Budget Amendment and now being implemented – are projected to be equally severe. It's estimated that over the next five years, VUMC will have to absorb the loss of $41 million in reduced Medicare funding.

The impact doesn't stop there. Since the Federal Government assumes that any mistake made while navigating its long and complex set of rules and regulations is due to fraud, as opposed to, say, an honest mistake, the cost of crossing the i's and dotting the t's has risen dramatically.

Two years ago, VUMC's regulatory compliance expenses totaled $1.6 million. Last year they rose to $3.3 million, and the trend is heading anywhere but down.

Why the cuts in Medicare funding? Because federal estimates projected that the Medicare trust fund would go broke in 2008, or in less than nine years. Last month, that "bust" date was revised to 2015, nearly doubling the fund's lifespan in just six months.

The drastic measures, which include slashing funding to providers like VUMC, are no longer necessary, but the budget cuts remain. VUMC officials are working hard to reverse the cuts impress upon federal representatives and officials that the financial crisis in Medicare may be overstated.

Not all of Jacobson's forecast was gloomy. According to a recently commissioned survey, Middle Tennesseans' preference for Vanderbilt has increased 50 percent in two years while Baptist and St. Thomas dropped 10 percent and 5 percent, respectively.

"I have never seen a more challenging time for the providers of health care than right now," Jacobson said. "But I believe we have the people here that can respond to these challenges.

"You all are working hard, evidenced by the increases in clinic activity that have been reported and the other positives reported today. You represent what it will take for Vanderbilt to be a leader in finding solutions. And solutions are needed, because I believe we should all tighten our seatbelts because I think we are in for a period of significant stress.

"It won't be easy, and it won't be quick, but once we get through these challenging times, we will be in good shape," Jacobson said.