Governance of Teaching Hospitals: Turmoil at Penn and Hopkins

1. Introduction

c h a p t e r o n e Introduction There is a well-worn phrase, so familiar to most observers of American academic medical centers that it has probably reached the status of a cliché: ‘‘If you’ve seen one medical school, you’ve seen one medical school.’’∞ Although it is true that the structure and culture of these institutions vary widely, there is also much that is similar among them. For example, every medical school must relate to a hospital to teach its students and graduate trainees, conduct clinical research, and provide its clinical faculty with the means of practicing their profession. What di√ers, school to school, is the structure of that relationship. The medical school may own the hospital, the hospital may own the medical school, or neither may own the other. The school, through the dean or another senior o≈cer, may control the hospital, or, as is more common, the hospital’s leaders may not report to any o≈cer of the medical school or the university. And then, to complicate matters even further, the states, or, in one case, the federal government, may own the hospital, the medical school, or both. Before describing the events that drove two of our most distinguished academic medical centers, the University of Pennsylvania and Johns Hopkins 2 Governance of Teaching Hospitals University and Hospital, to attempt to change their governance, let me sketch the governmental landscape of all American medical schools and their teaching hospitals. Governance of American Academic Medical Centers Of the 125 American medical schools surveyed for this study (see appendix 1), governments—states in all cases except for the federal Uniformed Services University of the Health Sciences (USUHS)—own 60 percent.≤ Private, notfor -profit corporations own the rest. In only 14 schools, 2 private and 12 stateowned , do the senior o≈cers of the hospitals report to deans. In each of the 14, except at Johns Hopkins for reasons that will be described in chapters 6 and 7, the same entity owns both the hospital and school. The arrangement in which one person heads both the medical school and the principal teaching hospital is seen even less often. In several academic medical centers in which one entity owns both the medical school and the hospital, the dean and the hospital CEO report to a senior university o≈cer.* In the most frequent relationship, however, the medical schools and their principal teaching hospitals are governed by di√erent entities. This arrangement applies to 78 percent of private schools and 61 percent of government-owned schools. In this scenario, no university o≈cer directly controls the teaching hospital. The hospital chief executives hold their jobs at the pleasure of their boards or authorities. Academic o≈cers can exercise some influence o≈cially through elected, ex o≈cio, or legislated seats on hospital boards of trustees and informally through successful working relationships with hospital executives. In recent decades, the governance of many teaching hospitals a≈liated with state-owned schools has changed. Formerly owned by states with their chief executives often responsible to senior medical o≈cers on the campus, these hospitals acquired corporate independence to:≥ — remove themselves from the bureaucracy of state-university ownership with, among other restrictions, its civil service employment policies that are unsuitable for hospitals *Academic medical centers use many titles for their senior medical o≈cers, such as chancellor, vice-chancellor, executive vice-chancellor, president, vice-president, senior vice-president, executive vice-president, provost, vice-provost, and senior vice-provost. Often a phrase such as ‘‘for medical affairs ’’ or ‘‘for health a√airs’’ is appended. Introduction 3 — negotiate more successfully for the purchase of equipment and supplies — improve incentives for collecting money and reducing costs — borrow funds for capital improvements in the private market These conversions occurred in what has been called ‘‘two waves.’’ During the 1970s and 1980s, the hospitals and health systems changed their governance to operate more e≈ciently and e√ectively than state governmental structures allowed. In the 1990s, strategies to assure corporate survival drove the changes as universities tried to prevent current or projected losses from their hospitals and health systems from depleting their resources. Health system expenses often account for half of university budgets. This would become the principal concern motivating the trustees of the University of Pennsylvania to find some way of ejecting their money-losing health system from university...