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Clinical Enterprise Subcommittee Home
Jan 30Minutes

Clinical Enterprise Strategic Plan Subcommittee
Preliminary Discussion Draft
January 30, 2003

1. Our Purpose: Mission, Vision, and ValuesI OUR PURPOSE: MISSION, VISION, AND VALUES

It is our Mission to use the strength, creativity and intellect of our integrated scientific community to advance the care of Kentuckians through excellence and innovation in health care, research and education. Our Vision is to solve the health care problems of Kentucky through an innovative, focused and interdisciplinary approach leading to national and international recognition. In advancing our purpose, we must refocus on our commitments to our Values of Discovery in our research, Preparedness in our education, and Care excellence in our clinical work.

In these pursuits, it is our intent to achieve greater levels of recognition among the nation’s top tier of public academic clinical enterprises, thereby contributing to enhanced levels of recognition for the University of Kentucky.

2. OUR SITUATION: MARKET AND PROSPECTS

Four key assumptions and one key conclusion underpin our proposed initiatives for the clinical enterprise.

Assumption #1: We expect a modest growth in demand for our ambulatory and acute care services in the Greater Lexington market, and a smaller degree of growth from the broader outstate region. As an academic center, our greatest opportunities for clinical growth and distinction reside in the complex higher acuity services in the largest areas of need for Kentuckians: cardiovascular disease, cancers (e.g., lung, breast), stroke, and musculoskeletal disease.

Assumption #2: We expect a very difficult financial environment, with payment for our services coming under major reduction pressure on the federal (Medicare), state (Medicaid), and local (commercial) levels. In addition to reductions in all of our “insured” populations, we expect dramatic growth in the uninsured as greater numbers of Kentuckians lose their health care coverage. Finally, we do not expect increases – and may in fact have decreases -- in direct funding we receive from the Commonwealth of Kentucky and the University proper.

Assumption #3: We expect escalating levels of competition for insured patients from our larger local “community” hospitals – Central Baptist, St. Joseph – both of whom are as large and sophisticated as our own clinical enterprise, and both of whom can provide generally higher levels of patient service quality at lower costs. Our trend of losing market share to these institutions must be reversed or our rapidly dwindling capacity to provide services at quality volume thresholds and our financial wherewithal to sustain our enterprise will be exacerbated.

Assumption #4: We expect to have to replace our aging facilities over the balance of the decade, and further expect to have to finance such replacements with our own resources. Our current levels of retained capital in the hospital and medical school, and the projected profitability of the same, are insufficient to generate the necessary $500 million to accomplish this, requiring we receive additional funding and/or improve our profitability and access to debt capital.

Conclusion: Within this environment, our clinical enterprise is not positioned to be the leader in Lexington, let alone the nation. No significant forward progress will be possible without bold and sweeping changes in our strategy, culture and organizational structure creating a more responsive clinical enterprise to attract and retain our patients, physicians and staff.

3. OUR RECOMMENDATIONS: STRATEGIC GOALS AND INITIATIVES

Our successful pursuit of the recommended Mission and Vision, resulting in advancement of UK’s clinical enterprise and national recognition of the same, requires we adopt and vigorously implement the following four (4) core recommendations.

Recommendation #1: We must complete an initial and ongoing “top-to-bottom” prioritization process(s) to confirm these areas of emphasis and better understand our areas of weakness. Such a process(s) must be rooted in established criteria, and these must support the advancement of clinical excellence and sustainability within the context of our Mission and Vision. We further recommend the following criteria -- both quantitative and qualitative -- be adopted to guide this process. These criteria are not assumed equal, nor do we expect any given priority program that is identified to meet all of them at equivalent levels:

• Market demand and growth, particularly in those disease areas impacting the health of Kentuckians;
• Clinical areas providing UK with the greatest opportunities for national recognition and preeminence;
• Clinical program elements with the best prospects of not only sustainable reimbursement for our faculty and hospital, but offering opportunities for us to strengthen our mutually beneficial bottom-line earnings capability;
• Competitively attractive programmatic areas, where we can expect reasonable prospects of success both locally and regionally;
• Clinical areas in which we can expect to produce a high quality proposition, e.g. where we can develop the necessary volumes, do so at affordable levels of investment, etc., and;
• Clinical areas core to our educational and research mandates, which cannot be otherwise provided more effectively via external clinical partnerships.

This process must convene immediately and be completed in short order such that recruiting, development, and budgeting decisions can be informed in a timely fashion.

Success metrics: Definition and completion of the initial process by September 2003, with prioritization of all major clinical program elements with recommendations for the disposition of each.

Responsibility: Faculty leadership group (similar to the “Faculty Vision Group”) to develop criteria, complete assessment and make recommendations to the EVP and/or leadership of the Colleges and Hospital for approval and endorsement by the University.

Recommendation #2: We must (re)focus our resources into those identified (per Recommendations #1) clinical program elements where excellent and sustainable results are possible. This does not necessarily imply the elimination of clinical program elements, but such outcomes should not be ruled out in those areas proving to be neither sustainable nor essential to our educational mission. The majority of leading public clinical enterprises does not provide a full spectrum of clinical programs, nor do they have the financial resources to do so. Those program elements not provided directly are made available through provider partnerships and alternative delivery networks. In select cases, external industry partnerships may also support the continued or initial provision of services otherwise unsustainable. UK is hardly an exception to this reality, and if we wish to advance our organization and our results, we must pursue vigorous redirection of our current “do it all” strategy. Related to this, we must also consider alternative organizing approaches, e.g., service lines, to support the advancement of this strategy breaking down historical barriers, capitalizing on our unique educational and research resources, and promoting interdisciplinary potential to achieve our program objectives.

Success metrics: Confirmation of 4-6 target programs by September 2003; completion of 2-3 business plans for implementation in FY 2004 and an additional 2-3 plans for implementation in FY2005.

Responsibility: EVP, faculty and leadership of the Colleges and Hospital.

Recommendation #3: Our resource focus must include those disease areas where UK can bring large and excellent programs to the fore: cardiovascular, cancer, neuro, musculoskeletal and high-technology interventional and diagnostic work. These are not only among those recognized as afflicting significant numbers of Kentuckians, but also represent areas in which sophisticated academic centers such as UK can best apply our academic advantages. It is worth noting that not a major academic center in the country has achieved their standing without exceptional services in these areas – not a one. A clinical area such as cardiovascular is the financial cornerstone at leading teaching hospitals and their relevant academic counterpart departments across the country, and also plays a comparable role at UK, current unrealized potential notwithstanding. Focus in such areas does not imply we will provide every single programmatic element possible, only that a significant and successful service is critical to accomplishing our defined task.

Success metrics: Confirmation of specific priorities consistent with Recommendation #2 by Fall 2003, and completion and implementation of successful supporting business, recruitment, and facility redevelopment plans by the first quarter of 2004.

Responsibility: EVP, faculty, and leadership of the Colleges and Hospital.

Recommendation #4: We must redevelop our clinical facilities and capacity such that our ability to attract our “fair share” of, and balance, all patient reimbursement sectors -- Medicare, Medicaid, Commercial, Uninsured -- is enhanced. Currently, we are less competitive for commercial patients and less competitive for Medicare patients. Neither is sustainable or desirable. On the flip side, we serve a heavily disproportionate share of Medicaid and Uninsured populations. Our current share of this is not financially sustainable without greater participation from the region’s other not-for-profit hospitals who have comparable missions to take care of Kentuckians regardless of their ability to pay. To enable a sustainable re-balancing of our clinical business at UK, we recommend redefining our faculty, staff, and facility capacities over the short term to levels we conclude are financially sustainable. We recommend evaluating redevelopment of our hospital and faculty practice, or elements thereof, at alternative locations conducive to successfully attracting a more balanced mix of patients.

Success metrics: Strategic facility direction, feasibility, and site planning to be completed in FY2004; financing plan concurrently underway to be completed in the first half of FY2005; programming and design and development to be completed through FY2005; and construction FY2006-FY2008.

Responsibility: EVP, supported by the faculty and leadership of the Colleges and Hospital, and endorsed by the leadership of the University.

Implementation of the preceding recommendations in the targeted timeframes implies an organizational agility not currently in place within the Medical Center. We recognize the level of collaboration, responsiveness, and progressive change to advance these initiatives is extraordinary -- and necessary. It is our collective sense such a plan cannot be advanced within our current organizations.

In order to achieve what we have set forth in our Mission and Vision, we must consider how we might recreate our organizations and culture in support of our future delivery system. Our existing and historical structures, practices and relationships at every level are proving insufficient to advance our strategic objectives. Recognizing the inherent complexity of the Medical Center and University organizations, the diversity of the institutions, and their unique individual and collective needs, organizational and cultural change of the necessary magnitude is a momentous undertaking. Many of the nation’s leading centers have or are in the process of undergoing some level of transformation. In such institutions, it is essential to have the understanding, support, and input of the major stakeholders, e.g., line faculty, students, etc.; however, it is ultimately leadership’s responsibility to set the tone for change. We recommend a systemic evaluation of our transitioning organizations, identifying how our proposed strategic needs will be met and the implications for our proposed plan.