The University Record, February 21, 2000

U-M health leaders offer an innovative framework for keeping academic medicine viable

By Kara Gavin
Health System Public Relations

U-M, in fact, established the country’s first university-owned hospital in 1869. As early as 1878, all U-M students were required to complete lab instruction in every scientific subject offered, including physiology, anatomy and chemistry. Photo courtesy Bentley Historical Library and the Historical Center for the Health Sciences
Even as medical centers and hospitals around the nation are struggling, merging or even closing, the U-M Health System has a favorable balance sheet, a positive operating margin and plans for new initiatives in research, technology, facilities and patient care.

How can this be possible in an age of managed care, government spending cuts, declining medical school applications, negative stereotypes of university medical centers and increasing demand for high-tech treatments? Only through a coordinated effort among the teaching, research and patient care areas of one of the nation’s largest and oldest academic medical centers.

In an editorial published in this week’s issue of JAMA, top U-M health officials discuss what they have done since 1996 and plan to do in coming years to stay ahead of the turmoil that currently troubles other health care providers in this time of change.

“Instead of viewing our academic missions as costly burdens on patient care, we have reaffirmed our commitment to integrating medical practice with education and research,” says lead author Gilbert S. Omenn, executive vice president for medical affairs and CEO of the Health System. “Today, we are proactively shaping our own destiny.”

Omenn’s co-authors are Allen S. Lichter, dean of the Medical School; Larry Warren, executive director, hospitals and health centers; and President Lee C. Bollinger, who also is chair of the hospital executive board.

“Institutions that can respond to change while remaining focused on service, productivity and market leadership will shape a positive future for academic medicine,” explains Omenn. “We are confident that we will be among those leaders.”

The editorial recounts how the U-M’s health leadership began its course of preventive measures in 1996. At the time, they faced a modest operating deficit, pressure from employers and payers to reduce the average cost for treating a patient, disagreements among hospital and Medical School leaders, constrained funding from the National Institutes of Health due to Congressional cuts, and a lack of facilities where more medical students could be trained as generalists rather than specialists.

But instead of separating the hospital from the rest of the University, or merging with other providers, as other academic medical centers have done in the face of similar challenges, the U-M began to shape its own health care future.

Today, the Health System sees more patients than ever before, maintains a positive financial margin and has reduced its average cost per patient by 20 percent. It also has attracted research support in amounts that make it the ninth largest recipient of NIH funding and help the U-M’s research expenditures amount to the largest in the nation.

Among the innovations, improvements and adjustments:


  • Unification of the clinical practices of 15 Medical School departments into a single Family Group Practice.

  • Integration of the group practice with the University’s three hospitals and 32 suburban and rural health centers to focus attention on the bottom line while at the same time stimulating cooperation between departments in patient care and academic research.

  • Renaming the “Medical Center” the “University of Michigan Health System” to reflect the broad reach of the ambulatory health centers, strategic affiliations with other health care providers and the central role of the Medical School.

  • Use of the Health System’s own 190,000-member M-CARE HMO to train residents in managed care and to make investments in medical management, disease management and pharmacy practices.

    Customer service

  • Adopting a “Putting Patients and Families First” theme that emphasizes empathetic customer service for patients.

  • Implementation of means to measure patient satisfaction, staff productivity, quality and cost-competitiveness. In surveys of patients throughout southeastern Michigan, the U-M Health System consistently ranks high in public perception.

  • Distribution of certain operating surpluses to hospital and health center employees, in a manner tied to patient satisfaction scores.

  • Improvements in communication with referring physicians through toll-free phone service, fax and e-mail so they can follow the progress of their patients in real time.


  • Redesign of clinical procedures and purchasing to improve efficiency and cut costs.

  • Spreading of fixed costs over an increased volume of inpatients and outpatients.

  • Acceptance of input from a broad range of sources, including system engineers from General Motors who helped assess operating room and post-op procedures, ultimately saving more than an hour in cardiac surgery time and eliminating a bed transfer from post-op care. The same team also helped redesign patient flow and layout for the University Hospital’s Emergency Room, now under renovation.

  • Plan for a 4 percent reduction in base spending across every hospital, ambulatory and administrative area adjusted for volume.

  • Development of a new health plan for a major employer, Ford Motor Co., that features disease management programs for major ailments, patient advocates, and the possibility for doctors outside the U-M Health System to participate if they agree to meet guidelines. Partnership Health is exceeding expectations and is being adapted for other employers and patient populations.

    Innovation in education and research

  • Initiation of a Biological Sciences Scholars program to recruit the best young faculty, and a Program in Biomedical Sciences to integrate the education of Ph.D. students across departments and other health-related schools in the University.

  • Founding of a Center for Clinical Investigation and Therapeutics to make clinical research more efficient and centrally coordinated.

  • A major initiative in bioinformatics, an important new field to support research in genetics, structural biology and microbial pathogenesis.

  • Establishment of special funds to support translational research, bridging basic and clinical researchers.

  • Innovative programs in medical education, including increased training in ambulatory care, and selection and mentoring of cohorts of “educational innovators.”

  • Participation in the University’s $200 million Life Sciences Initiative and the state’s $50 million/year, 20-year Life Sciences Research Corridor project, both intended to produce biomedical research results for the future of health care and for Michigan’s economy.