Hopkins embraces the market ethic

June 25, 1995|By David Folkenflik and John Fairhall | David Folkenflik and John Fairhall,Sun Staff Writers

From now on, Johns Hopkins means business.

Hopkins' survival as a successful research and educational institution depends upon its success as a commercial enterprise.

This tricky balancing act is the impetus behind a major organizational reform announced last week by trustees.

"I am most explicit about the success of Johns Hopkins Medicine as a commercial enterprise, as a health care delivery operation," said Morris W. Offit, chairman of the university board of trustees.

The trustees' action is a strong endorsement of the marketplace mind-set of Hopkins Hospital and Health System President James A. Block. It is also a culture shock for many School of Medicine doctors and scientists, who have traditionally seen themselves as above the business fray.

Relentless pressure from health insurers and competition with other hospitals are forcing Hopkins to change.

Trustees envision a medical center without walls, stripped of divisions between hospital and medical school. Satellite clinics will sprout throughout the region, bringing Hopkins medicine to patients who live far from Baltimore.

It won't just be renowned specialists performing transplants, but an expanded cast that includes family doctors relieving sore throats. Doctors will be as likely to be appointed professors at the medical school for their ability to treat patients as for their scholarship.

This business strategy could dilute the research concentration of the medical school faculty, as some Hopkins doctors fear. But Hopkins trustees and officials said this approach is the only way to pay for the operation of the medical school.

From the trustees' perspective, there's no better person to oversee Hopkins medicine now than Dr. Daniel Nathans, acting president of the university and an ardent supporter of reform.

This Nobel-winning scientist will head the new governing organization created by the trustees to streamline business-related decision making, unify the often conflicting hospital and School of Medicine and bring together in a single office the men who lead them, Dr. Block and Dr. Michael E. Johns, dean of the school.

Dr. Nathans' sterling credentials as a research scientist, a Nobel prize in 1978 for his work on mapping DNA, and his more than 30-year Hopkins career give him immediate credibility with the doctors and scientists whose cooperation is essential to Hopkins' business ventures.

The unyielding demands of health maintenance organizations for cheaper medicine, combined with proposals for deep cuts in government support of medical research, is driving some high-cost academic medical centers toward financial ruin.

But Hopkins is not in the precarious financial condition of some centers. And, under Dr. Block, who became president in 1992, Hopkins has a plan for the future.

Fresh measures

Hopkins must improve its ability to control costs, expand into the suburbs and forge links with other hospitals and doctors, he believes. Just last week, Hopkins and Hopkins' Bayview Medical Center formed an alliance with seven other hospitals from Anne Arundel to Carroll and Harford counties, the largest such network in Maryland.

A "re-engineering" program to make Hopkins more efficient already is paying off, Dr. Block asserts in a June progress report dubbed "A New Role for a New Age." Examples include:

* Cutting $21 million in hospital operating costs.

* Reducing the cost of coronary artery bypass grafts from $24,000 to $18,000 and decreasing the average length of stay in the hospital from 10 to fewer than seven days.

* Lowering the cost of kidney transplant surgery from $80,000 to $50,000.

But Dr. Block's most ambitious effort requires additional spending and is provoking the most internal controversy: development of a Hopkins-run health system that ultimately will reach into neighboring states.

When the system is complete, it will join hundreds of community doctors and several satellite centers, like the new one at Greenspring Station in Lutherville, with Hopkins' facilities in Baltimore and its 1,000-member physician faculty.

With this system, Hopkins hopes to win more HMO contracts, thus securing more patients and more revenue.

Extending reach

This effort rankles some faculty physicians who question spending big sums of money to recruit the community doctors needed to extend Hopkins' reach outside the inner city.

Some doctors have expressed particular concern over Hopkins'

negotiations to acquire a 60-doctor Towson medical group -- which could cost as much as $23 million.

Investing so heavily in a health system, with no guarantee of success, might seem risky for an institution that's currently profitable. But danger lurks in a health system in which HMOs increasingly control the flow of patients and determine which hospitals they enter.

Academic health centers like Hopkins face competitive disadvantages because they bear the burden of teaching costs and big charity-care loads. HMOs warn that Hopkins Hospital is too pricey for many procedures.

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