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The treatment center: a model for competitive clinical practice.

The Treatment Center: A Model for Competitive Clinical Practice

The treatment center model described in this article was developed with the intent of providing a high technology practice environment that would attract patients to an academic center for their medical care. It was also intended to create an environment that would result in the retention of the best clinicians within the academic framework. Appropriate goals and incentives had to be determined by both the hospital and the professional groups involved. Many preconceived ideas regarding traditional academic structures needed to be revised to implement this program.

Competition for dwindling health care dollars presents significant challenges and opportunities to traditional academic medical centers. Often laissez-faire involvement in clinical practice and service at academic medical centers is being replaced by an intense desire to be more competitive. This requires the provision of hospital and professional services competitive with those available from other provider organizations in the center's community.

Conventional Patterns

The traditional role of the academic center medical staff has been based on the triad of research, teaching, and patient care. The reward system has long favored the researcher in terms of stature, rank, and power. "Career" clinicians were rarely in primary leadership positions at the major teaching hospitals. Changes in medical leadership and direction at university hospitals are usually based on academic considerations, with criteria of publication and federal and other research dollars serving as qualifications in the most senior research, administrative and clinical positions. Clinicians have not had career success in the major academic institutions beyond the associate professor level. Thereafter, even the most astute clinician with the largest practice would be hard pressed to remain on the full-time staff. Comparatively poor compensation levels, job insecurity associated with cyclical changes in academic leadership, and the traditional tenure and promotion system have resulted in this situation. Successful clinicians are frequently lost, taking their practices to competing institutions or practices. Significant fees from departmental practices as well as hospital revenues are immediately lost. Recent graduates of training programs are readily recruited in these situations (for short periods), but they have an increasingly difficult task building practices in severely competitive markets.

Impact on Market

The perception of patient care services at university hospitals varies with geographic location and prevailing alternate sources of secondary and tertiary care. In areas where the university center is the sole provider of advanced services in the community, these issues might be of lesser consequence. This situation is becoming increasingly rare, however. In general, community hospitals, using highly trained specialists in private practice who do not have access to the academic medical center, are capable of competing for health care dollars. Despite a notion to the contrary within academia, the academic medical center has not been viewed in the community as having a monopoly on high-quality care. On the contrary, the perception of the academic medical center by the referring medical community and the increasingly sophisticated lay community may be of a "teaching environment" where care is complicated by the presence of "time-consuming and clumsy trainees." In addition, the specialists at these facilities are often perceived as being inaccessible and frequently unavailable. Patients may frequently find much of their care entrusted to residents. Physical plants at many academic medical centers may also be overshadowed in elegance and convenience by nonteaching facilities in the community. These perceived disadvantages may mask the real benefits of the academic medical center--the highest quality services and the most sophisticated medical staffs. The training program environment in fact provides the most ideal environment to care for seriously ill and complex patients.

Problem and Solution

University Hospitals of Cleveland (UHC) is an 850-bed hospital that is the primary teaching facility for Case Western Reserve University School of Medicine (CWRU). The institutions are private and governed by independent boards of trustees. However, this does not detract from a close affiliation in terms of physical plant, a shared faculty, and multiple areas of cooperation and mutual support. The professional staff at University Hospitals is organized into departments under chairmen appointed through the School of Medicine. Members of the professional staff of the hospital are considered "employees" of the medical school. This is irrespective of their sources of income, which may be solely from hospital and practice sources. Each professional department has an independent practice corporation with independent systems of billing and collection. Clinical practice, particularly in the nonsurgical disciplines, has, with some exceptions, been considered the least important obligation a staff member has had to fulfill. No unique provision has been made for the clinician building a practice in a primarily research environment. Packaging of programs requiring both hospital and physician services has been rendered more difficult by the multiple independent entities that constitute the complete health care package offered by the two organizations. This system is not uncommon at private institutions around the country. In the case of the Pulmonary Division, considerable research strength existed, including the second largest amount of National Institutes of Health funding for pulmonary medicine in the country. A clinical practice in pulmonary medicine had been developed by a few clinicians who had been successful on a relatively small scale because of their own reputations and expertise. However, a practice environment was lacking that permitted consolidation of professional (clinician and research) and hospital resources to optimize the impact of the practice in the local and regional market. An attitude was also lacking for the retention of successful clinicians. University Hospitals of Cleveland and the academic Department of Medicine have established a model for clinical practice using the Pulmonary Division as the prototype. This model puts responsibility for management of the clinical pulmonary practice in the hands of the clinicians to a greater extent than is the case in possibly any equivalent environment in the country.

Structure of the Center

The Pulmonary Treatment Center was established as a joint hospital-departmental venture. A new for-profit professional corporate structure owned and administered by the hospital was established (University Treatment Centers, Inc.) to accommodate the professional practice. The Chairman of the Department of Medicine is responsible for all issues related to professional practice in the Center. The trustees of the corporation include the Chairman of the Department of Medicine and the President (Chief Executive Officer) and the Chief of Staff of the hospital. A hospital management center (Integrated Health Systems) serves as the operating base for the practice corporation. The practice was capitalized by the hospital subsidiary, including the necessary capital equipment, leasehold improvements, and personnel costs. These capital costs are being amortized and depreciated appropriately. Practice revenues are used to cover the costs of salaries, rent, utilities, billing services, equipment and medical supplies, and a six percent of net revenue management charge. The annual net profit is designated for the Department of Medicine. The department thus has riskless participation in the development of a profitable clinical activity that encompasses high technology services likely to be profitable.

Medical Staff Organization

The practice is based on a core of clinicians who spend the majority of their time in clinical practice. Their salaries are paid by the corporation to the department of medicine on the basis of the percentage of their time allocated to patient care activities. This includes secretarial support and all fringe benefits. These physicians are fulltime members of the academic department even though their clinical activities stem from a distinct corporation. The clinicians are organized into a tightly knit clinical practice and together make the major decisions regarding the daily administrative issues in the Center. They provide 24-hour coverage, have busy office practices, and assume responsibility for patients who are admitted to hospitals. Full-time clinicians are given full responsibility for managing the practice, which increases their involvement and degree of responsibility within an "institutional" model. Other members of the Pulmonary Division are involved primarily in research activity but still conduct their limited clinical work within the framework of the Treatment Center. All billing and other administrative matters for these physicians are conducted via the Center. The goals of the clinicians are clearly different from those of the research-oriented members of the division. The physicians who are based predominantly in research concentrate their limited clinical consultation on their specific areas of expertise, e.g., allergic disorders, sleep apnea, immunological disease, respiratory muscle function, and respiratory control. They bring to the Center unusually sophisticated expertise that can be exploited by the active clinicians and other health professionals.

The Medical Director

The Medical Director of the Treatment Center reports to the Chairman of Medicine on all professional issues. The director is entrusted with developmental, administrative, and fiscal responsibility for the Center and is required to be actively involved in the clinical practice of the Center. The role of the Medical Director includes the hiring of allied health professionals, budget determination, and monitoring of practice revenues. The relative operational independence accorded to the Center is perhaps its most distinctive characteristic. The Medical Director is required to work closely with the Director of the Pulmonary Division of the Department of Medicine at University Hospitals.


A concept of individual accountability has been established by the Chairman of Medicine, with compensation linked to individual productivity. A flexible additional compensation allows for an individualized incentive system. In the Cleveland environment, these clinicians will not be awarded tenure at the University, but it is anticipated that the favorable practice conditions and the ability to manage their own work environment will create a pathway capable of retaining outstanding clinicians.


The physical facilities are largely in the ambulatory setting. The Center does, however, function as the clinical arm of the Pulmonary Division for both inpatient and ambulatory care. The Center emphasizes a high technology orientation that is greatly enhanced by its affiliation with the academic medical center. It has a full capability bronchoscopy suite (hospital-based but run by Center personnel). Advanced pulmonary function equipment, including cardiopulmonary exercise testing, arterial blood gases, bronchoprovocation, evaluation of lung mechanics, respiratory muscle function, respiratory control, and impedance plethysmography, are all available in the ambulatory practice. These capabilities greatly enhance the potential profitability for the group. A radiology suite, including a CT scanner, and a laboratory facility immediately adjacent to the Treatment Center add to the full service character of the facility. A limited number of pharmaceuticals and inhalation devices are also sold at discount prices for patients. Home oxygen and other home care services are provided by the hospital's home care agency. New ventures currently being undertaken include computer networking of pulmonary function testing equipment at multiple sites.

Support Staff

The practice dynamics encouraged within the Center have emphasized a team approach to health care. Cross-training among respiratory therapists, nurses, exercise physiologists, and cardiopulmonary technicians facilitates optimal utilization of staff, equipment, and space. A collegial relationship has been nurtured between the physicians and the non-MD staff. The horizontal management style permits greater participation and involvement of the non-MD staff, which is critical to the development of a "Center" philosophy and work ethic. Emphasis is placed on innovation beneficial to patient care and practice profitability. The same emphasis exists for salary allocations.

Our Experience

The Treatment Center model has been highly successful in establishing full-time clinical practice as an acceptable and vital component of an academic department. The group practice framework has been utilized to develop work rules and guidelines for billing, cross-coverage, and quality control. There has been an effort to achieve consensus within the group on practice issues, which would traditionally have been achieved by fiat at a departmental or divisional level. Professional involvement within the Treatment Center environment has fostered a cooperative spirit that has resulted in innovation and commitment. The volume of new patients presenting and being referred for diagnosis and treatment has increased threefold in the first year of operation of the Treatment Center. Revenues have more than tripled from previous levels of activity in the specialty. The number of admissions to the hospital for patients with pulmonary disease has also increased. The payer mix is favorable, and the referral base has extended to a considerably wider geographic area. After the first year of operation, the center was in a positive cash flow position despite significant capitalization and other start-up costs. The Department of Medicine realized its first net profit after 18 months, having had no cash investment in the project. The most current data suggest a doubling of that profit for the current year. A satellite of the Treatment Center opened in a suburban location in January 1989. It should be noted that the Center has not moved away from the mission of University Hospitals in providing health care to all, irrespective of economic class. All referrals are accepted in the Center for consultation. The attractiveness of the environment to a favorable payer mix makes this possible. The two cooperating groups in the venture, the academic department and the hospital, have seen the benefit from this joint venture. We have developed a highly competitive clinical practice with a degree of sophistication perhaps only possible in a university environment while satisfying the needs of the health care market and the parent hospital. The success of this parallel operational entity emphasizes the need to redefine clinical practice for academic medicine. Clearly differentiated roles for clinicians in academic health centers will be essential if the academic clinical base is to survive in the new health care environment. This may require a redefinition of existing faculty and departmental concepts at many major academic medical centers.

References [1]Cohen, D., and others. "Academic Group Practice: The Patient's Perspective." Medical Care 24(11): 990-8, Nov. 1986. [2]Cohen, D., and others. "Academic Group Practice: The Physician's View." Medical Care 25(8): 686-94, Aug. 1987. [3]Fein, U., and others. "Hospital Based Group Practice: Does It Change Clinical Patterns of Care." Journal of General Internal Medicine 2(1):11-9, Jan.-Feb. 1987.

Michael L. Nochomovitz, MD, is Medical Director, Pulmonary Treatment Center, and Medical Director, Integrated Health Systems, University Hospitals, Cleveland, Ohio.
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Article Details
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Author:Nochomovitz, Michael L.
Publication:Physician Executive
Date:Nov 1, 1989
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