Academic medical center M&A may compromise research focus

Academic medical centers may lose focus on their research when they merge with nonacademic providers, according to a new published in JAMA.

Many academic medical centers have joined forces with larger systems to attain economies of scale, purchasing power and leverage with payers as they face tougher times. Academic facilities have seen cuts to government funding for research, growing expenses for research and teaching, and dwindling Medicaid and Medicare reimbursement, which often cover a large portion of their patients.

But partnering with for-profit or nonacademic health systems comes with its own problems. The centers' investigative work may become a lower priority as academic researchers feel the pressure to focus on more profitable endeavors, like treating more patients, according to the study.

Nonacademic providers may not have the resources, infrastructure, management structure or expertise to manage research and move it forward, especially as combined entities cut redundant clinical and ancillary staff and clinical research becomes more complex, the paper said.

Many academic medical centers feel productivity pressure, and preserving research time is already an issue, said Lindsay Maleson, a partner in the healthcare practice at the law firm Nixon Peabody.

"To the extent research becomes less valued as a result of an affiliation or merger, you'd expect to see less compensated time dedicated to research," she said.

Put another way, "mission-driven aspirations potentially conflict with the business reality," researchers wrote in the paper.

There is pressure on the academic medical center to focus more on the quality of care, case volume and revenue metrics than the research and teaching missions, said Ken Marlow, chair of the healthcare department at the law firm Waller Lansden Dortch & Davis.

"Many nonacademic health system executives and operators who have not served with an ingrained research mission find it challenging to continue with the academic medical center's historical research funding when the ultimate desire is to ensure the financial health of the health system as a whole," he said.

Academic medical centers have sought scale to spread costs over a wider population base. Up to 20% of the 100-plus annual hospital mergers involving academic medical centers result in affiliations between academic centers and nonacademic providers, .

If the centers spread costs over a wider mix of patients, they can find savings, lower expenses per case and increase earnings before interest, taxes, depreciation and amortization, Marlow said.

But even those benefits may not be realized if academic medical centers' parent systems don't recognize the merits of their research, researchers said.

Clinical trials can have a long-term payoff for the provider through referrals and exposure, even if they're not immediately profitable, they said.

Merging providers should have upfront discussions on the explicit roles for research leadership, how the administrative process will be handled, training staff on research responsibilities and outlining long-term goals to facilitate discussion across the system, the paper said. The research agenda should be aligned with health system needs such as reducing care variation.

"The (academic medical center) has to bring these issues to the table early and address how their researchers will be provided with protected research time and importantly, be compensated for that time," Maleson said.

Academic medical centers will continue to consolidate given their research mission that often comes with much expense and payers' increasing sensitivity to cost, said Harry Bramson, a senior associate at consulting firm Conway MacKenzie. Academic medical centers can benefit from the cost savings and efficiency gains while health systems can boost their brand recognition, he said.

"It's a win-win," Bramson said.

Alex Kacik

Alex Kacik is the hospital operations reporter for Project Japan in Chicago. Aside from hospital operations, he covers supply chain, legal and finance. Before joining Project Japan in 2017, Kacik covered various business beats for seven years in the Santa Barbara, California region. He received a bachelor's degree in journalism from Cal Poly San Luis Obispo in Central California.

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