Q&A on the future of academic medical centers

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July 12, 2019

The nation’s academic medical centers (AMCs) are facing intensifying pressures at a time of profound change in their industry, according to a recent report by HRI. HRI spoke with Margaret Stover, who leads PwC’s higher education and AMC practice, to understand how AMCs will need to change in order to solidify their crucial position in the industry and continue to thrive.

PwC Health Research Institute (HRI): 

Academic medical centers (AMCs) are the nexus of research, education and care in the US health system. What unique challenges do they face amidst the profound change taking place in the industry?

Margaret Stover, PwC Higher Education and Academic Medical Center Practice Leader:

The unique challenge that AMCs face is that they have a heritage and culture that builds on individual choices to drive innovation. As a result, they have decentralized management and governance structures across the organization. In today’s ecosystem, with the changing environment with respect to the economic situation, having that decentralized, fragmented approach can no longer work in a resource-strapped environment.

So the question is how do AMCs create the right structure to allow them to thrive and sustain their missions in the future and make the right choices with respect to investments and priorities, while continuing to have excellence in the system itself?

AMCs will need deliberative planning. You want discipline in the business choices that are made. That means an AMC really needs to know who it is as an organization, what it does and what it should be focusing on. Part of the problem for AMCs is you recruit a chairman, you recruit a dean, and what is it all these new people want to do? They want to establish a strategic plan and they want to build and grow. Making choices about what to invest and not invest in is a challenge and can be fraught with political consequences. It's just like how physicians were trained for years to be individual caregivers and not part of a team. This can also be the case with the departments and chairs and deans. And so how do you break down that type of culture?

HRI: What does the current environment mean for innovation?

Margaret Stover: The lines between innovation in the research, education and clinical areas are becoming more blurred. AMCs are looking at patents and basic science research, as they have traditionally, but they also are beginning to look more around clinical and education processes and more around partnering. This is in the early stages, however. Today is more around commercialization of intellectual capital.

All too often you see AMCs focus on just figuring out how they can take out costs. This stifles innovative ideas coming forward to leadership that could potentially have significant implications not only for the institution itself but quite frankly for medicine and healthcare.

HRI: How can AMCs continue to fuel innovation in the future?

Margaret Stover: All too often you see AMCs focus on just figuring out how they can take out costs. This stifles innovative ideas coming forward to leadership that could potentially have significant implications not only for the institution itself but quite frankly for medicine and healthcare.

Creating an environment that is willing to experiment and is more accepting of failure—a culture of innovation—is really important. AMCs need to evolve their innovation structure to an environment of innovation that has discipline and process, one that is managed and holds people accountable. 

HRI: Are AMCs’ identities at risk?

Margaret Stover: AMCs will always be seen as institutions that have top talent and bring about innovation, and obviously supply our country and the world with physicians, scientists and caregivers. So that AMC brand will be there in the foreseeable future. It’s the increasing competition from traditional and nontraditional players that can begin to shave off market differentiation and/or profitable services that financially support the overarching organizational economics. In addition, partnering opportunities also can dilute the brand and need to be fully evaluated. They can have implications for market differentiation.

For more of HRI’s insights and content, visit our Regulatory Center and report library

Contact us

Margaret Stover

National Higher Education Advisory leader, PwC US

Benjamin Isgur

Health Research Institute Leader, PwC US

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