January 6, 2011

New Year's Message from Dr. Balser

Dear Colleagues,

As we embark upon a new year I would like to take this opportunity to thank each of you for your contribution to our numerous successes during 2010. The past year presented myriad challenges due to the national economy, and we experienced a tragic flood in our own community. Yet, because of your innovative spirit and your values -- anchored in genuine compassion for each and every member of our community -- we are navigating through these challenges. And at the same time, we are making huge strides as a worldwide leader in academic medicine – securing our own future, while moving concepts to practice that are capturing national and worldwide attention.

In his message to the Vanderbilt community, Chancellor Zeppos eloquently describes our institution’s many advantages, but also clarifies obstacles we face in the coming year. Having withstood negative forces affecting the economy for the past two years, we enter 2011 in a wiser and stronger financial and operational position. We are the nation’s 10th largest NIH-funded biomedical research enterprise, and the largest, most preferred, and by far the most technically advanced health care system in the region. At the same time, we are sober regarding the likelihood -- in fact, the certainty -- of even more substantial economic challenges.

Today, health care is the largest single item in the federal budget – health care (Medicare, Medicaid) is 21% of the $3.55 trillion 2010 federal budget, and is larger than the defense budget. And it is clear that reducing the budget deficit, which now exceeds our Gross National Product, is a priority for both national political parties. It is noteworthy that half of the health care in this country is financed by federal sources, so there is no question that reimbursement to hospitals and health care providers from these government programs will fall considerably over the next decade. Likewise, at VUMC, half of our health care revenue comes from Medicare or TennCare programs. Moreover, 70% of our research revenue, now nearly a half billion dollars per year, comes from the National Institutes of Health, and it is very likely that revenues from that discretionary portion of the federal budget will also fall. At the same time, many of our fellow Tennesseans remain without work and without access to affordable health insurance, and Vanderbilt remains the only alternative for many, many people in crisis.

So it is with an acute awareness that change is inevitable that we chart our course for the coming year.

Throughout history, it is during times of adversity that true leaders emerge. Many of the nation’s health care systems are taking a “wait and see” approach to the changes coming in health care reimbursement and support for biomedical discovery. We will not do so. Rather, by taking proactive steps, VUMC will not only remain strong, but will further distinguish itself as the science, education, and health innovation leader in this nation.

Months ago we began productive discussions with our department chairs, health system executives and financial leadership to identify large, yet sensible initiatives that will yield sustained positive change to our overall financial performance, and with a view toward re-examining a decades-old “cost structure” we now utilize to deliver care, support education and nurture science. Many efforts are already under development, particularly in the health care arena. In considering our options we aim to take tremendous advantage of our capacity for integration and culture of collaboration.

We have embarked on this journey by stating explicitly that we will only prioritize initiatives creating long-lasting improvement – scalable efforts that are sustainable and not only save cost but improve quality. As such, we are focused on system-wide changes that will ultimately allow a more efficient and productive environment for faculty and staff, and in the long run, improve service and support for our patients, our scientists, and our students. By starting early with laser focus, insisting on excellence, and importantly, engaging some of the “sacred cows” that we all recognize need rework, reorganization or integration, we can avoid across-the-board “blind” cost cutting – what I like to refer to as “Neanderthal budget cutting” – an archaic approach that threatens the future of peer health systems across this nation.

For example, huge efficiencies can be achieved by improving the utilization of our existing physical plant—using a combination of people, process and advances in our own health information technology to make vastly more effective use of available outpatient clinic space, clinician time, research resources, and even the impact of our educational programs – allowing us to treat more patients, discover and translate more cures to patients, and train students to be more effective in less time -- with the same or even fewer resources.

I am asking each of you to be prepared when called upon to be part of these efforts. Think about the opportunities in your own work, and how you can help us improve in the areas of cost, quality, service and outcome. And if you have ideas we might pursue, we do want to hear from you. The best ideas live with you -- the people experiencing our challenges and opportunities every single day. We have established the address valueideas@vanderbilt.edu to receive your suggestions.

I feel fortunate every day to be part of this extraordinary institution, a place where so many talented and dedicated individuals share a common vision and purpose -- to improve the health and well-being of all people. Our capacity for innovation, coupled with our unique culture of caring and cooperation, will light the way.

Lastly, I wish each of you health, happiness and prosperity for the coming year. And again, I wish to thank you for all that you do for Vanderbilt as we begin our journey into 2011.


Jeff Balser, M.D., Ph.D.
Vice Chancellor for Health Affairs
Dean, Vanderbilt University School of Medicine