In the Face of Economic Uncertainty, We’re in this for the Long Term

Last Monday, August 8, stock markets around the world declined by 5 to 7 percent. As the week unfolded, these markets increased and decreased by over 4% per day for an unprecedented four consecutive days. As I edit this on the evening of August 18, the Dow Jones Industrial Average lost another 420 points today.

With all this volatility, you might wonder what implications there are for UF&Shands. The bottom line is this: Although the economic picture at the moment is not rosy and we will be affected financially, we are well-positioned to navigate through the storm, and must maintain our focus on the important jobs we have to do in patient care, education and research.

Our success, past and future, rests largely with your efforts. You have kept your eye on the goal, and while the sailing may not always be as smooth as we’d like in the months ahead, we have made much progress and I am confident we will continue to do so. Consider this:

Access has greatly improved. GatorAdvantage was launched last fall in Gainesville, and in January in Jacksonville. Through July 15 in Jacksonville, there were 1,800 requests for appointments, of which 572 were new patients. Moreover, 873 were requested online. In FY11, the call center was established in Jacksonville and answered 1.8 million calls, 87% within 15 seconds and 91% within 30 seconds. In Gainesville, under GatorAdvantage, we now see an additional 200 visits per week to our faculty from employees, and our access center, which opened in May, has dramatically improved call responsiveness and appointment scheduling. It is on track to match the performance of Jacksonville over time.

For the future, as we transition from the current volume-driven system of care to one in which we care for populations in an environment of reduced Medicaid and Medicare funding, we will be taking a more regional approach. We are spending considerable effort to learn from others and from the literature about how best to do this, and to plan for implementation of an effective regional strategy that will sustain our clinical momentum and improve health in the population we serve. To the extent that we are successful in these efforts, the resources generated will provide greater support of our academic missions. A promising early example is the self-insurance plan for UFJH/P employees in Jacksonville, which began on January 1. Due to better overall management of care in a comprehensive manner, there have been measurable improvements in improved quality and reduced cost.

Another source of support is philanthropy. Across UF&Shands, total cash gifts increased to $58.6 million during the past fiscal year, an 81 percent increase over the last fiscal year. While our donors may be feeling a little less flush at present, this substantial increase in donor gifts reflects their interest in the content of our work, and their confidence in how we are doing it. As well, success in fundraising reflects the excellent work of our superb development staff.

In research, we are reaching for excellence, focusing on areas in which we can build on critical mass and achieve a level of scientific contribution that is in the top 10 nationally. We also are seeking to expand clinical and translational research to complement the HSC’s historical investment in basic science, and are making more efficient use of research resources, including facilities and scientific cores. These strategies are bearing fruit: In the fiscal year ending June 30, NIH funding to faculty in the HSC across Gainesville and Jacksonville increased to $171 million, compared with $112 million the previous year. While $45 million of this increase was due to “stimulus” funds that will expire, the level of base non-stimulus funding still increased by $14 million. Despite the very challenging NIH environment, we expect continued momentum in research, due to new departments in epidemiology and biostatistics, recruitment of energetic new chairs committed to research in several HSC colleges, continued recruitment to new facilities in the Emerging Pathogens Institute and the Biomedical Sciences Building, increased clinical research in Jacksonville, and the opening next summer of the Academic and Research Building in Orlando.

In education, progress is also accelerating. Plans are being developed and funds are being raised for a new medical education building that will reflect contemporary approaches to learning in the health professions — e.g., small group learning and cross-professional teams, simulation, interpersonal communication skills and mobile technology. Meanwhile, in Gainesville, renovations to the lecture halls, lobby and library in the Communicore are proceeding, and in Jacksonville, renovations to the dorm facilities, including a new student fitness area, are near completion. The College of Nursing is implementing a brand-new curriculum and the College of Medicine is working on a new curriculum this year, for implementation beginning with next year’s entering class. The College of Veterinary Medicine is transforming its educational experience with its new, world-class Small Animal Hospital and lecture halls. The College of Public Health and Health Professions is attracting more and more undergraduate students to its pre-professional majors in health sciences, and the College of Dentistry is about to begin master planning for new facilities and educational programs. Finally, a task force with members across the HSC is defining interprofessional opportunities for curricular enhancements, to be implemented next year.

One way to think about the recent events in the markets is that they represent aftershocks of the 2008 financial earthquake, in which banks around the world virtually seized up, and commerce almost stopped, because their holdings and collateral for loans — a variety of financial derivatives based on sub-prime home mortgages and other risky assets — were perceived as almost worthless. To restore commerce, an enormous amount of liquidity was injected into these markets by central banks such as the U.S. Federal Reserve. After 2008, debt accumulated worldwide, but economic growth — required to pay back the debt — stalled.

For a while, from the second half of 2009 through the first half of 2011, investors appeared to believe that economies would, in a reasonable time frame, grow sufficiently to pay down debt, allowing individual companies to grow in an orderly and stable financial environment. Globally, stock markets increased in value. In recent weeks, however, investors have become increasingly concerned that the combination of rapidly increasing debt and anemic growth in many countries has created a situation that will not be resolved without major financial disruption and upheaval.

Which way will this go? In the world of finance, many are guessing at the answer, but no one knows for sure. Suffice it to say there is financial fragility in economies with massive indebtedness. The lessons of history are that highly leveraged economies cannot be sustained long-term, and that deleveraging is painful.

In our world of health care, education and science, this means it is wise to prepare for reduced federal funding of health care services to patients with Medicare and Medicaid, reduced funding for graduate medical education (residents and fellows), and reduced funding for research. At the state level, it is prudent to plan for even greater reductions in the funding of Medicaid and other safety net programs, and for a constant level of funding (at best) for the educational programs in our six health profession colleges.

All that said, in the face of economic uncertainty, we still have a job to do. It is reassuring that our missions are not only intrinsically noble, but quite necessary in any circumstance. Whatever financial upheavals might be occurring around us, we get up in the morning and have patients to care for, students to educate, and knowledge to advance through research.

We have expressed a vision in our Strategic Plan that through close collaboration between the UF Health Science Center and Shands, we will “create unstoppable momentum toward the goal of improving individual and community health through discovery, clinical and translational science and technology, exceptional education, and patient-centered, innovative, high-quality health care.”

Can we really create unstoppable momentum in this environment? My answer is a resounding yes. By taking advantage of the synergies between the University of Florida Health Science Center and Shands HealthCare, we have made substantial progress in each of our missions, and have indeed built momentum to accelerate success.

Clinically, our unceasing focus on quality as Job 1 has led to impressive, measurable improvements in the quality and safety of patient care. (More on this in the next newsletter.) Working together, leadership at UF and at Shands, on both the Gainesville and Jacksonville campuses, are driving faculty ownership of patient care and outcomes, and are improving communication. Implementation of Epic will require significant ongoing effort to reap its full benefits, but I am confident that it will ultimately yield significant contributions to patient care safety and quality and to clinical research. Progress in research and education is also accelerating, as described above.

Make no mistake: The current uncertainty about our economic future as a nation has led to an environment in which public funding of health care, education and research — the core missions of UF&Shands — has come under tremendous scrutiny. In turn, we have experienced, and will continue to experience, increasingly constrained public funding for UF, for the HSC and for Shands. As reviewed in this newsletter, we are acutely mindful of this and are implementing strategies to maintain momentum as best we can. Meanwhile, our collective mission is not going away. We’re in this for the long term.

Forward Together,

David S. Guzick, M.D., Ph.D. Senior Vice President, Health Affairs President, UF&Shands Health System