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“University” of Oklahoma at Oklahoma City~: Health Sciences Center

OFFICE OF THE PROVOST

July 9, 1980

Dr. Joshua Lederberg
President

The Rockefeller University
York Avenue & E. 66th

New York, New York 10021

Dear Josh:

I started to set down my thoughts about Stanford Medical School several
weeks ago as you asked after our talk, but was distracted by moving and
getting settled in Oklahoma, and finished only last weekend.

The school faces several fundamental problems which are interrelated and
difficult to solve. All concerned are dug in because of strong perceptions
that have not changed for years; in some cases, even though the reality has.
The solution to these problems stems from current realities, which must
replace these entrenched misperceptions.

I set forth what I think should be done below under four headings:
general funds, the clinical practice, the hospital, and governance. These
resolutions are interdependent, just as are the problems. I was working some
of this out and beginning to move in some of these directions at the time I
left Stanford.

Basic Objective: The most important contribution that Stanford can make
is in fundamental research carried on in both basic science and clinical
departments. However, general funds cannot even start to support this
activity. Therefore, except for developing new programs and part of capital
needs, research should be self-funded.

The second priority is MD education. I consider this the primary draw

on general funds. Housestaff, Ph.D. and post-doctoral students also should
be supported by general funds, but at much lower rates.

P.O. Box 26901 Health Sciences Center Library, 1000 Stanton L. Young Blvd., Room 221 Oklahoma City, Oklahoma 73190 AC 405 271-2332
Dr. Joshua Lederberg
July 9, 1980
Page 2

It is also important to develop the clinical programs, including the
technically oriented departments such as surgery, radiology and anesthesia. *
Most of these departments have been throttled at Stanford. They can contri-
bute significantly to knowledge and technology as well as to patient care. As
with research, these programs should be self-sustaining. At present, they
are not.

General Funds: Now that excess MSP funds are no longer being trans-
ferred from the graduate/technical departments to the medical and basic
sciences programs, the purely clinical activities are being subsidized by the
basic science and medical departments. That is because part of the salary of
all faculty is paid from general funds, irrespective of how much teaching
actually is done. That creates a draw on general funds when faculty are
recruited to meet clinical needs and not needed for additional teaching. That
occurs almost exclusively in the graduate/technical departments. That draw
on general funds used to be balanced by a transfer of MSP funds from these
departments. In retrospect, I should have moved in the direction described
below instead of taxing MSP funds to make up for salaries of faculty not
needed for teaching.

It should be made explicit that general funds are provided to depart-
ments on the basis of medical student teaching actually accomplished (a
dollar amount per medical student per hour of teaching in a specific course
or clerkship.) An additional amount should be provided per Ph.D. student,
graduate student and house officer (independent of the number of hours
reported for teaching). The final component of general funds should be for
departmental administration. This should be a set amount per department,
plus two additional amounts, one proportional to the number of faculty and
the other proportion to departmental grants bearing overhead. That would be
the entire general funds budget for the department, including faculty
salaries. That would change the general funds assignment to one that is
Proportional to measured outputs rather than estimates of input. It would
result in substantially reduced general funds support of the clinical
programs and would most effect that graduate/technical departments. It would
result in increased general funds-support of basic science and medical
departments because of their high level of medical student teaching and
research. Depending upon the factors used to calculate the general funds
assignments, there could be a reserve a few years after this change was made.
That would be important so that new academic ventures could be stimulated and
emergencies met.

 

® T divide the departments into three functional groups a) basic sciences;
heavily involved in fundamental research and didactic teaching of medical
students, b) medical (including medicine, pediatrics, neurology, etc.)
heavily involved in research and clinical teaching of medical students, and
c) graduate/technical (surgery, anesthesia, diagnostic radiology, etc) which
tend to be more involved in technical clinical care and housestaff teaching
than in research and medical student education.
Dr. Joshua Lederberg
July 9, 1980
Page 3

There would be resistance to this from the graduate/technical depart-
ments because they don't think of their clinical programs as subsidized and
wouldn't want to lose the support. However, the decentralization of clinical
programs that is part of this approach (described below), and their regard
for self-sufficiency would make it acceptable, once understood.

Clinical Practice: Currently, the clinical practice is more constrained
than necessary or desirable.

Billing and collections were centralized because part of the funds
received went to the school. Now that most of the fees remain with the
departments, there is no advantage to centralization. In fact, the quality
of service, satisfaction of faculty and promptness of billing all suffer. I
would decentralize the financial operation of the clinics to the departments
and divisions, except for management-auditing, financial auditing and
ultimate university control.

The other constraints have been on size and cite of practice. The con-
straint on cite also was to make it possible to collect practice funds for
use as general funds. Now that that is no longer possible (or, in my view
desirable, once the changes in general funds policy indicated above were
implemented), the requirement that all practice be located at University
Hospital no longer would be necessary.

There are two reasons why the size of the graduate/technical departments
have been constrained. One is a fear, both in other Medical School depart-
ments and throughout the University, ‘that they would become too large, too
influential and too commercial. Those are reasonable fears, but such
problems are not the inevitable response to expansion. Several of these
departments always have been too small to develop appropriate academic
strength. (e.g. Neurosurgery; for long a one man show and, one year ago, too
understaffed to allow deve lopment of research oriented faculty). I think the
frustration they experience may be a significant cause of the negative
attitude of the faculty in most of these departments.

The other constraint is the size of University Hospital. The
compression of vigorous University and community practices into this hospital
compromises both, prepetuates one of the most serious problems of the school,
and threatens the position of the University in the community from which most
of its funds are raised.

I think the school should get a small amount of gross receipts (4-5%)
and that an equal amount should be put into a capital fund to be used to
service debts for new construction. The rest should go to the generating
departments for MSP business expenses, salaries, operational expenses and
academic development. Management should be decentralized. The University
should accept a larger number of full time clinical faculty appointments for
clinical program needs, and some clinical speciality services (always
including housestaff and medical students) should be allowed to develop
programs in other hospitals.
Dr. Joshua Lederberg
July 9, 1980
Page 4

These changes would result in an increase in the clinical programs of
some of the graduate/technical departments, to the point where they can have
reserve funds for a academic development. Growth beyond that point should
not be allowed. I don't think that most of the departments concerned would
want it, but realize that many at Stanford think that they would. The gains
from having these departments well-developed should not be over looked.

The objections to such changes would be most intense in the University
outside of the Medical School. Both Lyman and Miller basically saw the
school as a threat and were determined to maintain rigid centralized control
of size and policy. I think that there is a good chance that Don Kennedy
will have a better understanding and be more flexible. The concerns of the
faculty of the University could be reduced considerably by the leadership a
president and provost who were less fearful, and by changes in governance
described later, but would remain a difficult obstacle. The basic science
and medical departments would accept such changes if they thought they would
resolve some of the school's problems, and as the price of the increased and
the more stable general funds support they would have from the revised
policies described earlier.

Hospital: There is a strong tendency at Stanford to fix upon theoret-
ically possible solutions, even though they are exceedingly unlikely, or even
undesirable. These include the idea of a several hundred bed expansion of
University Hospital (desirable but terribly unlikely), an exclusion of the
community physicians (an improper reversal of commitments and obligations
unless another hospital is built), a revision of the MSP to one that brings
large sums into the general fund (unnecessary and politically impossible) the
reduction of the graduate/technical departments to unsubstantial size
(impractical) and selling the hospital (who on earth would buy it, and what
problems would be solved?). These and other remote or foolish obsessions
confound reasoning about practical steps to resolve the basic problems. In
particular, the University needs a plan that does not count on greatly
enlarging the hospital, a massive increase in hospital operating funds, or
excluding the community physicians.

A solution to the current impasse can be worked out - I think. I would
set aside a number of beds and part of the OR time for teaching medical
students. This would reflect the real need for the core-clerkships in
medicine, general surgery, pediatrics, obstetrics, etc. It would not reflect
the practice-needs of the faculty beyond what is required for the basic
medical student clerkships. These assignments would fit within the
limitation of the quota because of policies that I describe below. I would
also exclude community physicians definitively and permanently from the
radiation therapy and pathology laboratories. The community would object but
would accept these changes as reasonable for a university hospital.

I would then open all other current beds (new beds added in the future
could be excepted) to University and community physicians alike, with admis-
sions based upon patient-needs and uniformly applied hospital policies. The
only quota that would apply to these beds would be the quota in the contract
for the affinity staff and a very much reduced number of voluntary clinical
faculty. The total number of admissions from these groups are too small to
affect they system I am describing.
Dr. Joshua Lederberg
July 9, 1980
Page 5

In order to reduce the number of community physicians who can admit
under the quota, the departments would have to reduce the voluntary clinical
faculty to the level actually necessary for teaching. (Note that voluntary
faculty appointment no longer would be necessary for guaranteed hospital
privileges). If legally practical, a new line of voluntary teaching appoint-
ments that would not grant a privileged quota under the contract should be
started.

These changes would cause a small teaching service and several
laboratories to be closed to the community. However, the hospital otherwise
would be committed permanently to an open staff with no quotas in operation
that had any practical consequences. Both the faculty and the community
physicians would object but I think they would come around. There are
advantages for each group, the policy is fair, and it offers a solution.

However, this would work only if restrictions on cite of practice are
relaxed for some specialties. For example, there is far too much cardio-
vascular surgery (both university and private) at University Hospital now. It
stifles development of other surgical specialties and runs the cost of
general hospital care way above reimbursement-limits. A policy limiting this
specialty, that would apply to community and university services alike, is
needed. That is practical and reasonable only if other options exist for the
university surgeons as well as for those in private practice. That is why I
think that there should be exceptions to the restrictions upon cite of
practice. An appropriate amount of cardiovascular surgery could remain in
University Hospital, while the rest developed elsewhere. Such an option will
become more important in the future as technical advances continue to emerge.
If there is no way to decompress University Hospital, and if new beds cannot
be built, current explosive pressures will mount.

Governance: Within the school there must be both a dean and a vice
president. The scope of the job as well as some emerging conflicts between
the needs of the faculty and dean, and the needs of the hospital, both are
too great to make it practical to continue this single office. I note that,
ls years after I left, no acting dean has been appointed. That over-cen-
tralizes power and prevents adequate development of the academic side, as
contracted to clinical/hospital operations. I made a mistake by not
splitting the office, and eventually was overwhelmed as a result.

I think that the executive committee should be revised to include the
vice president, dean, three chairmen representing and selected by the
chairman of the three departmental groups (basic science, medical and
graduate/technical) but including the chairmen of medicine and surgery, the
chairman of the senate and the most senior non-MD administrator; with no one
else present. The current committee is excessively cumbersome and mixes
policy and communication roles.

Nothing tried so far has resulted in good communications within the
faculty. That is because most chairmen wont pass on information they receive
in the Executive Committee to their faculty. I think there should be a news
letter from the vice president and dean every two weeks to all faculty and
budget heads.
Dr. Joshua Lederberg
July 9, 1980
Page 6

The clinical program should be under a clinical policy committee
different from the medical school executive committee, composed of the chief
of staff, vice president, dean, clinical program directors (not necessarily
chairmen) and the chief clinic administrator.

I never got departmental reviews underway. That is an important element
of quality-control and should be done, with a formal external review every
three years.

The final governance issue has to do with the University at large. The
changes I recommend would result in some increase in the clinical full-time
faculty. That would create ligitimate concern about the composition of the
University Senate. I think that the restriction on the number of clinical
full-time faculty should be lifted or eased, and that only tenure-Jline
faculty in the School of Medicine should be represented in the University
Senate.

In summary, I think the academic program of Stanford Medical School wil]
be funded better and more stably if general funds were channeled to support
medical education (with research and clinical program both fully self-sus-
taining) and if the clinical programs are partially decentralized and allowed
to become the source of funds for their own academic development. Some
enlargement of some clinical departments is practical, warrented on grounds
of the quality of academic programs that would result, and not a threat to
other departments or the university. The community-conflicts could be
reduced or solved by opening permanently all beds except for a moderate sized
teaching service, taking steps that eliminate the impact of the quota, and
providing for decompression by allowing some part of those services which
unbablance the practice in the hospital to relocate elsewhere.

You should note that the solutions I have described must be approached
together, rather than one at a time. Basic science and medical departments
cannot develop their full academic potential unless there is a change in the
way general funds are assigned. The graduate/technical departments cannot
accept changes in the way general funds are assigned unless they are allowed
to develop a level of practice that supports their operations and their own
academic development. They can and would do this if allowed. That cann't
happen, and changes in the operation of the hospital that will resolve much
of the conflict with the community cannot take place prior to major hospital
expansion unless there are exceptions made to current restrictions on cite of
practice. None of these current problems can be delt with unless the Univer-
sity can accept the proposition that the graduate/technical departments could
become an asset if allowed the modest increase in size and moderate degree of
decentralization that would reduce their current intense frustration.

I have had a busy month in Oklahoma. The job so far has been quite
interesting. There have been plenty of problems and number of crisis, but
not as intractible (so far) as at Stanford. It is too early to be sure, but
I think the opportunities for progress here may be quite good.
Dr. Joshua Lederberg
July 9, 1980
Page 7

I have bought a smal] house in a large oak grove fronting on a lake;
really quite beautiful, and different from the usual ideas about Oklahoma
City (not an oi] well in sight, nor a house, for that matter). It has been a
bit warm, but no tornadoes, so far.

I hope all goes wel] with you. Give Margurite my best regards.

Sifcerely,

Clayton Rich, M.D.
Provost

CR/pv