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To Your Health: Developing a Perfect Balance
Third of a Four-Part Interview with Dr. Alfred Knight
From Spring/Summer 2006 Quarterly
Growth at Scott & White, which is a result of successes even as the national debate on healthcare rages, begets its own set of challenges, but as President and CEO Dr. Alfred B. Knight explains in the third of a four-part series, “To Your Health,” the institution’s vision mandates that the patient always comes first. It is the patient who will benefit from Scott & White’s growth, whether in Temple or the other Central Texas communities. It is the patient who will benefit from expanded numbers of physicians. And it is the patient who will benefit from breakthrough research.
Patient benefit—that’s why Scott & White is committed to achieving perfect balance. In part one of this series, you described America’s current healthcare system and its many challenges, which frankly, seem rather daunting. In the second interview, you discussed how the national trends affect patients in Central Texas and how Scott & White is responding to these issues. For this interview, let’s focus on Scott & White’s future.
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| "It becomes a balancing act, choosing to renovate when possible, build when necessary and affirm in perpetuity our commitment to provide outstanding patient care." - Dr. Alfred B. Knight, President and CEO, Scott & White |
Knight: When looking at an organization as large and complex as we are, it is often very difficult to limit one’s discussion of our vision. We focus on excellence in everything that we do. The needs of our patients drive our vision. Clearly, we intend to be one of the top healthcare centers in Texas and the southwest. But in fact, we are already nationally recognized for providing high-quality care. And soon we will be nationally recognized as an academic medical center. Our emphasis on research and education with our partner, the Texas A&M Health Science Center College of Medicine, holds enormous promise for the right kind of growth. And finally, we intend to lead the country in applying sophisticated technology to enhance the quality of patient care.
How does this vision apply to programs, projects and people?
Knight: We are spending substantial capital to upgrade our older facilities, to recruit our next generation of leaders in clinical services, research and education, and to develop long-term plans for patient care. In Temple, the broad spectrum of services and specialties will continue to expand according to demand.
But the vision calls for expansion in all geographic directions. From a regional perspective, we will focus on those services in which we are particularly strong and for which a demand exists. Nationally, our research and education efforts will continue to produce knowledge that will make a difference for patients everywhere. It is a very bold vision for Scott & White.
Has this vision changed in the past few years?
Knight: Any dynamic organization will change as opportunities arise and challenges are identified. Five years ago, we were not thinking of the Long-Term Acute Care Hospital. But the need evolved, and we have responded. Strategy must be a dynamic process.
You say that the institution is growing in all directions. How does that growth affect operational areas such as education, research, clinical care, staffing and so on?
Knight: The bedrock of Scott & White is superb clinical care. In order to provide that, we must address a broad range of medical specialties, a multipayer insurance strategy, convenient patient access and a host of other issues, research and education among them.
Research brings new ideas, creative staff and a national voice. It also brings those unique patients who have conditions not easily treated with success. An example is the recently announced Phase I trial of a new cancer drug for locally recurrent prostate cancer. It is an opportunity to demonstrate our expertise on the cutting edge of therapies. But to fulfill our vision for research growth, significant enhancements will be necessary.
Of course, education has been a fundamental part of Scott & White for its entire 100-year history. But education has evolved. Today, we do far more than provide mentors and on-the-job training. We have recruited superb education researchers who are bringing new strategies for education to all of our students.
What factors contribute to the need for growth?
Knight: Growth is necessary for us to reach a critical mass of expertise to be able to develop unique, cutting-edge programs for patient care, research and education. We might do very well with five research scientists, but having 10 scientists brings more intellectual power, creativity and drive. We plan to achieve that critical mass in key programs.
Growth is also essential because of patient demand. Our population is aging, and we must be prepared. Yet, we are constrained by unrealistic patient expectations, decreasing reimbursements and ever-increasing costs. It becomes a delicate balancing act in which we are challenged on the one hand and constrained on the other. But we have little choice. We have chosen to renovate when possible, build when necessary and affirm in perpetuity our commitment to provide outstanding patient care. Texas A&M College of Medicine recently announced that it plans to expand its medical school to a four-year model in Temple.
What drives this decision?
Knight: Our 30-year partnership with the Central Texas Veterans Administration and the Texas A&M College of Medicine has been immensely successful. One component of that success is our small medical-school class size. Currently, about 80 students in each of the four classes study for two years in College Station and two years in Temple. Still, the demand for physicians is 30 percent greater than the number of our graduates. So preparing more medical students now is essential. Ten years of training is necessary to educate medical students in many specialties. Ten years!
Texas A&M will expand class size to 200 students a year during the next five to seven years. The College Station and Temple campuses will each become four-year programs with 80 to 120 students on each campus. This is a cost-efficient way to expand class size without creating new medical schools.
We enthusiastically endorse this proposal, and we are working aggressively with A&M to bring the first group of four-year medical students to the campus by the fall of 2007. Certainly, the four year campus in Temple is a component of our vision to be a nationally competitive, academic medical center.
How will this future growth be funded?
Knight: In the simplest terms, capital is created from operations, borrowed through the nonprofit bond market or generously provided through philanthropy. Scott & White is working on all fronts.
Our operational success will also facilitate our ability to borrow money through the bond market, where we have maintained an AA rating. Our non-profit status does not mean that we can ignore the bottom line, of course. Any surplus is reinvested into operations. Last year, for example, Scott & White contributed to the community an estimated $70 million in services and unreimbursed, mission-directed programs such as research and education.
The focus on all three elements to create capital has allowed us to fund many facilities coming online within the next 12 to 14 months. That will represent more than 800,000 square feet of new clinical space. But frankly, that is not enough. We have other very significant projects going forward. We will rely on our own financial stability to fund and borrow prudently, but we also will rely increasingly on the generosity of our patients and donors to make a difference.
Is growth a result of competition for market share?
Knight: In most of our geographic areas, we have a substantial part of the current market. Our strategy anticipates growth of those markets as population expands. In addition, we are focusing on unique services, some of which have been previously unavailable in Central Texas. We are not trying to take market share from others.
Hospitals across America are in the midst of the largest construction boom in more than 40 years. Why is that?
Knight: I reflect often on the pundits of 15 years ago, who said we had too many doctors, too many specialists and too many hospital beds. They were very, very wrong on all three accounts, but we believed them. Hence, we have not increased the number of medical students, most of whom we pushed into primary care, and all across the country, hospitals stopped enlarging inpatient facilities. We are way behind now.
But the second reason is more challenging. The leading edge of baby-boomers has turned 60, and we anticipate the largest population growth ever to occur in the United States to begin to move into retirement. The realities of aging mean the demand for healthcare services will increase. Since it takes so long to plan, budget and capitalize beds, most hospitals are trying to anticipate the demand for beds by building now.
What are the facility needs over the next decade?
Knight: I mentioned 800,000 square feet of new space coming on board soon. One could conclude that Scott & White has caught up. We have not. Three major projects are in the planning stages: a Bone, Joint & Spine Institute, a comprehensive Clinical Cancer Center and a Surgery Suite of 30 or more state-of-the-art operating rooms. Other programs also will expand, including the Cancer Research Institute, which will require 40,000 square feet of space. With the medical school’s expansion, additional facilities will be necessary by the time the class reaches its full complement. There are plenty of opportunities on the horizon!
With so much specialty research being conducted, will Scott & White increasingly offer the more profitable areas of high-tech healthcare as opposed to the less profitable services?
Knight: Scott & White in Temple will continue to provide broad-based, integrated and comprehensive services for our community. That is our responsibility. And we will meet the demand for specialized services that serve our interests, as well. However, we will continue to fund needed services, even if they are not reimbursed at the level sufficient to cover costs. One of the key elements in this discussion is the cost of healthcare. We must continue our dedication to discovering ways of doing the same work for less cost. We have accepted that challenge, and as we grow, we will do so in the most cost-effective way possible.
But the costs for these expansions will be considerable. Could this spell financial trouble?
Knight: No. Expansion for Scott & White means operational integrity to produce the best possible care for the lowest cost. It means a commitment to financial stability to continue to access the bond market. And it means providing opportunities for our friends to participate in the building of our vision. Philanthropy for all nonprofits is a huge part of our collective future. We cannot be successful without it.
Having said that, I am constantly amazed and humbled at the response of our friends when they hear the remarkable Scott & White stories. They marvel at the scientific and medical expertise amassed here, and they increasingly understand the need for and rewards of financial support.
I continue to believe that as we share our story, our friends will want to be a part of the most exciting medical story in Texas—perhaps in the country. What we’re building here is unrivaled anywhere. As details emerge in the coming months, I look forward to sharing them.
With all of the recent growth, might the patient who has not visited for a time be forgiven for assuming that Scott & White has gotten too big?
Knight: The fundamental basis for Scott & White’s reputation is superb patient care. That is unchanged. In fact, all of the work we are doing currently focuses on enhancing the quality of care for our patients. On some of these issues, one must take the long view. The time from a researcher creating an idea for a new therapy until the implementation of that therapy can be years, sometimes a decade. Scott & White is in this business for the long term. Our growth, if anything, attests to our success in patient care. So even though we appear bigger, we always remember that our job is to serve one patient at a time. For Scott & White, excellence in patient care means operational excellence to produce that level of care for the lowest cost. It means calling on our patients and donors to help us create the future of patient care. Philanthropy is a huge part of that future. We cannot be successful without it.
Other "To Your Health" Interviews
Part 1 - The State of American Healthcare
Part 2 - Who Benefits? Who Pays? And Who Decides?
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