Chapter 13: Head of Hospitals and Clinics: Managed Care and the Origin of the National Comprehensive Cancer Network;

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Chapter 13: Head of Hospitals and Clinics: Managed Care and the Origin of the National Comprehensive Cancer Network;

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In this chapter, Dr. Balch focuses on two main challenges he faced as Vice President of Hospitals and Clinics: the impending managed care crisis and the institution's initiative to develop a network of affiliates. He begins by explaining how he was asked by Dr. Charles LeMaistre to serve in this new leadership role. He discusses the context in 1993 and explains the measures taken to ensure that the institution worked more efficiently with better margins. Next, Dr. Balch tells the story of secret discussions with leaders at Memorial Sloan Kettering to join efforts in negotiating aggressively with managed care and how these conversations led to the creation of the National Comprehensive Cancer Network, a body that still establishes guidelines for standards of care in cancer treatment. Next, Dr. Balch talks about Charles LeMaistre's vision for a national and international network of institutions delivering MD Anderson care. He discusses the creation of the Tex Moncrief Cancer Center �one of the first affiliates, located in Fort Worth, Texas.

Identifier

BalchC_03_20181218_C13

Publication Date

12-18-2018

Publisher

The Making Cancer History® Voices Oral History Collection, The University of Texas MD Anderson Cancer Center

City

Houston, Texas

Topics Covered

The University of Texas MD Anderson Cancer Center - Building the Institution; Leadership; Professional Path; Beyond the Institution; Growth and/or Change; MD Anderson Culture; Professional Practice; The Business of MD Anderson

Transcript

Charles Balch, MD:

It could be a big barrier. So the question is how I got into the Hospital and Clinics. This was not my plan. Mickey LeMaistre hadthe hospital VP had left on a Friday. Mickey LeMaistre called me into his office on Saturday morning, which was a rare event that we had Saturday morning meetings, and said, "On Monday you're going to be the interim Vice President for Hospital and Clinics."

T.A. Rosolowski, PhD:

Who was the outgoing?

Charles Balch, MD:

It was Dan Oldani, who actually went to Georgetown Hospital to be their Hospital Director. So this was more of a directive, "I need you to do this on Monday." [laughter] This was not something I was looking for. In my role as the Division Head I'd been very involved in the managed care of MD Anderson, the contracting and marketing. I'd been very involved in the establishment of MD Anderson Outreach Corporation, for which Bob Shaw was the CEO and I was the first Medical Director. And we were establishing MD Anderson outposts in Clear Lake, Texas, in Fort Worth, Texas. We had begun the discussion for what became MD Anderson in Madrid, Spain. And the concept then was to establish a network in Texas, and even internationally. I had also been very involved with Mickey and a guy named Dr. Buck Brown in Orlando, to establish what started out as the Orlando Cancer Center and then became MD Anderson at Orlando. So all of these things were going on while I was the Division Head, in the Managed Care and the networking, and for me and for Mickey it would have been natural, at least, to help out the institution on an interim basis. Now, of course, I'm not trained to be a hospital administrator in budgeting, financing, and personnel, so part of the issue, which Mickey agreed to, was to get Donna Sollenberger on that same Saturday to say, "Starting Monday you will come with me to the Office of the VP for Hospital and Clinics." Donna became the Executive Director of this. She is magical in her ability to organize people to develop implementation of strategy, to manage budgets, to decrease expenses and raise revenues, and it was a bit of a surprise to everybody that we not only maintained things but they got better. And for that reason, Mickey didn't want me to go back to the Division Head, and he stopped the recruitment and said, "I want you to just continue doing this with Donna Sollenberger," and the staff that we'd assembled.

T.A. Rosolowski, PhD:

So what were the first items that you really attacked?

Charles Balch, MD:

Well, at this time, in 1993, the wave of managed care was taking place in the West Coast, especially in California, and our consultants, which included some people from the West Coast, had said, "This is going to move to the East. It will involve you. You will be involved in managed care contracts. Your revenue will decrease, and you have to find a way to reduce your expenses, as well. And the sources of revenue are going to dramatically change." So part of the first thing that we needed to do was to become leaner in our expenses. Even in that first year we had a goal of reducing our expenses and reducing staff. In fact, we had cut almost $90 million from our budget, and by volunteering retirement and reduction in force, we took out 1,000 positions in that two years, from the hospital and clinics and later as we moved into the EVP office. Now, this was in anticipation of a managed care event which didn't materialize in Texas to the same degree it had in California. But the good news for the institution is these very significant reductions, without any interruption of personnelno strike forces or things like thatwe did this in a way that was humane to the employeeswhen positions became vacant we took them out. Nobody was fired. We had some voluntary retirement packages, which people took advantage ofbut by the time 1996 came the institution had a significant reduction in its expenses. It maintained its level of revenue so that the margin in between actually increased during that time. We also were very aggressive in managed care contracting. We doubled the number of managed care contracts that were there, and actually because of that activity we had some private discussions with Memorial Sloan Kettering about doing national managed care contracting. They were interested in exploring that, but they wanted to do this under the radar screen without anybody to know it. John Durant, who was one of my mentors from UAB, had become the President of Fox Chase Cancer Center. I asked John about it, who was nationally very attuned to managed care, and while we didn't want to meet in either Houston or New York, John Durant and his CEO, Jay McKay, volunteered to have Fox Chase be the neutral ground for MD Anderson and Memorial Sloan Kettering to come together and have a discussion on national managed care contracts, led by our two organizations. So we actually had three meetings. I represented MD Anderson. A CEO from Memorial whose name I can't remember right now and I met in John Durant's office on three occasions. And from that, we decided to form a new organization called the National Comprehensive Cancer Network. That concept was that cancer centers in the major cities, comprehensive cancer centers, but only one in each geographic region, would be part of this NCCN that would then go to market for managed care contracts nationally, with the same pricing adjusted to the market cost in each geographic area.

T.A. Rosolowski, PhD:

Why was this an advantage, forming this?

Charles Balch, MD:

Well, because at that time, in 1993 to 1995, all of the hospital administrators in the consensus in the country was we were going to transform into managed care contracts and do away with fee-for-service reimbursement. So we brought this back. David Hohn and Roger Wynn were helping in the implementation of this. Now, instead of going for the market for fee-for-service, we wanted to price things based upon an episode of care, either six months or 12 months of care. In order to price that, we had to develop guidelines of how we would manage patients using standard care protocols, so that we could then determine what the price would be for six months of care that was multidisciplinary, or even 12 months of care, and take that to the marketplace. So we'd organized national experts to develop those guidelines. Now, the irony is that the managed care contracts never materialized, but NCCN became the standards in America, and now in the world, for guidelines with algorithms for cancer care throughout the world. But that was the genesis of it was to begin managed care contracting at a national level, and work with the major insurance carriers to have national managed care contracts.

T.A. Rosolowski, PhD:

How does the NCCN and the guidelines and algorithms that they've established, how does that relate to the creation of the algorithms that are being done in-house now? Are they connected?

Charles Balch, MD:

This was a later event that had to do with quality of care and measuring outcome, having consistency among physicians and their staff in caring for patients in exactly the same way, regardless of who was taking care of them. And that, led by Tom Aloia, Randy Weber, and others here have shown that you can decrease length of stay, decrease complication rates, shorten and both improve the quality of care for the patients and save money at the same time. But what we had started was a little bit different, more at the institutional level and not down at the individual physician level. It was a vision that, interestingly, turned out to be very important, but we started out for the wrong reasons. The other thing I was

T.A. Rosolowski, PhD:

So thisI'm sorry, I just wanted to make sure I understand that NCCN is still in existence, it's got a life of its own now, or?

Charles Balch, MD:

Yes, and it sets the standard of care that people follow, not only in the United States, throughout the United States, but also many countries in the world use these as the starting point for the guidelines and the management of care, and what becomes the so-called standard of care. This is the reference source for standards of care. It doesn't say you should do this one thing, but it gives you the options that should be considered based upon the diagnosis, the stage of disease, molecular markers, and so forth.

T.A. Rosolowski, PhD:

What were the conversations like with Memorial Sloan Kettering? I'm curious. I mean, there's obviously always been a kind of rivalry, or some sort of

Charles Balch, MD:

Well, that's why we met in secret, [laughter] because we are known to be rivals, but we both knew that we were the two largest cancer centers in America, and if we agreed, that it would be much easier for other smaller cancer centers to follow, if we agreed to do something at the outset and organize things. Just as one segue, Murray Brennan, who became the Division of Surgery Chief at Memorial on the same day I did, July 1st, 1985, both agreed since we had the largest number of surgical oncology fellows in the world between the two of us, that we wanted to do those things that were right for getting the applicants, giving them a fair chance to choose between our institutions. And Murray Brennan and I, behind the scenes, worked with the Society of Surgical Oncology to set up the match program for fellows and a number of other things that became standards for training surgical oncology fellows in the United States, because we had agreed the two of us will do things in the same way and set these standards, which other institutions and training programs followed. So even though there is this so-called rivalry, there were still a lot of conversations between the two institutions to work together, because we knew we had the responsibilities as the two largest cancer centers, the two largest surgical oncology programs in the world, and to set high standards and consistent standards for the good of both cancer patients and trainees.

T.A. Rosolowski, PhD:

Well, amazingly good outcomes with that

Charles Balch, MD:

Yes.

T.A. Rosolowski, PhD:

including unexpected of the NCCN.

Charles Balch, MD:

And not many people know about that, [laughter] because we did that quietly.

T.A. Rosolowski, PhD:

Yeah, very cool story.

Charles Balch, MD:

But the other thing that's a good story is the creation of the MD Anderson Outreach Corporation. And, again, this was Mickey LeMaistre's vision, to begin to export the standard and quality of care to other geographic regions so that patients did not need to travel to downtown Houston in order to get their care. And we started out in a few locations in Texas, but Mickey's vision was bigger than that, and that's why we started with Buck Brown, what became MD Anderson at Orlando, and even had the Tex Moncrief MD Anderson Cancer Center in Fort Worth. And this was because Tex Moncrief, who was a benefactor of both UT Southwestern and MD Anderson, his wife had developed breast cancer. He brought her here for me to treat her, and because of that relationship he was willing to fund a new cancer center, largely around radiation therapy, in Fort Worth, much to the consternation of the leadership at UT Southwestern, because it was in their backyard. And interestingly, now there is the Tex Moncrief Cancer Center under UT Southwestern, after Mickey and I had departed from MD Anderson.

T.A. Rosolowski, PhD:

Interesting story.

Charles Balch, MD:

But this is something that was the forerunner of what is now the MD Anderson Network, the Houston area MD Andersons, and the international areas. All of this was established because of Mickey's vision, and we planted some of the initial seeds in that period of 1993 to 1996.

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Chapter 13: Head of Hospitals and Clinics: Managed Care and the Origin of the National Comprehensive Cancer Network;

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