Vanderbilt: Transforming a Health Care Delivery System

In 2013, Vanderbilt University Medical Center was the top ranked hospital in Tennessee by U.S. News and World Report, and among the leading academic medical centers in the entire southeast region. The 2012 US News & World Report hospital rankings listed Vanderbilt's care for kidney transplant (11th), women's health (16th), heart (25th), and cancer (29th) as among the best in the nation. Its $292 million in National Institutes of Health research grants ranked ninth in the nation. Over the previous decade, the medical center had grown revenues, more than tripled its operating margin, and was operating at capacity in many areas, with average inpatient bed occupancy approaching 90 percent, versus the national average of 68 percent.

Despite its growth, Vanderbilt University Medical Center (VUMC) was facing a revenue shortfall of $250 million over the next two years, as more patients shifted to lower reimbursement Medicare coverage and there were rising price pressures from commercial insurers, employers, and individual consumers. Dr. Jeffrey Balser, CEO of the VUMC, had to address the shortfall while maintaining the quality of patient care, education, and medical research.