Vanderbilt Chancellor Says Financial Independence Will Let Medical Center Move Faster

At Vanderbilt University Medical Center, Dr. James Crowe, right, watches as graduate student Andrew Flyak adjusts equipment used in the production of Ebola antibodies. Credit: VUMC

Vanderbilt University Medical Center will be going through a major restructuring: it’s becoming financially independent from the university.

The change, announced Friday, isn’t expected to affect employees, patients or students. But Vanderbilt chancellor Nick Zeppos says one of the biggest differences will be in the way the hospitals are managed.

“This really needs to be an entity with a smaller board that meets more regularly,” he says, “and is making strategic decisions with a different pace in a really dynamic healthcare environment.”

After a process that could take more than a year, the Vanderbilt hospital will be overseen by a new governing board made up of people from both the university, including Zeppos, and the medical center.

Zeppos says the university and hospitals will continue to fund each other in certain areas, including research, but the medical center will now be more “nimble” and have more opportunities to get outside funding.

Teaching hospitals across the country have been experimenting with new structures and partnerships in an effort to cut costs, says Janis Orlowski, interim chief health care officer of the Association of American Medical Colleges. Vanderbilt’s decision to separate finances isn’t common, she says, but it does make sense to her.

“It allows the university board that probably had a lot of its attention drawn to the medical center — should we have a new hospital, should we buy an MRI scanner — to have an appropriate view of its liberal arts program, its history, its philosophy,” she says.

Currently, about three-quarters of Vanderbilt’s employees work at the medical center. Orlowski predicts the two sides will remain close, similar to other academic medical centers with a similar setup, including Harvard and Northwestern. Zeppos was adamant that would be the case.

“I think the partnership will really be a great one and a healthy one,” he says.

This decision comes after the hospital laid off hundreds of employees last year as part of an effort to skinny up its budget, but a Vanderbilt official tells the Tennessean that the two are not related.