Milestone 6

9 – 6 0 1 – 0 3 9
A U G U S T 1 5 , 2 0 0 0

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Professor Clayton Christensen and Research Associate Sarah Thorp prepared this case. HBS cases are developed solely as the basis for class
discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management.

Copyright © 2000 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685,
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C L A Y T O N C H R I S T E N S E N

S A R A H T H O R P

Developing Nurse Practitioners at the College of St.
Catherine

I had a view that there should be a greater role for non-physician health care providers in delivering care. St.
Catherine’s would be a place for me to explore the notion of creating new leaders for healthcare.

— Margaret McLaughlin, Dean of Health Care Professions, St. Catherine’s College

February 2000

It was a cold winter morning in St. Paul, Minnesota, and Margaret McLaughlin had just unpacked
the last box of files in her new office at The College of St. Catherine. After a six-month transition
from her former position as Associate Director of the Magee-Womens Research Institute and
Professor of Obstetrics, Gynecology and Reproductive Sciences at the University of Pittsburgh
College of Medicine, she was finally able to devote her full time and attention to her new charge as
Dean of Health Professions. In anticipation of a meeting she was about to have with the head of the
nursing department, she leafed through a pile of article clippings and pulled out a study from the
most recent issue of The Journal of the American Medical Association. The headlines read:

Some Patients have Comparable Short-Term Health Outcomes When Treated By A Physician or
Nurse Practitioner.1

The article provided key findings of a study that had compared outcomes for patients randomly
assigned to nurse practitioners or physicians for primary care follow-up and ongoing care after
visiting a hospital emergency department or urgent care center within the Columbia Presbyterian
Medical Center System. The authors concluded: “Who provides primary care is an important policy
question. As nurse practitioners gain in authority nationally with commercially insured and Medicare
populations now accessing nurse practitioner care, additional research should include these
populations.”2 The study had triggered considerable discussion and debate in the national health
care community. With great excitement, McLaughlin contemplated the implications this might have
for the future of their own graduate programs for nurse practitioners at St. Catherine’s.

1 Mary O. Mundinger, Dr. PH., et al., The Journal of the American Medical Association, issue 283 (January 5, 2000): 59–68.

2 Ibid.

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No sooner had McLaughlin completed the article when Alice Swan, the Chair of the nursing
department, Brenda Canedy, Graduate Program Director, and Patricia Dooley Eid, a graduate
nursing faculty member, entered her office. They began the meeting by updating McLaughlin on
progress in the graduate nursing department. Then Swan mentioned the Mundinger article and said:
“After hearing about this nurse practitioner-run clinic in New York, the faculty in our department are
all wondering about creating our own clinic. Imagine, a clinic run by our own St. Catherine’s nurse
practitioners and students in development!”

McLaughlin delighted in the idea. She had always thought that nurse practitioners made excellent
teachers. She knew from personal experience. Two years ago, her colleague Jane Butler, a certified
nurse midwife with a Master’s in Public Health who taught obgyn at Magee Women’s Hospital to
University of Pittsburgh medical students, had been voted by her students as “teacher of the year.” It
had been the first time at Magee that any faculty other than a trained physician had won the
prestigious award. If medical students are learning effectively from nonphysician-faculty, why
couldn’t nurse practitioners?

McLaughlin knew she did not have the empirical evidence to give Swan, Canedy and Dooley Eid
a thoughtful response. She knew that at St. Catherine’s, students training to be health professionals
were placed in local Minneapolis–St. Paul-based clinics that were run by health provider systems—
HMOs, hospitals, or community-based clinics. Though most of their education had been with nurse
practitioners, physicians also had played a role in their education. Further, in a physician-dominated
health care community, none of these faculty or administrators had ever owned and operated their
own clinic.

Eager to be supportive, McLaughlin wondered how to respond to Swan’s request. She knew such
an initiative would be a tremendous opportunity for the college. “If successful, a program like this
could put us on the map as innovators in this kind of training and organization. More important, it
could serve as a catalyst for empowering our students.”

Health Care Reform

The 1990s brought with it a paradigm shift in the way health care services were provided in the
United States. Market-driven economic policy, dramatic technology developments, changing
demographics, and the knowledge explosion, were all creating a climate of continuous rapid change.3
At one time focused on illness and highly specialized treatment, the U.S. health care system was now
having an increasingly greater emphasis on primary health care.4 One consequence of this was
changes in those professionals who provided health care, the skills they needed, and the educational
institutions that prepared them. One health professional that was impacted by this was the nurse
practitioner. Cost pressures discouraged the traditional family physician from working in primary
health care, and encouraged them to move into specialty areas. Nurse practitioners (NPs), who
traditionally had their greatest emphasis in primary care, were now in greater demand. Representing

3 Carol A. Lindeman, PhD, RN, FAAN (Professor, Emeritus, Oregon Health Sciences University, School of , Portland,
Oregon), “The Future of Education,” Journal of Education, vol. 39, no. 1 (January 2000): 5–12.

4 According to the World Health Organization, primary health care is based on five principles: community participation,
equitable distribution, multi-sectorial cooperation, appropriateness, and health promotion and disease prevention. Primary
Health Care emphasizes collaboration of health professionals and community members, focuses on the development of health-
promoting policies, and advocates for access to care for all people. ( and Health Care Perspectives, The World Health
Organization, p. 116.)

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Developing Nurse Practitioners at the College of St. Catherine 601-039

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the largest group of health professionals in the United States, NPs provided a largely untapped
resource to meet the primary health care needs of the nation.

Nurse Practitioners

Scope of Practice and Training

By 2000, nurse practitioners were registered nurses (RN) who had completed an accredited
program of advanced nursing education. Most NPs had a Master’s Degree in nursing and were
certified by a national nursing certification organization to practice as a nurse practitioner. They
provided primary care services to a wide diversity of populations, often specializing in family, adult,
geriatric, women’s health, school or pediatric nursing. Medical and nursing literature suggested that
nurse practitioners could provide up to 80% of the primary care services traditionally provided by a
primary care physician.5 (For nurse practitioner glossary, see Exhibit 1.)

As patient care became more complicated and demanding, the nursing profession demanded
higher knowledge, and accordingly, higher credentials. In the 1970s, the first certificate programs
were developed for nurses. Once trained in hospitals, nurses were now moved off-site to universities
to develop a better understanding for a more sophisticated practice. Nurse training and preparation
came to include a balance of university-based coursework in basic science and theory, and
experienced-based apprenticeships (called “preceptors”) in local area clinics or hospitals.

The 1970s was the era of role definition for NPs. At work, NPs focused on diagnosing patients and
operated under strict protocol before administering any care. The doctor was the medication
manager. In the policy arena, emphasis was on developing Scope of Practice Statements that
described who NPs are and what they do. Studies were conducted to see if NPs were able to provide
safe and effective care that was equal to medical doctors. Practice protocols were developed to guide
the nurse practitioner and were approved by the supervising doctors. State protocols were developed
to guide the nurse practitioner and were approved by the supervising doctors. State practice acts
were beginning to acknowledge that NPs could diagnose and treat the common health problems in
primary care.

The 1980s was the era of role differentiation. NPs were identifying how they provided unique
contributions different than the doctors. On a national level, economists were predicting an
oversupply of doctors so the NP’s jobs were threatened. State practice acts permitted nurses to make
prescriptions and to select drugs. As a result, NPs had more autonomy in taking care of patients. For
example, a nurse practitioner could prescribe antibiotics for strep throat. If serving a patient with
diabetes, the nurse practitioner could prescribe the insulin and order more without consulting a
doctor.

The 1990s introduced managed care and outcomes. The health care system demanded more
affordable care with more cost effective workers. There was more focus on disease management, and
NPs focused on prevention of illness because research showed the value of tight control to prevent
complications. Nurse practitioner roles serving patients expanded and their essential competencies

5 This paragraph was taken from, “Expanding the Horizons of Healthcare: A Reference Guide,” 2nd edition, published by the
Minnesota Partnerships for Training, Minneapolis, p. 1.

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601-039 Developing Nurse Practitioners at the College of St. Catherine

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evolved to include a broader range of diagnoses—some similar to those made by physicians in
primary care.6 Soon enough, managed care realized that NPs could provide primary health care.

To prepare NPs for these changing responsibilities, nursing programs acclimated. They first
offered diploma degrees, which were the norm in the 1990s. They were housed in hospitals and were
funded similar to the Graduate Medical Education (GME). In the mid-1950s the nursing profession
determined that education of nurses needed to be delivered in institutions of higher learning. While
master’s education in nursing had always been located in colleges and universities, nurse
practitioners were often prepared in these schools at the post-baccalaureate certificate level. In the
early 1990s, the standard for nurse practitioner education was changed to master’s level. Funding for
converting certificate programs to master’s programs was awarded through the Department of
Health and Human Services. (Though a national accrediting body set the bar of quality for these
programs and the federal government provided some sources of funding, individual states governed
precisely what a nurse practitioner’s specific scope of practice could include.) Shortly thereafter, most
nurse practitioners could see patients without consulting with a doctor. With changes in the
healthcare infrastructure (e.g., the rise of managed care and the decrease in hospitals), the setting for
work became community-based clinics. Clinics were required to demonstrate outcomes, and they
generally had a specialty focus.

The Rise of Community-Based Clinics

NPs began to run their own clinics. By 1999, there were approximately 76 nurse practitioner-run
clinics in the country. Since the early 1990s, the most successful clinics that served as models
demonstrated the following characteristics:

1. Community Responsiveness: the models selected address a documented health need faced by
vulnerable and under-served populations;

2. Innovation: creativity in program design, implementation and sustaining factors;

3. Collaboration/Integration: effectiveness in collaboration and coordination among various
partners;

4. Outcomes: measurable improved access to care, health status and economic outcomes;

5. Replication/Sustainability: potential for program replication, or adaptation, and sustainability in
other communities;

6. Administrative Effectiveness: quality and effectiveness in administrative systems.7

Pressures on Higher Education Institutions

Institutes of higher education reinvented themselves to accommodate the changes NPs were
experiencing in their work-settings and the higher levels of knowledge and decision-making
authority they now required. (See Exhibit 2.) Most experts agreed that as their role expanded, so did
the number of clinical hours required to educate them. When it came to the balance of classroom

6 Katherine Crabtree, DNSc et al., “Analysis of Student Nurse Practitioner Primary Care Practice Patterns in the Northwest,
Midwest, and South,” The American Journal for Nurse Practitioners, September/October 1999, p. 10.
7 Models that Work Campaign Clearinghouse, Health Resources Services Administration and the Department of Health and
Human Services, http://www.bphc.hrsa.dhhs.gov/mtw/mtw.htm, phone: (800-859-2386).

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Developing Nurse Practitioners at the College of St. Catherine 601-039

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work and clinical practice, the weight began to shift more toward the clinical practicum.8 This was
easier said than done, as clinical education was expensive and payers were becoming increasingly
unwilling to pay for the extra costs associated with the purchase of services at teacher facilities. Some
schools tried to offset these costs by creating faculty-run health clinics to bring revenue to the
institution. In a report about the future of nursing education, one health care educator cautioned:

It will not be easy in the current climate for nursing to produce significant revenue through
services provided by students and faculty. It will not be easy because of reimbursement issues,
because these services may have a history of being provided without cost, or because other
faculties are also trying to develop reimbursable services. The process of developing revenue
producing services requires faculty and administrators to alter the conception of the role of
faculty to include revenue generation. In addition to securing research and training grants,
faculty may be expected to produce a minimum amount of tuition revenue from their teaching
or clinical activities.9

Another issue was the faculty who taught the NPs. Some argued that having the students work
under the supervision of a licensed nurse practitioner—not the regular physician—afforded the
students the chance to “become more independent and able to function with less supervision.”10 An
analysis of student nurse practitioner primary care practice patterns revealed that “nurse practitioner
preceptors were significantly more likely to allow the student independence than were physician
preceptors . . . (perhaps) . . . because the NP preceptors understood the wider scope of their roles.”11
(See Exhibit 3 for highlights of the scope and content of nurse practitioners’ work.)

By the late 1990s there were close to 54,000 NPs in the United States and a proliferation of nurse
practitioner programs—exceeding 300 nationwide. One thousand two-hundred of these NPs were in
Minnesota, most of whom were working in the Twin Cities.

Healthcare in the Twin Cities of Minneapolis and St. Paul

Healthcare Costs

Boasting one of the highest health insurance coverage rates per capita in the United States, in 1999,
95% of Minnesota residents had health insurance. In spite of this, health care delivery costs kept
insurance premiums at an all time high. In the 1990s, the state legislature introduced two programs to
improve the situation: 1) A health insurance program called Minnesota Cares addressed the people
who needed help affording the insurance premiums, and 2) A waiver which allowed insurance
companies and medical providers to merge and integrate hoping to bring about economic
efficiencies. Some hospitals closed as a result, and five years later costs were still high. Janet Martins,
the Vice President of Operation at a clinic in the Twin Cities, commented: “Despite its best intentions,
it is clear that a shift in the Minnesota Health Care Delivery System must occur. Patient-care centers
are becoming productivity-care centers.” And, while the supply side was focusing on efficiencies,

8 Katherine Crabtree, DNSc et al., “Analysis of Student Nurse Practitioner Primary Care Practice Patterns in the Northwest,
Midwest, and South,” The American Journal for Nurse Practitioners, September/October 1999, p. 11.

9 Carol A. Lindeman, “The Future of Education,” Journal of Education, vol. 39, no. 1 (January 2000): 5–12.

10 Crabtree, p. 11.

11 Crabtree, p. 18.

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601-039 Developing Nurse Practitioners at the College of St. Catherine

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consumers were valuing personal choice over economy. To make matters worse, by the late 1990s,
cuts in Medicare meant declining reimbursement by third-party providers.

Labor Shortages

The labor market was tight. Minnesota had an unemployment rate of 2%, one of the lowest in the
country, putting pressure on health care delivery systems to think more carefully about how to
recruit and compensate a work force. There was a shortage of nurses. The Minnesota Board of
reported it would need 17.5% more nurse in 2005 than it had in 1994, and supply was not
keeping up with demand. Nurses were older (average age 44) and nearer retirement age; more nurses
were choosing part-time employment, and fewer people were choosing nursing as a career.
Registered Nurse (RN) program enrollments were down. Leaders in every part of the health care
delivery industry were looking for alternatives for efficient and effective alternatives for servicing the
consumer.

An Opportunity for Nurse Practitioners

Despite the declining enrollment in RN programs, trends indicated that those who were already
Registered Nurses were increasingly interested in moving to Nurse Practitioner careers.12 State
regulations about the scope of a nurse practitioner’s work made the job more attractive. A Minnesota
statute in 1999 authorized the nurse practitioner the following rights: “Nurse practitioner practice
means, within the context of collaborative management: 1) diagnosing, directly managing, and
preventing acute and chronic illness and disease; and 2) promoting wellness, including providing
nonpharmacologic treatment. They can provide pharmacologic treatment with a collaborative
agreement with a physician.” Prospective NPs could prepare for this practice in one of the state’s six
graduate programs to train NPs.13 Together, the schools graduated 120 to 130 NPs per year. Seventy
percent of the graduates worked in urban areas in primary care settings. The balance served rural
communities. Half of the graduates became family NPs.

Funding for nurse practitioner training programs came from public and private sources. In 1999,
federal money was available through the Department of Health and Human Services for schools
which prepared a significant percentage of their graduates to practice in rural areas or for expansion
of programs. Some of the universities were awarded grants to convert their nursing programs from
certificate based curriculums to master’s level programs. State money supported the state university
programs, but private colleges were for the most part tuition dependent. The Minnesota Education
and Research Costs Trust Fund was established in 1977 by the Minnesota legislature to provide
support for certain medical education and research activities in Minnesota that had historically been
supported in significant part by patient care revenues. Still, some private companies and foundations
were offering some financial support. Health care manufacturers and foundations at hospitals and
health plans that recognized the importance of training supported the initiatives.

Changes in reimbursement from health plans were also allowing NPs to play a larger role. Put
differently, as NPs took on responsibilities more similar to the physician, some insurance companies
were beginning to put processes in place to allow for the reimbursement of services provided by NPs.

12 “Expanding the Horizons of Healthcare: A Reference Guide,” 2nd edition, The Minnesota Partnerships for Training,
Minneapolis, p. 8.

13 The six schools included: The College of St. Catherine, College of St. Scholastica, University of Minnesota, Winona State
University, Minnesota State University, Metropolitan State University. Planned Parenthood of Minnesota also had a program.
All but the College of St. Catherine offered the family nurse practitioner program.

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Developing Nurse Practitioners at the College of St. Catherine 601-039

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The Medicare Act of 1998 made this possible, authorizing NPs in Minnesota to bill for their services.
Medicare promised it would pay NPs 85% of the rate of a normal physician. Specifically, the Code
entitled the following: “Provider reimbursement under Medicare in any location for services ‘which
would be physicians’ services is furnished by a physician . . . which are performed by a nurse
practitioner . . . under the supervision of a physician . . . and which the provider is legally authorized
to perform by the State in which the services are performed.”14 Martins explained one opportunity
the law had enabled: “At the time and still today, most insurance companies recognized ‘physician-
only’ clinics and services. Still, some were warming to the idea because of the lower rates. Blue Cross
Blue Shield, for example, did considerable work in the rural areas where a shortage of physicians had
always opened doors for NPs to take on more responsibilities. They saw a need for it.” With this, one
enterprising nurse practitioner in the Twin Cities decided to start her own clinic. In 1999, Kathleen
Pasqualiani, R.N. and Certified Nurse Practitioner, launched Care Plus, the first independently
owned and operated clinic in the State of Minnesota.

Care Plus

Care Plus was an adult primary care clinic located in downtown Minneapolis. Martins explained
how they reached a decision about the model:

We had to make a variety of choices when thinking about our model. First was location. We
knew that we wanted to be a pure primary and preventative care clinic, but we didn’t want to
go head-to-head with physicians. Steering away from the suburbs, we looked at the metro area
where people were under-served. At first, we found so many free clinics and community
clinics that we didn’t see a clear pocket of unmet needs. At the same time, we had to consider
regulatory changes explaining the scope of practice for a nurse practitioner, and about
insurance company plans and how willing they would be to support us.

It would also be critical for us to have a relationship with a physician, and our medical
director—though he does not provide any service at our clinic—is one. In a physician-
dominated community, it’s hard to even get financing from investors and loans from banks if
you are not connected to a physician. Face it, it’s a lot easier for a doctor to walk into a bank to
get a loan than a nurse practitioner. Insurance companies have denied us because we didn’t
have a physician on site.

We also had to think about costs and our proximity to hospitals or clinics that housed
expensive medical equipment. It was better for us to partner than buy it ourselves. When
thinking about financial viability, our two largest on-going operating expenses are personnel
compensation and benefits, and medical technology.

Care Plus had broken ground, paving the way for other NPs in the Twin Cities to consider running
their own clinic.

14 “Expanding the Horizons of Healthcare: A Reference Guide,” 2nd edition, The Minnesota Partnerships for Training,
Minneapolis, p. 23.

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601-039 Developing Nurse Practitioners at the College of St. Catherine

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The College of St. Catherine

The College of St. Catherine was a Catholic college with campuses in St. Paul and Minneapolis.15
Founded in 1905 by the Sisters of St. Joseph of Carondelet,16 by 1999 the college had 4,372 students
and 230 full-time faculty. The college offered bachelor’s degrees to women in liberal arts and sciences
and certificate, associate and graduate degrees to men and women in health-care and human-service
professions. (For list of accredited programs, see Exhibit 4.)

The school aimed to prepare students to become ethical, effective leaders in their professions, their
communities and their world. The college honored a strong commitment to faith and community
service and adhered to its Roman Catholic identity: “Affirming its Catholic Heritage . . . the college
maintains its conviction that religious and ethical values build a framework for living, its
commitment to the liberal arts as the broad base for all learning, and its pursuit of excellence for its
students.” These guiding principles informed a program that enjoyed a city-wide reputation for
community action. Its connection to the community was strengthened because many of the faculty,
especially those who taught technical skills and professional education programs, were full-time,
clinically based practitioners. Service and experiential learning strengthened the college’s educational
programs. The curriculum involved real-life situations in a variety of ways, including clinical
laboratory settings, internships and fieldwork assignments.

In recent years, the student body of the college had transformed, reflecting the changing
demographics of the Twin Cities. An increasing number of students were on financial aid, and
represented a diverse set of races, ethnic backgrounds, and cultures. In keeping with the founding
purpose of the college, the student body included a number of students who were working to
overcome such barriers to higher education as economic disadvantage; a physical, perceptual or other
form of disability or deficits in educational background. The campus community benefited from the
experience of the range of human diversity among its students and gained an appreciation for those
who had a variety of abilities and backgrounds.17

In 1998, new leadership was brought to the college in hopes of strengthening the college’s
programs and its reputation in the community. Said Vice President and Dean Mary Margaret Smith,
“St. Catherine’s was perceived in the community as a quietly distinguished liberal arts college and
yet with over …