Becker's Hospital Review

16 Sign up for the COMPLIMENTARY Becker's Hospital Review CEO Report & CFO Report E-Weeklies at www.BeckersHospitalReview.com or call (800) 417-2035 year of operation. "There's a lot of buzz out there that North Shore-LIJ is a name brand, and we think that we may get a good deal of business," says Mr. Gold. He says developing the health plan is "very, very hard to do" and it has already forced North Shore-LIJ to change the way it delivers care, as it makes administrators more cognizant of which sites of service, physicians and programs are most effective. It's also changing the way the 15-hospital system interacts with other commercial insurers — but not necessarily for the worst. "This does not mean, in any stretch of the imagination, that we'll only do business with our own insurance company," says Mr. Gold. "We want to deal with every single payer, and we think the future is using the infrastructure and [insurer] capabilities we have to add value to our relationships with those large payers." Getting commercial, going global UPMC formally launched its advisory services in May 2013, in which the system will provide consulting services of sorts to healthcare providers in the U.S. and abroad. It is working with the government of Kazakhstan to create a national oncology treatment and research center, it's partnering with the Asian American Medical Group in Singapore to help develop a comprehensive transplant center, and it's worked with Citizens Hospital in India to create a sophisticated clinical pathology laboratory in Hyderabad. During our conversation, Mr. Bogosta said the system had just struck another advisory services agreement with a partner in Japan. UPMC's international efforts started more than 15 years ago when it struck a deal with the government of Italy to operate a transplant hospital in Sicily. It has since opened a cancer center in Rome and runs a hospital and two cancer centers in Ireland. The Pittsburgh health giant isn't the only system to get a hand in the global medical market. Mayo Clinic has extended its reach to Abu Dhabi, but it has earned more attention lately for its aggressive efforts to transform its headquarters in Rochester, Minn., into a clinical tourism destination. It's doing so through a multi-billion-dollar, five-year economic development plan for what it calls Destination Medical Center. But UPMC remains unique in many ways, one being that it decided to be more aggressive in its overseas expansions rather than focusing entirely on bringing patients to Pittsburgh. "There are only a couple of organizations that have entered into this market," says Mr. Bogosta. "Nobody else is really jumping in the way we did. Rather than putting people on the ground [abroad], they're still looking at this as a branding opportunity to bring people to the U.S." The idea to provide advisory services stems from a trend Mr. Bogosta and his colleagues noticed a few years back, when organizations called to express interest in a partnership. During these phone calls, after executives affirmed the potential partnership fit with UPMC's strategy, the caller would insist that the interest was solely in UPMC's clinical or management expertise — not its money. Then UPMC would enter negotiations for up to a year. When a relationship seemed within reach, Mr. Bogosta and his colleagues would sometimes learn the partner was "just as much interested in us being a financial investor as [having] our talent and expertise," he says. Mr. Bogosta is clear that UPMC is not inclined to make financial investments in most oversea operations. It's especially unlikely that the system will make financial investments upon expanding to a new country for the first time. Consequentially, UPMC parted ways with organizations seeking mainly its capital, ultimately ending up with little to show for its efforts. "We said maybe we should look at something more incremental in nature than the type of long-term, operational agreements we've made in Italy and Ireland," he says. "Advisory services position us to provide value to our partners in a smaller-scale engagement that may still lead to bigger management contracts." In addition to its advisory arm, UPMC has also struck commercial contracts with some big names. It partnered with General Electric to develop a new digital pathology company in Pittsburgh. It also paired with the Advisory Board to create Evolent, a company that teaches other healthcare providers how to create insurance units and take on financial risk for patients. The system doesn't simply go after clinical research arrangements. "We want to put our money on the table, and we want a partnership where both organizations benefit," says Mr. Bogosta. Resisting an identity crisis No one wants to be known as a jack of all trades and a master of none, and the moniker can be especially lethal for an integrated health system. Despite the strategic focus on partnerships and expansions, high-quality healthcare remains a service in perennial demand. How do health systems extend talent, capital and investments to the health insurance exchanges and Kazakhstan, for instance, while maintaining their quality, brand and mission? Can a hospital system also become payer and consultant without distorting itself? To Mr. Gold, diversifying is necessary for healthcare organizations to succeed. Every other successful business has found a way to diversify the methods and mechanisms it has to deliver its products or services, he says. For NorthShoreLIJ, this not only includes its health plan, but also expanding into CVS Caremark's MinuteClinics and other retail settings, opening more urgent care sites, developing a medical complex without beds in New York's Greenwich Village and partnering with the once-troubled Lenox Hill Hospital in Manhattan in 2010. "I don't buy the idea that we're diluting ourselves," says Mr. Gold. "I think we're strengthening ourselves from the business point-of-view and learning skills necessary for the future." UPMC doesn't present itself as the final solution for international providers' challenges. The system has narrowed its focus to only a handful of areas in which it believes it can provide the most value: oncology, transplants and health information technology. And wherever UPMC makes its next footprint, Mr. Bogosta says western Pennsylvania remains its anchor. Management teams overseas — from hospital CEOs to human resource directors and marketing directors — all continue reporting to people in Pittsburgh. Mr. Bogosta says demand for UPMC's expertise worldwide is vast. "If, in the end, we can improve patient care for our partner in their country while bringing knowledge and resources back home, we feel like we've been successful," says Mr. Bogosta. "There are six billion people in the world. The problems are infinite." Conclusion It's an exciting time to watch how the traditional perception of a hospital or health system evolves. By broadening their approach to a health system's form and function, some of the country's more integrated systems are repositioning themselves and devoting more resources to non-acute-care strategies. Health plans, advisory services and global partnerships are just a few of the many "alternative" strategies a health system may pursue. Those that have done so successfully say it's important for hospitals to "resist temptation" and not fall prey to every marketplace trend or follow the steps of their competitors. This is especially important, as sources in this piece indicated they receive calls about potential deals weekly, if not more often. Systems can run the risk of missing the mark if they do not establish their priorities, the value they provide to patients or potential partners, and a clear case for return on investments. n MORE ONLINE: Want more information on health system strategy? See the following articles available at www.BeckersHospitalReview.com: n roviders Becoming Payors: P Should Hospitals Start Their Own Health Plans? n Things the Most Innovative 5 Health Systems Do Differently n Strategies for Integrating a 5 Large Healthcare System

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