Extending expertise
Skip to main content
MDHC_Logotype_white
Subscribe
  • My Account
  • Login
  • Subscribe
  • News
    • This Week's News
    • COVID-19
    • Providers
    • Insurance
    • Government
    • Finance
    • Technology
    • Safety & Quality
    • People
    • Regional News
    • Digital Edition
    • Cigna's MDLive acquisition could foster virtual-first plan development, analysts say
      As COVID surged, vaccines came too late for at least 400 medical workers
      Why AstraZeneca and J&J's vaccines, in use elsewhere, are still on hold in America
      Lawmakers probe if Cuomo's policy fueled nursing home deaths
    • As COVID surged, vaccines came too late for at least 400 medical workers
      Why AstraZeneca and J&J's vaccines, in use elsewhere, are still on hold in America
      Lawmakers probe if Cuomo's policy fueled nursing home deaths
      0928p1_nysna Rally 2_Dave Sanders_i.jpg
      New York State Nurses Association report finds over 26,000 nurse understaffing complaints filed in 2019 and 2020
    • The Check Up: Dr. Imran Andrabi
      The Check Up: Dr. Imran Andrabi of ThedaCare
      Dr. Imran Andrabi
      Q&A: ThedaCare CEO says lessons from COVID-19 will inform new approaches to population health management
      Hospitals confront water shortages in winter storm aftermath
      beaumont-hospital-royal-oak_i_i_i.jpg
      Beaumont says nearly 2,000 second-shot vaccinations canceled due to vaccine shortage
    • High MLRs inspire insurers to focus on quality improvements
      Blue Cross and Blue Shield of Oklahoma, OU Health Physicians mired in contract dispute
      Beyond the Byline: Insurers are betting on virtual-first plans as COVID-19 shifts care pathways
      Beyond the Byline: Insurers are betting on virtual-first plans as COVID-19 shifts care pathways - Transcript
    • Why AstraZeneca and J&J's vaccines, in use elsewhere, are still on hold in America
      Lawmakers probe if Cuomo's policy fueled nursing home deaths
      Questions arise about public disclosure of wasted vaccines
      Becerra confirmation starting to look more likely
    • Genomics firms taking advantage of SPACs trend to go public faster
      COVID-19 could dent hospital revenue by at least $53 billion in 2021, AHA says
      deloitte GDP image chart graph going up
      Sponsored Content Provided By Deloitte
      Breaking the cost curve
      Dennis Dahlen
      Health systems aren't rushing to cut back on financial liquidity
    • Teladoc reports $383.3M in fourth-quarter revenue, up 145%
      man and woman looking at ipad wearing face masks stock image
      Sponsored Content Provided By Surescripts
      Improvements to benefits data can enhance ePrescribing and the patient experience
      Oscar Health's $1B IPO sets the stage for more health tech exits in 2021
      A map of the U.S. with images of the coronavirus.
      The digital divide becomes a new social determinant of health
    • Why AstraZeneca and J&J's vaccines, in use elsewhere, are still on hold in America
      COVID vaccine websites violate disability laws, create inequity for the blind
      Walgreens to sell Labcorp COVID-19 PCR home collection kits over-the-counter
      angela karpf headshot
      Sponsored Content Provided By B. Braun
      Making patient safety a policy priority
    • Michael Jordan, Novant team up to address health equity
      Former Ascension CEO, the first to lead the health system, passes away
      Biden's pick to head CMS would be first Black woman to hold post
      RAKESH SURI MD_i.jpg
      Cleveland Clinic creates president of international operations position
    • Midwest
    • Northeast
    • South
    • West
  • Insights
    • ACA 10 Years After
    • Best Practices
    • Special Reports
    • Innovations
    • The Affordable Care Act after 10 years
    • Dr. John Fischer
      Patient-reported outcomes tool for hernia surgery helps physicians improve care
      New care model helps primary-care practices treat obesity
      doctor with patient
      COVID-19 treatment protocol developed in the field helps patients recover
      Rachel Wyatt
      Project to curb pressure injuries in hospitals shows promise
    • What's next for on-demand telehealth companies?
      A CalOptima PACE vaccination clinic.
      Will COVID-19 be the catalyst for creating a more sustainable healthcare system?
      A map of the U.S. with images of the coronavirus.
      The digital divide becomes a new social determinant of health
      Ascension’s St. Mary’s Hospital Surgery Center at Towne Centre and Allegheny Health Network’s Bethel Park surgery center
      Hospitals see opportunity, risk in ambulatory surgery centers
    • Dr. Daniel Hall
      UPMC pilots machine learning, telehealth to inform patient transfers
      A woman being recorded using her inhaler on a smartphone.
      Digital check-ins, connected inhalers help control asthma
      A phone screen showing the question, "Mary we hope this information was helpful and we'd like to keep guiding you. Are you interested in knowing when it's your turn to receive the vaccine?"
      Chatbots, texting campaigns help manage influx of COVID vax questions
      A woman with a wearable sensor talking to her provider.
      Wearable sensors help diagnose heart rhythm problems in West Virginia
  • Transformation
    • Patients
    • Operations
    • Care Delivery
    • Payment
    • What's next for on-demand telehealth companies?
      Rising prescription copays drop adherence, spike mortality, research shows
      Dr. John Fischer
      Patient-reported outcomes tool for hernia surgery helps physicians improve care
      Highmark Health inks six-year cloud, tech deal with Google
    • Hospitals' Medicare billing practices suggest upcoding, OIG says
      California hospitals prepare ethical protocol to prioritize lifesaving care
      Amazon, JPMorgan Chase, Berkshire Hathaway disband Haven
      Digital pathways poised to reshape healthcare continuum in 2021
    • Dr. Daniel Hall
      UPMC pilots machine learning, telehealth to inform patient transfers
      A woman being recorded using her inhaler on a smartphone.
      Digital check-ins, connected inhalers help control asthma
      Humana partners with in-home provider for 24/7 care
      A phone screen showing the question, "Mary we hope this information was helpful and we'd like to keep guiding you. Are you interested in knowing when it's your turn to receive the vaccine?"
      Chatbots, texting campaigns help manage influx of COVID vax questions
    • Coordinated payment policies could speed transition to value, experts say
      CMMI's geographic direct contracting model needs an overhaul, experts say
      Hospitals fight UnitedHealthcare policies over lab test, specialty drug payments
      Cigna eliminates prior authorization for coronary CT scans
  • Data/Lists
    • Rankings/Lists
    • Interactive Databases
    • Data Points
    • Health Systems Financials
      Executive Compensation
      Physician Compensation
  • Op-Ed
    • Bold Moves
    • Breaking Bias
    • Commentaries
    • Letters
    • Vital Signs Blog
    • From the Editor
    • Dr. Alan Kaplan
      The risks, rewards of taking organizations 'where they haven’t gone before'
      Wellstar CEO calls adapting for the pandemic her bold move
      Howard P. Kern
      Recognizing the value of telehealth in its infancy
      Dr. Stephen Markovich
      A bold move helped take him from family doctor to OhioHealth CEO
    • Dr. Stephen Markovich
      Making sure we're aligned along the path to achieving inclusion
      Barry Ostrowsky
      Ending racism is a journey taken together; the starting point must be now
      Laura Lee Hall and Gary Puckrein
      Increased flu vaccination has never been more important for communities of color
      John Daniels Jr.
      Health equity: Making the journey from buzzword to reality
    • In-person visitation must be part of the national COVID-19 response
      We've lost so much to the pandemic, but we've also made gains that will endure
      Medical groups key to meeting president's vaccine pledge
      We need a better social care referral loop, but it requires technology as well as the human touch
    • Letters: Eliminating bias in healthcare needs to be ‘deliberate and organic’
      Letters: Maybe dropping out of ACOs is a good thing for patients
      Letters: White House and Congress share blame for lack of national COVID strategy
      Letters: VA making strides to improve state veterans home inspections
    • Sponsored Content Provided By Optum
      How blockchain could ease frustration with the payment process
      Sponsored Content Provided By Optum
      Three steps to better data-sharing for payer and provider CIOs
      Sponsored Content Provided By Optum
      Reduce total cost of care: 6 reasons why providers and payers should tackle the challenge together
      Sponsored Content Provided By Optum
      Why CIOs went from back-office operators to mission-critical innovators
  • Awards
    • Award Programs
    • Nominate
    • Previous Award Programs
    • Other Award Programs
    • Best Places to Work in Healthcare Logo for Navigation
      Nominations Open - Best Places to Work in Healthcare
      Nominations Open - 50 Most Influential Clinical Executives
    • 100 Most Influential People
    • 50 Most Influential Clinical Executives
    • Best Places to Work in Healthcare
    • Health Care Hall of Fame
    • Healthcare Marketing Impact Awards
    • Top 25 Emerging Leaders
    • Top 25 Innovators
    • Minorities in Healthcare
      • - Luminaries
      • - Top 25 Minority Leaders
      • - Minorities to Watch
    • Women in Healthcare
      • - Luminaries
      • - Top 25 Women Leaders
      • - Women to Watch
    • Excellence in Nursing Awards
    • Design Awards
    • Top 25 COOs in Healthcare
    • 100 Top Hospitals
    • ACHE Awards
  • Events
    • Conferences
    • Galas
    • Webinars
    • COVID-19 Event Tracker
    • podium march webinar logo lockup
      Sponsored Content Provided By Podium
      Webinar: Critical Touchpoints for Every Patient’s Journey — How Technology Plays an Important Role
      scp health logo lockup march 2021
      Sponsored Content Provided By SCP Health
      Webinar: COVID’s call to action — Reset for success in 2021
    • Women Leaders in Healthcare Conference
    • Social Determinants of Health Symposium
    • Healthcare Transformation Summit
    • Leadership Symposium
    • Virtual Briefings
      • - Hospital of the Future
      • - Mental Health
      • - Patient Safety & Quality
      • - Strategic Marketing
      • - Virtual Health
      • - Workplace of the Future
    • Best Places to Work Awards Gala
    • Health Care Hall of Fame Gala
    • Top 25 Minority Leaders Gala
    • Top 25 Women Leaders Gala
  • Listen
    • Podcast - Next Up
    • Podcast - Beyond the Byline
    • Sponsored Podcast - Healthcare Insider
    • Video Series - The Check Up
    • Sponsored Video Series - One on One
    • Next Up Podcast: Educating patients on the COVID-19 vaccine with Tanya Andreadis
      Dr. Joseph Cacchione
      Next Up Podcast: Educating patients on the COVID-19 vaccine with Dr. Joseph Cacchione
      Dr. Karen DeSalvo
      Next Up Podcast: What to expect with telehealth and healthcare technology in the next four years
      Carter Dredge
      Next Up Podcast: Ready, set, innovate! Innovation and disruption in healthcare
    • Beyond the Byline: Insurers are betting on virtual-first plans as COVID-19 shifts care pathways
      Beyond the Byline: How residents' stories shape our coverage of the vaccination rollout in nursing homes
      Beyond the Byline: Regulators aim to boost value push with fraud and abuse law updates
      An older man wearing a mask receiving a vaccine.
      Beyond the Byline: Verifying information on the chaotic COVID-19 vaccine rollout
    • Outreach during COVID-19
      Leading intention promote diversity and inclusion
      Introducing Healthcare Insider Podcast
    • The Check Up: Dr. Imran Andrabi
      The Check Up: Dr. Imran Andrabi of ThedaCare
      The Check Up: Tanya Blackmon
      The Check Up: Tanya Blackmon of Novant Health
      The Check Up: Dr. Patrick Hwu
      The Check Up: Dr. Patrick Hwu of the Moffitt Cancer Center
      The Check Up: Suresh Gunasekaran
      The Check Up: Suresh Gunasekaran of the University of Iowa Hospitals & Clinics
    • ivana naeymi-rad one on one intelligent medical objects
      Video: Ivana Naeymi Rad of Intelligent Medical Objects
  • MORE +
    • Advertise
    • Media Kit
    • Newsletters
    • Jobs
    • People on the Move
    • Reprints & Licensing
MENU
Breadcrumb
  1. Home
  2. Finance
January 12, 2013 12:00 AM

Extending expertise

Duke LifePoint reaches across U.S.

Beth Kutscher
  • Tweet
  • Share
  • Share
  • Email
  • More
    Print
    The acquisition of Marquette General Health System, pictured, marks the beginning of Duke LifePoint's nationwide expansion.

    Duke LifePoint marked the start of an aggressive, nationwide expansion strategy for the two-year-old joint venture when it inked a deal to acquire a hospital on Michigan's Upper Peninsula.

    The addition of Marquette (Mich.) General Health System, 1,100 miles from Duke University Medical Center—which holds a small stake and brings its name and clinical expertise to the venture—also will test whether a university health system could play on the same turf as its investor-owned peers.

    Partnerships among for-profit and not-for-profit systems are nothing new—nor is it unusual for an academic medical center to forge clinical affiliations with hospitals hundreds of miles away. But groups such as the Mayo Clinic Care Network, which was launched in 2011 and now has 12 members, are about extending expertise on clinical matters, not ownership.

    Under the Duke LifePoint agreement, Duke University Health System receives a 3% interest in the initial equity of each hospital acquisition and does not have to put up any capital to fund the deals, according to financial statements filed to bondholders.

    For its fiscal 2012 ended June 30, the system reported just $754,000 in noncurrent assets related to its investment in the joint venture.

    The partnership is a chance for Duke to extend its brand—and tap into a new revenue stream—while minimizing its financial risk.

    But the experiment does carry reputational risks, as Duke needs to show that it can franchise its core strengths and that its reach extends beyond the corporate letterhead.

    Dr. Bill Fulkerson, executive vice president of Duke University Health System, noted that the joint venture is just beginning to forge a national strategy and developing new clinical programs is “part of our mission.”

    “The main concern is not about diluting the brand, but about scaling our product,” Fulkerson said. “Our name is more important than just about anything else. That's our commitment—that you're getting Duke.”

    Durham, N.C.-based Duke launched its joint venture with publicly traded LifePoint Hospitals, Brentwood, Tenn., in January 2011 with the acquisition of 102-bed Maria Parham Medical Center, Henderson, N.C.

    Since then, the group has added 50-bed Person Memorial Hospital, Roxboro, N.C., and 86-bed Twin County Regional Healthcare, Galax, Va. The 812-bed academic medical center draws referral business from the smaller hospitals, all within 150 miles of its main campus.

    But it was the July deal for 276-bed Marquette General that was a turning point for the joint venture—signaling its intention to be not only a regional health network, but also a national one, where potentially every region of the country is ripe with targets.

    Leif Murphy, executive vice president and chief development officer at LifePoint, said the joint venture has a list of 50 “perfect candidates” to pursue, which he described as having a reputation for quality but in need of additional capital to meet the demands for technology and clinical upgrades. Duke LifePoint, he said, is focusing on hospitals in the southeast region stretching as far as eastern Tennessee and South Carolina, but also major acute-care hospitals that could be located anywhere.

    LifePoint CEO Bill Carpenter declined to quantify how many deals he expects to pursue this year, but noted that LifePoint has acquired $500 million in new revenue with the joint venture's four buys with the potential to continue on that scale.

    The national deals the joint venture plans to target will be distinct from the community hospitals the investor-owned chain usually pursues. Instead, it is looking for tertiary-care centers that have strength in Duke's core programs—cardiology, oncology, neonatology and sports medicine—but lack an academic partner.

    “Marquette is a good example of what we think is possible for Duke LifePoint,” Carpenter said. “They have the ability to benefit from the expertise that Duke brings in that area.”

    More acquisitions are likely to follow in Michigan's Upper Peninsula as Duke LifePoint attempts to build a regional network of hospitals that will refer more complex patients to Marquette. Carpenter noted that the goal is to have patients treated closer to home rather than travel to 759-bed Henry Ford Hospital in Detroit or the Mayo Clinic in Rochester, Minn., for care.

    “What we've put together at Duke LifePoint is the ability to improve clinical outcomes with Duke's ability to provide care at the lowest cost setting,” Carpenter said.

    The joint venture may also acquire ancillary care centers that complement the acute-care hospitals in the network, Murphy said. “The entire continuum of care is up for consideration.”

    Officials from Duke and LifePoint have been quick to emphasize that Duke's involvement in the joint venture is larger than its equity interest might suggest.

    Trey Crabb, managing director at investment bank Ziegler, noted that having Duke on board gives the joint venture an edge. “Duke is along for what they do best, which is the clinical piece,” he said.

    Tertiary-care hospitals need access to capital—and if they still harbor any bias against for-profit systems, Duke's prestige is supposed to smooth any lingering doubts. In that way, the tie-up is intended to capitalize on the strengths of each partner: LifePoint's operating efficiency and ability to raise capital, Duke's clinical prowess and esteemed reputation.

    In a seller's market, “it's not all about money; sometimes it's about structure, governance and fit,” Crabb said.

    LifePoint Hospitals doesn't have a brand, something it readily acknowledges and takes prides in. It considers its Brentwood, Tenn., base a “hospital help center” rather than its corporate headquarters.

    That's where Duke comes in. “Their brand carries with it the quality and clinical expertise that they're well-known for,” Carpenter said. “They were very careful to protect the Duke brand.”

    Before they formed their joint venture, the two systems tested the waters when LifePoint's Danville (Va.) Regional Medical Center brought in Duke to run the cardiovascular service line at the 151-bed facility.

    Other regional hospitals took note. And when Twin County Regional Healthcare undertook an 18-month due-diligence process to find a buyer, it had both Duke and LifePoint on an initial list of 28 potential partners.

    “We were finding it increasingly challenging to remain viable as a community hospital,” said President and CEO Jon Appelbaum, who noted that systems came and gave a joint presentation. “The guiding principle with Duke LifePoint is creating a place where patients want to come for care.”

    In a deal that closed April 1, LifePoint, through the joint venture, paid $20 million for an 80% stake in Twin County and committed another $20 million for capital expenditures over the next 10 years, according to LifePoint's stock exchange filings. The company also contributed $3 million toward physician recruitment efforts.

    Appelbaum said the hospital has now invested in digital mammography, video endoscopy and wireless communication systems. “I'm confident that we will be able to measure significant gains in all measures of patient safety and patient care,” he said.

    Duke had become accustomed to receiving inquiries from community hospitals that were struggling to go it alone. But Fulkerson said he was “a little surprised” when he learned that LifePoint had been looking at Marquette—and even more surprised that Marquette had an interest in working with Duke.

    Marquette General Health System already had an affiliation in place with seven other partners in the Upper Peninsula when it started to look for a buyer. The alliance was intended to help prepare for the challenges of healthcare reform, including setting up an accountable care organization.

    But local affiliations “wouldn't change anything for us in terms of access to capital,” said Judy Watson-Olson, vice chairwoman of the hospital board.

    So in September 2011, Marquette selected a financial adviser that helped whittle down a list of 26 potential companies—both for-profit and not-for-profit, inside and outside Michigan—that could be potential partners.

    Gary Muller, Marquette's president and CEO, noted that the three physicians on the search committee of about a half-dozen people were instrumental in selecting Duke LifePoint. “The physicians liked the (access to capital) but, boy, did they like the quality.”

    As part of the deal, which closed Sept. 1, LifePoint paid $132.7 million in cash for the system and committed another $350 million to invest in capital improvements and physician recruitment.

    Joint ventures between for-profit and not-for-profit systems date back as far as the 1996 partnership between HCA, Nashville and St. David's Hospital, Austin, Texas. “It was a very controversial approach at the time,” said Chris Jedrey, a healthcare M&A attorney at law firm McDermott, Will & Emery.

    Pushback from the Internal Revenue Service to limit these types of deals—including a subsequent legal fight over St. David's tax-exempt status—also had a chilling effect.

    “There's been a revival of joint venture deals,” Jedrey said. “At this point, the market is much more accepting of this fact. … A lot of this is driven by access to capital.”

    Academic medical centers in particular have an educational and research mission that requires access to larger numbers of patients and patient revenue, Jedrey noted. He added, though, that operating in multiple markets has not been a standard component of these deals.

    “I think this is a changing landscape, the definition of where these academic medical centers play and how they use their brands,” said R. Lawrence Van Horn, executive director of health affairs and associate professor at Vanderbilt University's Owen Graduate School of Management. “Duke is a little bit out in front of this, but I wouldn't be surprised if we started to see other academic medical centers building their brand, building their referral business.”

    Van Horn noted that potential challenges include cultural differences between the partners as well as being able to convince patients and clinicians that the academic medical center is along for more than just marketing purposes. “You have to be able to franchise that delivery model,” Van Horn said.

    Other academic medical centers are already following suit. In September, Tufts Medical Center, Boston, said it was partnering with Vanguard Health Systems, Nashville, and a physician network in Massachusetts to form a new system that would also seek acquisitions.

    “I would say every major academic medical center in the U.S. has been contacted by … companies looking to do the same thing,” Ziegler's Crabb said. “That's a given.”

    Letter
    to the
    Editor

    Send us a letter

    Have an opinion about this story? Click here to submit a Letter to the Editor, and we may publish it in print.

    Recommended for You
    Genomics firms taking advantage of SPACs trend to go public faster
    Genomics firms taking advantage of SPACs trend to go public faster
    COVID-19 could dent hospital revenue by at least $53 billion in 2021, AHA says
    COVID-19 could dent hospital revenue by at least $53 billion in 2021, AHA says
    Sponsored Content
    Get Free Newsletters

    Sign up for free enewsletters and alerts to receive breaking news and in-depth coverage of healthcare events and trends, as they happen, right to your inbox.

    Subscribe Today

    The weekly magazine, websites, research and databases provide a powerful and all-encompassing industry presence. We help you make informed business decisions and lead your organizations to success.

    Subscribe
    Connect with Us
    • LinkedIn
    • Twitter
    • Facebook
    • RSS
    • Instagram

    Stay Connected

    Join the conversation with Modern Healthcare through our social media pages

    MDHC_Logotype_white
    Contact Us

    (877) 812-1581

    Email us

     

    Resources
    • Contact Us
    • Advertise with Us
    • Ad Choices Ad Choices
    • Sitemap
    Editorial Dept
    • Submission Guidelines
    • Code of Ethics
    • Awards
    • About Us
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Modern Healthcare
    Copyright © 1996-2021. Crain Communications, Inc. All Rights Reserved.
    • News
      • This Week's News
      • COVID-19
      • Providers
      • Insurance
      • Government
      • Finance
      • Technology
      • Safety & Quality
      • People
      • Regional News
        • Midwest
        • Northeast
        • South
        • West
      • Digital Edition
    • Insights
      • ACA 10 Years After
      • Best Practices
      • Special Reports
      • Innovations
    • Transformation
      • Patients
      • Operations
      • Care Delivery
      • Payment
    • Data/Lists
      • Rankings/Lists
      • Interactive Databases
      • Data Points
    • Op-Ed
      • Bold Moves
      • Breaking Bias
      • Commentaries
      • Letters
      • Vital Signs Blog
      • From the Editor
    • Awards
      • Award Programs
        • 100 Most Influential People
        • 50 Most Influential Clinical Executives
        • Best Places to Work in Healthcare
        • Health Care Hall of Fame
        • Healthcare Marketing Impact Awards
        • Top 25 Emerging Leaders
        • Top 25 Innovators
        • Minorities in Healthcare
          • - Luminaries
          • - Top 25 Minority Leaders
          • - Minorities to Watch
        • Women in Healthcare
          • - Luminaries
          • - Top 25 Women Leaders
          • - Women to Watch
      • Nominate
      • Previous Award Programs
        • Excellence in Nursing Awards
        • Design Awards
        • Top 25 COOs in Healthcare
      • Other Award Programs
        • 100 Top Hospitals
        • ACHE Awards
    • Events
      • Conferences
        • Women Leaders in Healthcare Conference
        • Social Determinants of Health Symposium
        • Healthcare Transformation Summit
        • Leadership Symposium
        • Virtual Briefings
          • - Hospital of the Future
          • - Mental Health
          • - Patient Safety & Quality
          • - Strategic Marketing
          • - Virtual Health
          • - Workplace of the Future
      • Galas
        • Best Places to Work Awards Gala
        • Health Care Hall of Fame Gala
        • Top 25 Minority Leaders Gala
        • Top 25 Women Leaders Gala
      • Webinars
      • COVID-19 Event Tracker
    • Listen
      • Podcast - Next Up
      • Podcast - Beyond the Byline
      • Sponsored Podcast - Healthcare Insider
      • Video Series - The Check Up
      • Sponsored Video Series - One on One
    • MORE +
      • Advertise
      • Media Kit
      • Newsletters
      • Jobs
      • People on the Move
      • Reprints & Licensing