Foreign​ ventures​ help​ academic​ systems​ boost​ brand,​ revenue

For Massachusetts General Hospital in Boston, the recent decision to help a Chinese health system open a new hospital was years in the making.

Jiahui Health, a private system based in Shanghai, first reached out to Mass General in 2012 for advice on how to design a new facility and plan its overall operations. That relationship evolved over the years, and when Jiahui looked for a partner to help open its new 300-bed hospital, Mass General was the obvious choice.

"We've been working together for so long, both sides felt it was time for a broader relationship," said Greg Pauly, senior vice president of Mass General.

Under the agreement, Mass General will provide guidance on the structure of the facility, operations and governance, as well as expertise in clinical areas. Physicians from the Mass General Cancer Center will train their peers at Jiahui on best practices in cancer care. Nurses will establish programs focused on quality and patient safety. The new hospital is slated to open in October.

"For our faculty, these relationships get their intellectual juices flowing," Pauly said. "They start asking questions like, 'Why do we do that?' "

Mass General is one of several U.S. academic health systems that have forged agreements with foreign governments or organizations. The partnerships are viewed as an opportunity for U.S. systems to not only expand their brand overseas, but complement their missions as educators and speed acceptance of the latest clinical innovations. These international ventures also create an additional revenue stream in the wake of ever-shrinking reimbursement.

Launching services in foreign countries also presents challenges, requiring robust amounts of investment, planning and manpower to execute successfully. As a result, the international arena is still largely the domain of prestigious, multibillion-dollar academic health systems.

"If you're a big player and you're not engaged in having a presence overseas, it could potentially be a threat," said Chris Collins, a principal at ECG Management Consultants. "It expands your brand recognition . . . and you don't want to be left behind."

Cleveland Clinic has been a player on the international scene for well over a decade and its success is largely influenced by the status it holds in the U.S. Most of its foreign partners want to learn from the best, and the clinic has trademarked itself as one of them.

"The brand is very important in these relationships," said Steve Glass, chief financial officer of the Cleveland Clinic system. "The clinic has a great reputation globally."

The value of the brand also means it needs to be protected. At Cleveland Clinic Abu Dhabi, which opened in 2015, much has been done to ensure the quality of care and services are on par with the system's U.S. standards.

The clinic manages the facility in the United Arab Emirates as part of an agreement with Mubadala Healthcare. Under that agreement, the clinic hires and oversees all the staff, including about 220 physicians. In addition, quality metrics are routinely monitored to ensure the Abu Dhabi clinic meets the standards set forth under the agreement.

"We don't allow anyone to use the brand if we don't have the ability to ensure there is a certain level of quality we can monitor," Glass said.

Mubadala, a private investor-owned company, is a prime example. The United Arab Emirates is looking for ways to improve and expand its healthcare industry. Patients who can afford to travel to Western Europe or the U.S. for care do so, but that is only a small sector of the population. The majority of citizens don't have the financial means to travel and need better access to services close to their home.

Since opening two years ago, the Abu Dhabi hospital has become a preferred destination for people across the Middle East, Glass said. The Cleveland Clinic is well known around the world, so people will travel to the Abu Dhabi hospital, a much shorter trip than going to Europe or the U.S.

So far, none of the clinic's international ventures present an economic risk. The partnering organization reimburses the clinic for its help, and the clinic doesn't have a financial stake in the project's success.

That will change after it opens a London hospital in about three years. Cleveland Clinic will be responsible for the entire project with no help from a partner. Cleveland Clinic CEO Dr. Toby Cosgrove will oversee the hospital's opening after he steps down at year-end, and he will stay on as an adviser to the system.

Experience in the international market has positioned the clinic for this risk-based venture, Glass said.

Although a significant portion of the clinic's $8 billion revenue comes from domestic operations, its international business is its "most profitable" and the "fastest growing" segment of the system, he said, noting that it has helped offset financial pressures on the domestic front, where there is constant pressure to keep costs down in the face of declining payments. "It has definitely supported the organization financially as we face challenges with reimbursement," Glass said.

Academic centers also seem to benefit from trading in new ideas and innovations. The UPMC system adopted a cost accounting system used by the transplant center it manages in Palermo, Sicily, because of how well it analyzes the price of services based on specific conditions. The Italian government also partnered with Pittsburgh-based UPMC over a decade ago to create a $398 million biomedical research and biotechnology center.

"Our international locations have become an engine for innovation and development," said Dr. Bruno Gridelli, executive vice president of UPMC International and director of UPMC Italy.

A $14 billion organization, UPMC has a robust international infrastructure to support work overseas. More than 200 employees are solely focused on overseeing and managing the system's international ventures.

Chuck Bogosta, president of UPMC International, said the system's board and its C-suite fully support investing in overseas operations to such a large extent. The health system largely looks for international partners that want to improve access to healthcare services in their countries, Bogosta said. This has been an effective strategy for UPMC because foreign governments and companies "don't want to work with organizations whose priority is to take patients out" of their country, Bogosta said.

The opportunity to advance research and education internationally supports the mission of academic medical centers. "Academic medical centers are best-positioned to train and educate physicians," ECG's Collins said.

UCLA Health has focused most of its international efforts on education and research. The Los Angeles-based system has staff in dozens of locations around the world, but it has just begun to delve into the consulting realm. The system announced in November that it would advise a Chinese property company on developing a new hospital in Guangzhou.

Under the agreement, UCLA Health will provide a business plan to Chinese developer R&F Properties that outlines the design of the building, best practices in hiring physicians and staff, and quality policies.

The venture was the first of its kind for UCLA and the process has been meticulous. UCLA has hired consulting firm MedPoint Health Partners to help advise it on how best to execute the partnership. A team of about 30 UCLA staff members, including the chief medical officer and chief nursing officer, are also weighing in on the plan.

"We wanted to make sure the business plan was viable . . . and it elevates quality of care in Asia," said Michael Burke, director of UCLA Health International.

Revenue is not the main driver for UCLA, Burke said, at least not yet. "It is more about elevating our profile around the world, improving clinical quality, setting new standards, and trying to give back in a new way. A small bonus is that it does diversify our market, but that is not our leading goal."​