Providers are still under financial pressure, however, and system executives are learning how to balance their investments based on geography, aging infrastructure and available virtual care opportunities to capture the greatest returns.
Sanford, which reported a 5.4% year-over-year revenue increase for the first nine months of 2023, is investing in ancillary services such as durable medical equipment, retail pharmacy, occupational medicine and home health in rural areas. The goal is for those types of services to grow to about 20% of all Sanford’s margin contributions over the next five years, compared with 8% now, Hocks said.
The efforts are already starting to pay off. Ancillary services contributed about $20 million to Sanford’s bottom line this year, Hocks said. “If you’re going to run an integrated health system, it’s more than having a health plan, a clinic and a hospital,” he said. “You’ve got to be able to meet patients where they are and where their needs are.”
Sanford is also looking to add market share by implementing virtual care services for behavioral health, primary care and obstetrics, Hocks said. It plans to open a $43 million virtual care center in Sioux Falls by the end of 2024.The center will act as a support hub for virtual services and house an incubator lab where Sanford can test at-home care technology, he added.
Pittsburgh-based UPMC is also prioritizing capital projects to bolster its financial performance. The system, which reported a 9.3% revenue increase for the first nine months of 2023, has invested roughly $3 billion in capital projects since 2020.
In May, the system opened the UPMC Mercy Pavilion, which houses its Vision and Rehabilitation Institutes that focus on translational research and outpatient rehabilitation services. Construction also continues on the new $1.5 billion UPMC Presbyterian hospital, a 17-story replacement slated to open in 2026.
“We have continued to substantially invest for the long-term, forging ahead to grow access to our patient-centered, cost-effective clinical care and community services throughout all our regions,” UPMC Chief Financial Officer Fred Hargett said.
Phoenix Children’s Hospital has been hiring physicians and enhancing services to help drive revenue growth, said Dr. Jared Muenzer, chief physician executive at Phoenix Children’s and chief operating officer for Phoenix Children’s Medical Group.
Over the past couple of years, Phoenix Children’s has been ramping up its neonatology program with investments into its intensive-care services, including a 48-room neonatal intensive-care unit coming online in 2024 at its Thomas campus, and by contracting with other facilities to provide those services.
Phoenix Children’s, which saw a 9.3% revenue increase for the first nine months of 2023, also hired anesthesia and infectious disease clinicians from private groups in late 2022, Muenzer said. He noted hospital leaders have monthly discussions about which service lines need investment and where.
“We chose not to back off the pedal in the sense of what our future looked like,” Muenzer said. “We kept going with our model of geographic expansion, programmatic expansion, continuing to innovate in the patient care space as much as we could.”
