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April 10, 2022 03:00 AM

Cleveland Clinic London is latest show of global growth

Crain's Cleveland Business
Lydia Coutré
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    Cleveland Clinic London Exterior 1_i.jpg
    Cleveland Clinic
    Cleveland Clinic London, which opened at the end of March, is just the latest example of the Clinic’s global expansion.

    International interest in Cleveland Clinic's model of care has accelerated as the health system continues to broaden its network and develop relationships around the world.

    Cleveland Clinic London, which opened at the end of March, is just the latest example of the Clinic's global expansion. The system has long had facilities in Toronto and Abu Dhabi, and it's working with partners in China and the Bahamas.

    "The hunger for the expertise of our caregivers at the Cleveland Clinic has only increased," said Dr. Rakesh Suri, president of international operations. "And therefore we are responding to those requests in a way that continues to allow us to prioritize our mandates here in Ohio and the U.S. where we're based, but also to help those in our global community who seek Cleveland Clinic quality care."

    The 184-bed hospital that opened in March is the Clinic's second location in London, following the Cleveland Clinic Portland Place Outpatient Centre, which opened in September 2021.

    Cleveland Clinic London links the Clinic's existing research efforts — in Northeast Ohio, Florida, Abu Dhabi and across the global system — to the "tremendous research assets" in London, said Dr. Brian Donley, CEO of Cleveland Clinic London.

    "In London are some of the leading universities and leading research institutions, and so we have been working on those relationships, and strengthening those relationships," he said. "And when you strengthen research collaborations, and you get that diversity of thought, and new ways to think about problems and new ways to solve those, that's when you can really see an exponential increase in outcomes for patients and new discoveries."

    The Clinic is not disclosing the total cost of its London project, but in 2018 through a U.K. subsidiary it financed £665 million (about $900 million in U.S. dollars) to fund constructing and equipping the hospital.

    In July 2021, Moody's assigned Aa2 to Cleveland Clinic's outstanding debt and a stable outlook. Moody's cited, among other factors, its strength as an international brand, which "will allow the system to grow revenue outside of the constrained northeast Ohio market and offset the impact of the pandemic on volumes," the July 2021 rating rationale stated. It also noted that Moody's expects the system's "centralized and integrated governance structure will help the system maintain good cash flow margins while managing execution risks related to its London expansion and ongoing integration of Florida acquisitions."

    In 2021, the Clinic's total operating revenue reached $12.4 billion (up 17% from 2020) with an operating income of $746 million — more than triple the year prior. The operating margin was 6%.

    Associating the Cleveland Clinic's brand and reputation with more quality facilities in different parts of the world is a plus for the health system across the country and in Northeast Ohio, said Tom Campanella, healthcare executive in residence at Baldwin Wallace University.

    "The big question mark will be the financial side of it," he said.

    As a private hospital, Cleveland Clinic London offers an alternative to public hospitals of the National Health Service — the United Kingdom's publicly funded healthcare system.

    Campanella points to two sides of COVID-19's impact on how patients have accessed care during the pandemic. With public hospitals overwhelmed during surges, private hospital utilization increased. But on the other hand, patients' ability to travel due to restrictions or their willingness to due to comfort level is likely to have a negative impact on international patients across Europe, he said.

    And longer term, there's likely to be increased competition.

    "There's going to be more private hospitals moving in to try to get that market share," Campanella said. "The challenge for the Clinic is to differentiate themselves from these other competitors."

    Contributed photo

    Dr. Brian Donley

    The Clinic's global efforts date back to its 2006 signing of an agreement with Mubadala Investment Company to provide care in Abu Dhabi.

    The same year, Cleveland Clinic Canada opened a 26,000-square-foot outpatient clinic in Toronto. Nearly a decade later, in 2015, the 364-bed Cleveland Clinic Abu Dhabi hospital opened.

    And a couple years after that, the Clinic launched a new structured platform, Cleveland Clinic Connected, designed to connect members with Cleveland Clinic enterprise experts in a collaborative manner. The program aims to help the Clinic serve more people through virtual health, while also supporting care the delivery of local care for those seeking it at member institutions.

    Luye Medical Group became the first — and to date, only — member of Cleveland Clinic Connected. The two are collaborating on the development of Shanghai Luye Lilan Hospital in the Shanghai New Hong Qiao International Medical Center.

    The hospital, which will be owned and operated by Luye Medical Group, is under construction and is expected to open in 2026.

    Cleveland Clinic Connected emphasizes supporting quality, safety and experience initiatives. Member physicians can connect with clinical experts at Cleveland Clinic for physician-to-physicians consultations, and member institutions can access the Clinic's expert advisory services, education and training.

    The program is just one model through which the Clinic offers its expertise to international partners. In 2021, the system formed a strategic advisory council with a tertiary healthcare institution in the Bahamas. Through a two-year agreement, Doctors Hospital Health System and the Clinic aim to improve and expand healthcare delivery in the Bahamas.

    Collaborating with local partners or consulting with existing systems by leveraging intellectual capital can create brand recognition with less financial risk, Campanella said, noting there's "a lot of potential for win-win scenarios" in such models.

    Campanella points to a number of factors to consider, including declining inpatient trends and uncertainty in the market and financial challenges in the U.S. healthcare system, such as risk arrangements and the shift away from the fee-for-service payment models.

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    "The more financial challenges you're having in the US, the less risks you want to take when you do something globally," he said.

    In the Clinic's mix of different models, the system ultimately decides how to enter a market — international or not — based on an analysis of what that community needs, Suri said.

    "Just like there are different models of serving patients between Cleveland, Lakewood, Bay Village, Akron, Florida, and in different parts of the U.S. — every community has specific needs — so too, are there differences in the needs between populations globally," Suri said.

    Cleveland Clinic London is building on the lessons of the Clinic's other locations in the U.S. and abroad, said Donley, who has been with the system since 1996. A key lesson in Abu Dhabi especially was the importance of building out a research infrastructure from the very start.

    He also noted the importance of investing in education from the beginning, citing partnerships that are already in place in London with universities to train fellows, medical students and nurses.

    "I think having Dr. (Tom) Mihaljevic as our CEO, is probably the best example of how we've taken that learning from Abu Dhabi to build London," Donley said.

    Mihaljevic, who oversees the system's global strategy, served as CEO of Cleveland Clinic Abu Dhabi before becoming president and CEO of the entire health system.

    The past two years in particular required a lot of shared learning, and ultimately strengthened the system's existing relationships around the globe, Suri said. In many ways, this means the system will emerge from the pandemic with "a stronger bilateral partnership" across all of its locations around the globe.

    "And the one thing that has come through is that the demand for high quality healthcare still continues to grow," Donley said. "And so we feel confident that the demand for the Cleveland Clinic model of care will continue to always be there. And we look forward to serving those needs in all of our areas, and now including in London."

    This story first appeared in our sister publication, Crain's Cleveland Business.

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