Creating a Blueprint for Strategic Partnerships

How can hospitals stay competitive? By partnering with programs to provide service that goes above and beyond the norm.


Hospital systems are facing increased competition, rising costs, and changing business models from fee-for-service to value-based pricing. Leaders from three hospital systems that created strategic partnerships said they have found a lot of value from the partnerships. Despite the large number of mergers & acquisitions transactions over the last several years, a partnership may be more in-line with the hospital’s strategy and mission, noted panelists in a late Tuesday morning session of Hospital of Tomorrow, a U.S. News & World Report conference.

“Where people get into trouble is when you get too big and uncontrolled, if you merge just for the sake of merging,” said Steven Altschuler, CEO of The Children’s Hospital of Philadelphia. “It behooves leaders to have a clear strategic vision. How do we develop governance models to ensure that [poor mergers and unsustainable growth] doesn’t happen?”

Moderator Ceci Connolly of PwC noted that when consolidation in a healthcare market happens, prices tend to go up. Jesse Cureton, EVP of Novant Health, said that transparency should lead to quality improving, prices going down, and M&A activity done for the right reason.

Panelists’ partnering activities have included:

  • The Children’s Hospital of Philadelphia built a small biotech company within the hospital, which allowed them to create reengineered viral vectors in-house, create an arm to work with the FDA, collect other intellectual property, and attract outside investors to help bring therapies to market, Altschuler said. CHOP has also formed overseas partnerships to bring more patients for treatments, such as spinal bifida. The hospital has performed its 1,000th fetal intervention for spinal bifida this year, in part due to those partnerships, Altschuler said.
  • Dignity Health, a California hospital system, partnered with a physician network and a Blue health plan in 2009 with the goal of better coordinated care and information sharing. The partnership has saved the CalPERS retirement system $50 million, improved outcomes, and shortened wait times, said Lloyd Dean, President and CEO of Dignity. But he emphasized the most important thing was the element of human touch, the fact that “someone listens and hears you.”
  • Cureton, EVP and Chief Consumer Officer of Novant Health, said that he has brought a banking industry perspective to the nonprofit hospital system in North Carolina. Novant has rapidly grown and added services, including patient video visits with doctors. He said banks over the last 20 years have been innovating and getting out of the brick and mortar business; 70 percent of customers don’t go to banks, rather ATM’s or online. “In 20 years, we won’t call ourselves hospitals, we’ll be institutes of wellness,” Cureton said. “We need to think of ourselves as fiduciaries: acting in the sole best interest of the community and the people of the community in everything we do.”
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