Hospital Partners of America

Source: Healthcare Digital

Date :07/01/2008 04:12:49

Joseph Murgo, Hospital Partners EVP, explains how a simple approach to physician-partnerships is redefining health care in the U.S.

Written by Emmet Cole and Produced by Tom Venturo

Letting doctors be active participants in hospital governance and planning is bringing success to hospitals - and patients. “We’re redefining hospital care by enabling our physician investors to be involved in strategic decisions that affect hospital operations. Our physician partners help our local operating teams define ways to improve the overall patient experience and identify best practice standards of health care,” says Joseph L. Murgo, Hospital Partners EVP.

Financially invested doctors are more emotionally invested in the overall success of their hospital. The opportunity to invest in a well-run, profitable hospital attracts top talent, which further increases the quality of care. Since doctors hold sway over decisions both large and small – from facility layout to marketing plans – the physician-partnership model allows physician owners to contribute their collective wisdom, resulting in a cycle of continuous improvement.

“It’s the difference between a chef working at a restaurant, and a chef sharing ownership in the restaurant,” Murgo says. “It’s a different psyche. It’s a different mindset. You’re a lot more committed to the success of the business, and you’re a lot more committed to the satisfaction of the clientele – in this case the patients and their families.”

This approach clearly works - to the tune of $700 million a year and a reputation for top-tier care. By offering partnership to its physicians, HPA turns distressed hospitals into thriving, profitable, high-quality medical centers.

Ambitious vision

HPA isn’t the only hospital company involved with physician-syndicated hospitals, but they could be the most ambitious. Murgo notes the existence of several specialty hospital companies, but says that HPA is the first to tackle projects as large as general med-surge, acute care hospitals as its primary core business model.

“There are some for-profit hospital companies larger than us that are sort of dabbling with the physician ownership concept, but it’s not their core business model,” Murgo says. “It just happens to be our underlying core business model, and that’s what makes us unique.”

Founded in 2002, HPA has targeted struggling hospitals to fuel its growth. Currently, HPA runs six hospitals – two in Houston, Texas, two in Dallas, Texas, one in Austin, Texas and one in Redding, California, a relatively remote town north of Sacramento.

HPA bought St. Joseph Medical Center - the oldest hospital in Houston - from a not-for-profit organization in 2006. Before HPA stepped in, St. Joseph struggled to break even. Twelve months later, the hospital generated over $25 million in earnings in fiscal year 2007. Similarly, the Redding hospital pulled in an almost six percent profit margin in fiscal year 2007 compared to a negative earnings situation when HPA bought it in 2004.

“One of the core success factors for our business model is to have strong physician leaders who really care and are committed and can rally their colleagues around making the hospital a success,” says Murgo.

High quality care

HPA hospitals ensure quality care in many ways, explains Murgo.

First, HPA hospitals continuously monitor and measure clinical results against the Centers for Medicare and Medicaid core quality measures, which include acute myocardial infarction, congestive heart failure, pneumonia, and surgical care improvement. Shasta Regional in Redding is in the top ten percent in the country for these core quality measures.

Second, each hospital has received distinctive external accreditation in key areas. For example, River Oaks in Houston has received certification from the American Society for Bariatric Surgery as a Bariatric Surgery Center of Excellence, as well as United Health Care’s Center of Excellence designation for spine surgeries. And Shasta Regional is one of only a handful of Bariatric Centers of Excellence for Blue Cross of California and is only the third hospital in California and the only hospital in Shasta County that has received full accreditation as a Chest Pain Center by the Society of Chest Pain Centers.

Third, HPA hospitals stay on the forefront of technology use. For example, St. Joseph Medical Center in Houston employs a leading-edge technology surveillance tool called MedMined, which provides real-time infection control monitoring via data mining technology to pinpoint hospital-acquired infection outbreaks.

Next, HPA hospitals maintain all required state and federal licensure, participate in the federal Medicare program and are accredited by key external bodies such as the Joint Commission on Accreditation of Healthcare Organizations. And finally, HPA has recently commissioned an enterprise-wide Quality Council whose goal is to elevate cutting-edge quality initiatives throughout the Company.

Challenges and opportunities

Encouraging physicians to invest in a hospital brings a host of different challenges, first and foremost keeping the new partners happy. “They’ve opened up their wallets and have written a check and are actual investors in the facility,” Murgo says. “In the hospital business, physicians are always your customer. But when the physician becomes an actual owner in the facility, then it’s a different level of customer.”

HPA ensures that investing physicians understand the financial health and key issues surrounding a specific hospital on a regular basis. The company also works hard to provide a voice for the physicians, through board membership and committees. “Most often in non-syndicated hospitals, physicians are kept at an arms-lengths distance with regard to things like the financials,” Murgo says. “In our hospitals we have finance committees, and they are made up of physician investors. We want our physician partners to understand the financial and clinical metrics that drive the overall success of the institution.”

But alongside the challenges, the partnership also creates a learning opportunity for the physicians, who get an up-close view at the complexity of hospital administration. “It’s kind of like the curtain in the Wizard of Oz,” Murgo says. “You’re really not sure who’s behind there maneuvering the levers and knobs. Our facilities are different because our philosophy is to pull back the curtain and make sure our physician partners understand the hospital’s critical success indicators.”

Murgo says a hospital’s biggest priority should never sway from patient safety and quality medical care. But a commitment to the overall good of the hospital requires tough, sometimes unpopular decisions.

For example, a hospital might need to move funds from one project to another of more importance, or perhaps isolate funds needed elsewhere for a new piece of equipment critical to patient safety.

“Once they understand that, and they have an understanding of why certain decisions need to be made, they get on board with the reason and rationale for the decision,” Murgo says. “They know what makes their practice tick, but they really don’t understand what that picture looks like for a hospital. Our model gives physicians the opportunity to have that view, many of them for the first time.”

Future expansion

“We couldn’t be more bullish on the future of HPA,” Murgo says. Two hospitals in the Dallas metroplex recently came under HPA’s control. The two hospitals – Trinity Medical Center and RHD Memorial Medical Center – will be the first physician-syndicated hospitals in Dallas. Murgo says the projects meet all the criteria the company sets for potential acquisitions, and have drawn incredible interest from the area’s medical community.

“Dallas is a new market for us,” Murgo says. “So when we come into a market like Dallas, and there are no physician-syndicated general med-surg acute care hospitals, physicians really pay attention to the entrance into that market. The high-level of physician interest has resulted in a tremendously successful offering, with some of the biggest and most prestigious groups in Dallas electing to participate in the newly-emerging partnerships.”

Considering that the HPA model has worked in places as diverse as Houston and Redding, Murgo says future expansion might happen anywhere in the US. “We are by nature entrepreneurial and opportunistic. Our next acquisition could be in Milwaukee or Seattle. The key is the ability to coalesce a core group of high quality physician investors who want to help us create a new model for health care in that market.”

It’s a simple, but dramatically effective approach to health care that’s redefining the medical sector - one hospital at a time.