Phoenix Children’s Hospital Benefits from Partnering with Largest Competitor

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PCH-thumbBob Meyer, President and Chief Executive Officer

As partnerships become more critical to a healthcare organization’s success, leaders need to be open-minded and ready to think outside of the traditional paradigms of healthcare collaborations.

In Phoenix, Ariz., one hospital made an alliance that has benefited two organizations and led to tremendous growth, along with improved care for patients.

Consolidating in a unique market

Phoenix Children’s Hospital is situated within a rather unique market in Maricopa County.

Much of Arizona is rural, yet about 80 percent of the state’s population lives in Maricopa County, including more than one million of the state’s 1.6 million children.

The population alone allows for the hospital to be able to offer high-end programs, and for the past four years, the hospital has been ranked among the best children’s hospitals in the country in four of 10 programs on U. S. News & World Report’s Best Children’s Hospitals list.

But Phoenix Children’s Hospital wasn’t always able to achieve such prominence. The market used to be disjointed, filled with many players and stiff competition. President and Chief Executive Officer Bob Meyer decided to disturb the market and bring about more unity, at least for pediatrics.

Dignity Health and Banner Health are the two primary health systems that serve multiple facilities in the county. St. Joseph’s Hospital, part of the Dignity Health network and Phoenix Children’s Hospital’s biggest competitor, was faced with the prospect of building a new children’s hospital to remain competitive with Banner Health.

Meyer approached the facility and began a dialogue to combine forces: St. Joseph’s would transfer its pediatric hospital, a 180-bed hospital within a hospital, to Phoenix Children’s Hospital in exchange for a 20 percent membership interest.

This collaboration, which closed in 2011, saved St. Joseph’s from building a $300-million facility that could not be supported by volumes and allowed Phoenix Children’s to expand its programs and focus on what it does best–caring for children.

“The area was prime for consolidation, and the agreement allowed us to build a real children’s hospital that provides high-quality care and competes nationally,” Meyer said.

Growing specialty programs and branching out

By consolidating the market, Phoenix Children’s Hospital grew to being among the top 10 in the nation in terms of volume for Cancer, Cardiology and Heart Surgery, Neurology and Neurosurgery, and Orthopedics. Furthermore, it has constructed a new technologically current facility to provide state-of-the-art care to its patients.

The hospital has centers of excellence in six major programs: cardiology, hematology/oncology, neurosciences, trauma, neonatology, and orthopedics.

Meyer said each service line is evaluated in terms of its volume, which has to be large enough to make it relevant to the market and have reasonably good economics. The hospital also has smaller programs that provide care for patients with HIV, sickle cell, diabetes, and cystic fibrosis.

Phoenix Children’s has been growing internally as well, adding a new 11-story bed tower in 2010 and branching out into the community. With most of Arizona outside of Maricopa County being rural, the hospital has built four ambulatory facilities and is growing telemedicine and remote clinic links.

The hospital is now about halfway to its goal of raising $40 million for constructing a new emergency department and level 1 trauma center.

Hiring and training a strong workforce

Recruitment and retention are big factors within any healthcare organization, especially amid growing fears of a workforce shortage. Meyer said he has seen some abatement of the shortage, but he would like to see an increase in local talent. The majority of pediatric specialty fellowship programs are east of the Mississippi and require a larger recruitment effort to lure those trainees out West.

Meyer said Phoenix Children’s Hospital actively supports the medical and nursing schools locally and has expanded its teaching program, residencies, and fellowships. In his more than 10 years at Phoenix Children’s, Meyer has helped to build the employed physician group as well.

“The employed medical group is a key strategic asset for us,” he said. “As we expand geographically, we need to have talented practitioners to fill those facilities.”

Managing reform and meaningful use

Only a few provisions of the Affordable Care Act specifically benefit pediatric care, but Meyer said the hospital worked closely with Arizona’s governor to get approval of a Medicaid expansion.

Maricopa County has many undocumented immigrants, but most of the children are U.S. citizens, making them eligible for Medicaid. Meyer said Phoenix Children’s doesn’t have a large program with uncompensated care as can be found in adult hospitals, but under-reimbursement through Medicaid has been an ongoing financial concern for the facility.

“We have a good, cooperative working environment with the government in this state,” Meyer said. “Not getting the Medicaid expansion would have had huge negative consequences for hospitals, but we had a governor who saw the benefit and was willing to push for the expansion.”

Phoenix Children’s Hospital is also making investments in electronic medical records, with most of the basics already in place throughout the hospital. The facility chose Allscripts for its EMR vendor and has customized many elements to pediatrics.

Meyer said the hospital built its own pediatric dose range checking system that it now sells to other Allscripts clients. Currently, it is expanding the EMR to ambulatory facilities.

Phoenix Children’s is now well-situated within its market and is able to focus on developing the highest-quality programs for the pediatric community.

Meyer said forming collaborations with adult care is part of the hospital’s future strategic plan, along with ensuring that patients continue to receive seamless care as they age out of the facility. He plans to keep an open mind and maintain the same forward thinking in coordinating adult care as he did with children’s care.

“Traditional ways of thinking and paradigms are falling by the wayside,” he said. “Most children’s hospitals are afraid of being acquired, yet we acquired our largest competitor. You have to keep an open mind and be flexible.”

-by Patricia Chaney

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