In shift, Partners HealthCare seeking growth globally
State officials may have dashed Partners HealthCare’s dreams of growing south of Boston — but not south of Shanghai.
Partners’ Harvard-affiliated teaching hospitals, Brigham and Women’s and Massachusetts General, are increasing efforts to build on their international reputations and find business opportunities in China, the Middle East, and other regions of the world where growing and wealthy populations are demanding more and better medical care.
Partners, the state’s largest health system, so far has no plans to acquire or build its own hospitals overseas. But executives are on the hunt in international markets for contracts to develop medical programs, train doctors and nurses, and manage hospitals.
Partners’ increased focus on foreign projects comes as its efforts to expand in Massachusetts have foundered. A state judge earlier this year rejected a plan to allow the health care system to acquire hospitals north and south of Boston. Partners subsequentlyabandoned a bid to take over South Shore Hospital in Weymouth and put a proposed acquisition of Hallmark Health System of Medford on hold, indefinitely, under the threat of antitrust actions by Attorney General Maura Healey.
“Partners is running out of growth opportunities in Boston,” said Robert Field, a professor at Drexel University in Philadelphia who studies health care consolidation. “[Overseas] is a new untouched territory where they don’t have to worry about antitrust regulators. It’s a whole new playing field.”
Mass. General is now working to finalize a deal to jointly manage a hospital that a Chinese development company plans to establish on Hengqin island, near the gambling hot spot of Macau. The hospital is still two to three years from opening. Separately, Partners is designing the building and clinical programs for another hospital project in Shanghai, slated to open in 2017.
Brigham and Women’s, meanwhile, recently hired its first chief business development officer largely to target overseas markets. Steven Thompson founded the international business arm of Johns Hopkins Medicine in Baltimore before coming to Brigham six months ago.
Thompson recently traveled to southern China with officials from Evergrande Group, one of China’s largest property development companies and a donor to Brigham and Harvard Medical School, to visit potential sites where Evergrande wants to build a hospital. Brigham would not be an investor in the hospital, but it has begun talks on consulting roles that may include developing medical programs and training executives and clinical workers, Thompson said.
Brigham is also holding discussionsabout projects in Saudi Arabia and United Arab Emirates, but Thompson declined to name the parties since the talks are in early stages.
In addition, the hospital is scouting opportunities in several South American countries, such as Brazil and Peru.
“The reality is the traditional lines of revenue for [US] health care organizations are threatened,” Thompson said. “It makes good business sense always to diversify your revenue base. We need to reach out in more and different ways.”
International programs offer Partners and other US health systems a way to increase revenues as they come under pressure from government and private insurers to control costs and prices at home, analysts say. For example, in Massachusetts, the state limits medical spending growth to 3.6 percent a year.
Gulf nations, because of their wealth, and China, because of its huge population, rising middle and upper classes, and growing demand for better medical care, are particularly attractive markets for Partners and other US providers. In addition to management and consulting fees, the benefits of an increased presence in these and other nations include opportunities for Partners hospitals to leverage their international reputations and attract more foreign patients to Boston for treatment.
About 2 percent of patients at Brigham and Mass. General travel from abroad.
“Our institutions want to be recognized as the best in global health care,” said Dr. Gilbert H. Mudge, chief executive of Partners HealthCare International.
Partners, which owns 10 hospitals in Massachusetts, has done various international projects for more than a decade, such as training nurses in New Delhi and designing obstetrical programs in Doha, Qatar. One of Partners’ latest projects is advising developers who want to build a teaching hospital in the African nation of Ivory Coast.
But Partners’ newest efforts involve larger projects and have greater significance, given the system’s limited ability to grow in Massachusetts.
International programs bring in roughly $10 million to $20 million per year, a tiny fraction of Partners’ overall $11 billion in revenue. Most of it goes toward supporting Partners’ hospitals in Massachusetts, Mudge said.
Doing business abroad can be complex, requiring hospital executives to grasp not just the health care industry in another country but also the politics and business regulations. It can take years for discussions to yield real projects.
Yet many hospitals are looking overseas. Johns Hopkins and Cleveland Clinic have made forays abroad. Cleveland Clinic manages two hospitals in Abu Dhabi, including one that opened this year and bears the Cleveland Clinic name.
Boston Children’s Hospital recently hired a senior vice president to hone its international strategy. Children’s has held training programs for thousands of doctors and nurses around the world, including at a pediatric cancer hospital in Querétaro, Mexico. Children’s does not have an ownership stake in any facilities abroad but that “is one of many possibilities that we’re considering as we develop our international strategy,” said Margaret Coughlin, chief marketing officer.
“Most countries are very interested in building their medical institutions,” she said. “We’re interested in helping them make that happen.”