Going global: The University of Pittsburgh’s world-class international network

Most American hospital leaders are looking at international markets these days. While medical tourism may not be bleeding away much revenue right now,they know it may soon. With much-cheaper services available  in India, Thailand, Costa Rica and Mexico, to name just a few locations, and a growing movement to certify the safety care along U.S. lines, it’s inevitable that American hospitals will feel the pinch eventually.

How should hospitals respond?  Well, one strategy is to jump into foreign markets, rather than wait for foreign markets to swallow them. And that’s just what the University of Pittsburgh Medical Center has done.

Few hospitals have dived into the international market as deeply as UPMC, whose facilities outside of the U.S. generate almost $100 million per year.  UPMC’s ambitious overseas programs, which employee 1,300 staffers, are a precursor of things to come, though they may also offer an opportunity to see what can go wrong when American hospitals fan out into foreign waters.

At present, UPMC operates 14 different operations in six countries, including Greece, Qatar, England, Japan, Ireland and Italy, according to a report in the Pittsburgh Post-Gazette. The UPMC overseas network, which developed over 14 years, include general hospitals, cancer centers, a transplant center and a biomedical research facility. That’s one hell of a stretch for a large hospital with an immense operation to take care of here at home.

Of course, UPMC can afford to make big bets. According to the American Hospital Directory, the 1,602-bed medical center took in $9.3 billion dollars in gross patient revenue in 2008. While its profit margin that year was a not-too-impressive 0.7 percent, most hospitals tanked in 2008, the year of the Wall Street meltdown.

To me, the real question is whether it’s practical for smaller hospitals to adopt such a strategy.  I have no guess as to what this kind of expansion costs, but it’s pretty obvious it can’t be cheap. While hulking giants like UPMC can plan for the long term, community hospitals may be too strapped to pay their bills or build much-needed facilities.

Still, the unfortunate reality is that even struggling hospitals will have to find a way to walk down this path, perhaps through partnerships if they can’t build out foreign facilities of their own. My guess is that within 10 years, hospitals that don’t are going to take it on the chin. This is no joke, folks.

About the author

Anne Zieger

Anne Zieger

Anne Zieger is a healthcare journalist who has written about the industry for 30 years. Her work has appeared in all of the leading healthcare industry publications, and she's served as editor in chief of several healthcare B2B sites.

4 Comments

  • UPMC has an impressive international strategy, though one that most hospitals would find it difficult to copy or fund. What I think many hospitals are missing, though, is that the development of sophisticated medical services around the world is, in effect, price-based competition targeted directly at US hospitals’ most profitable services. You don’t hear “Come to India for obstetrics or mental health.” How many high-end ortho, neuro, cardiac or cosmetic procedures could the typical suburban hospital stand to lose before ‘profitable’ becomes ‘break-even’ or worse? Few hospital planners have yet come to grips with competitors operating at such geographical distance.

  • Visionaries in the 80’s looked at shores beyond US and are reaping the benefit today. Like what Steve said, the economical Healthcare package coupled with quality care is making a difference to patients who travel across seas. What UPMC has done is great and should look at a setting up more centers or tie up’s in more countries.

    As the world is moving t0 a global village concept, it would not be far when we see people travel across continents even for small procedures like dental care which seems more lucrative in emerging market countries. With the Healthcare industry growing at AGR 26%, emerging market countries will play a lead role in determining the future of HC.

    UPMC model is the future for all especially in the US.

  • Hi Steve:

    Thank you for your input!

    My guess is that few hospitals and health systems believe that it’s time to develop an international network (yet). At least for the next five years, I predict that most will dedicate little or no resources to such projects.

    But this is probably short-sighted. While few can afford to spend anything like UPMC has, I’m confident that well-positioned hospitals can at least form substantive global partnerships which will get them oriented in foreign waters.

    And I think that now is the time to get started.

    By the way, you and other readers may be interested to note that Tenet recently made an offer to buy an Australian hospital chain.

    While the deal fell through, it demonstrates that industry leaders are already jockeying for position outside of the U.S. (See this post for more details on Tenet’s offer:) http://bit.ly/cXX85b )

    My prediction is global partnering and deal-making will begin to pick up as early as Q4 of this year.

    -Katherine

  • Thank you for your thoughts, Paul!

    You mention dentistry as one reason for global tourism, and I’m aware that there’s several high-ticket procedures (such as cardiac surgery and joint replacement) which are moving overseas. What other specialties do you think will be affected next? And how long do you think it will take for, say, a small community hospital to feel the effects of this trend?

    -Katherine

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