Long-term vision is crucial for any hospital and health system. And today, health system executives must balance the need for growth with challenges related to finances, the workforce and operations.
Chris Van Gorder, president and CEO of San Diego-based Scripps Health, and Priya Singh, chief strategy officer and senior associate dean for strategy and communications at Stanford (Calif.) Medicine, told Becker's their organizations are taking a measured and strategic approach to growth.
Question: What is/are the goal(s) of your system's growth strategy and what are the market opportunities to achieve it?
Note: Responses have been lightly edited for length and clarity.
Chris Van Gorder: San Diego is unique in the sense that we're bordered by Mexico, the Pacific Ocean, the desert and Marine Corps Base Camp Pendleton. We're not in a contiguous community with Los Angeles or Orange County. So while we can try to plan a lot of things, sometimes we must be opportunistic. For example, we've established a relationship with Pioneers Memorial Hospital in Brawley, Calif., which is a disproportionate share hospital. We did not do this so much as an acquisition, but because we know that the two hospitals in Imperial County have to use San Diego as their tertiary referral source. We have helicopters flying back and forth constantly to San Diego from Imperial County. Pioneers had some challenges around quality and some other areas, so we are able to work with them to benefit patient care.
We have explored merger and acquisition opportunities in Orange County and other areas. But we've always walked away from most of them because we weren't convinced after looking at them that we'd be able to turn those organizations around, because, sadly, a lot of the organizations waited too late to look at merger opportunities. Another factor in California is SB 1953, which requires hospitals to meet seismic strengthening requirements. If not for that, we would probably be more aggressive in adding other hospitals to our system. But we are spending billions of dollars to rebuild our existing hospitals and taking on other hospitals with their own SB 1953 issues would endanger our balance sheet.
So what we have done is look at smaller volume services that have not been generating a positive operating margin for us. For example, we had our own home health agency that was losing money. We used it to form a joint venture with the Pennant Group, and they eliminated the losses we were running. We have been and continue to look at opportunities for growth partnerships with services that are important to Scripps, but which may not be the core patient care services that we deliver.
We also entered into a lot of contracts to grow market share. But what we're discovering is that full-risk managed care is not being funded appropriately. The risk that we're taking on is that we're not covering our costs. We're losing tens of millions of dollars in Medicare Advantage, and that's not sustainable. And so, we have made a conscious decision to exit Medicare Advantage full-risk agreements with our integrated medical groups. We're staying in with our individual physician associations. While we cannot employ doctors directly, we work with doctors in both our integrated – or a "foundation" model – and also with those in private practice who organize in IPAs.
Priya Singh: Stanford Medicine recognizes system growth as an opportunity to advance scientific knowledge, better prepare the biomedical leaders of tomorrow, and make positive and equitable contributions to the health of populations. With this in mind, we focus on growth that is measured, purposeful and strategic.
Through our efforts to better serve our surrounding communities, including our collaborations with other Bay Area health systems, we are able to reach more underserved populations, expand patient access, and advance clinical research. Chronic disease disproportionately burdens racial and ethnic minorities, yet they are underrepresented in clinical trials. By strategically expanding our Bay Area presence, particularly by increasing access to clinical trials, we make a direct impact on surrounding communities and advance health equity at a national and global level.
We are keenly aware that our ability to address our patients' needs starts with ensuring that our people have the necessary resources and support. We continually strive to further build a culture of belonging across the Stanford Medicine community. This includes our WellMD & WellPhD Center, which promotes professional well-being, supports continuous learning, and addresses clinician burnout — an epidemic affecting health systems nationally.
We believe that technology, particularly telehealth and artificial intelligence, will have a growing role in our ability to increase access to care and lessen the burdens on clinical staff while leading to better patient outcomes. Stanford Medicine remains a leader in the use of telehealth, and we are on the leading edge of implementing AI technologies in patient care environments. While we see tremendous promise with AI and large language models, we recognize the need for implementing them thoughtfully.
In June, Lloyd Minor, MD, dean of the School of Medicine and vice president for medical affairs at Stanford University, launched RAISE-Health along with Fei-Fei Li, PhD, the co-director of the Stanford Institute for Human-Centered Artificial Intelligence. RAISE-Health stands for Responsible AI for Safe and Equitable Health, and its primary goal is to guide the responsible use of AI across biomedical research, education and patient care.