• Health Care
  • Why Advocate's growth agenda is turning heads

    If successful, the CEO's newly unveiled strategy could make Advocate a dominant force in the rapidly changing health care industry, with greater leverage over insurers and suppliers, and new revenue streams.

    Aurora Health

    79彩票注册网址

    79彩票注册网址After methodically expanding Advocate Aurora Health into a regional hospital power over two decades, Jim Skogsbergh is hitting the gas.

    7072彩票开户 7073彩票地址 963彩票开户 7073彩票网址 689彩票邀请码 7073彩票注册 8炫彩彩票app 677彩票开户 7073彩票登录 66顺彩票app

    Jim Skogsbergh

    79彩票注册网址

    79彩票注册网址His ambitious plan to more than double Advocate's revenue within five years could vault the chain from 10th place to second among the nation's largest nonprofit health care systems by revenue. If successful, Skogsbergh's strategy could make Advocate a dominant force in the rapidly changing health care industry, with greater leverage over insurers and suppliers, and new revenue streams to offset rising costs and dwindling inpatient volumes.

    79彩票注册网址Skogsbergh's vision of Advocate as a "multimarket consolidator" caused a stir when he unveiled it at an industry conference early this month. To carry it out, he may have to cobble together hospital acquisitions in multiple markets while joining forces with insurance companies and venturing into unfamiliar business lines. Merger integration risks and other potential downsides could be as significant as the hoped-for benefits.

    79彩票注册网址"In more mature industries, businesses like health care, unless you have a blockbuster drug, unless you have some kind of new app that changes the world, you don't really see this level of aggressive forecasting," says Thomas D'Aunno, director of the health policy and management program at New York University's Wagner Graduate School of Public Service. "Leaders have to be careful with stretch goals because you lose credibility if you don't reach them."

    In an interview, Skogsbergh downplays the pressure, calling the goal "pretty significant" but also "aspirational."

    79彩票注册网址"We're just saying this is what we think might be possible and, if we do scale up and take full advantage of all the benefits of scale, that will assist us in accomplishing our end goals of quality and safety and access and affordability," Skogsbergh says.

    But the numbers outlined in Skogsbergh's PowerPoint deck could hardly be bolder. He wants to boost the Downers Grove- and Milwaukee-based chain's revenue to $27 billion from $12.2 billion, slash $1 billion in costs, and quintuple its patient base to 10 million.

    Announcing these goals publicly signals to the industry that Skogsbergh is on the hunt for both acquisitions and partnerships, says Allan Baumgarten, a Minnesota-based health care consultant. Advocate says it will look for partners that value population health but declines to identify potential acquisition targets or specific geographic markets it would like to enter.

    It's an expensive growth strategy, with risks that are hard to identify before closing a deal. In addition to merger integration challenges, "when you're making an offer, you're being asked to make commitments for future capital investment," such as a new emergency department, Baumgarten says. "Bottom line, (sellers) are looking for significant investment going forward."

    79彩票注册网址Advocate last doubled in size in 2018, upon merging with Aurora Health Care. Skogsbergh says the deal has improved efficiencies as well as patient outcomes.

    79彩票注册网址However, a new study by Harvard University researchers found that hospital mergers were associated with a modest decline in patient experience scores and no change in readmission or mortality rates. A separate study by the hospital industry last year found—perhaps unsurprisingly—that mergers improve quality of care.

    Skogsbergh says he plans to be "thoughtful and deliberate" about combinations moving forward, adding that it's possible the chain will expand to other parts of the country. "It's not growth for growth's sake," he says.

    EARLY INSPIRATION

    A former baseball player at Iowa State University, Skogsbergh, 61, says he was inspired to pursue a hospital administration career by his mother, a nurse. He joined Advocate Health Care in 2001 and has been at the helm since 2002.

    7072彩票开户 7073彩票地址 963彩票开户 7073彩票网址 689彩票邀请码 7073彩票注册 8炫彩彩票app 677彩票开户 7073彩票登录 66顺彩票app


    79彩票注册网址

    Hospital combinations can be lucrative for top brass, says D'Aunno. Skogsbergh and former Aurora CEO Nick Turkal—who served briefly as co-CEO of the combined company—both pocketed substantial raises ahead of their 2018 merger. Skogsbergh took home $11.7 million, up 42 percent from the year prior, and Turkal's pay rose 187 percent to $11.4 million.

    Skogsbergh also is looking to add new business lines as costs continue to outpace revenues, inpatient volumes shrink and nontraditional health care providers, such as CVS, expand.

    79彩票注册网址Other hospitals have pursued similar diversification. The University of Pittsburgh Medical Center, for example, has a health plan and an enterprise arm that backs a number of businesses, including a predictive analytics service and a medical device that treats respiratory failure. California-based Kaiser Permanente, the nation's largest nonprofit, has long had hospitals, physician services, health plans and a venture-capital arm.

    While Skogsbergh says he's not looking to turn Advocate Aurora into the next Kaiser Permanente, he does aim to emulate approaches that have worked in health care and other industries like banking.

    He says consumer-facing businesses could range from a tool that provides new parents with clinical products to a system that helps at-risk seniors remain in their homes using safety assessments and sensor technology.

    79彩票注册网址The consumer businesses might help Advocate reach its revenue goals, but getting into a business it's not an expert in is risky, D'Aunno warns.

    Skogsbergh plans to expand health insurance offerings through partnerships like one announced this month with Quartz, an insurer owned by three health systems. The partners aim to launch a Medicare Advantage plan in eastern Wisconsin, administered by Quartz.

    That route is less risky than starting a health insurance plan from scratch. New York hospital operator Northwell Health, for example, shut down its insurance business a few years ago after incurring steep losses. But partnerships also offer less upside.

    Baumgarten says similar joint ventures between hospital chains and health insurers "are doing OK, but in terms of enrollment growth, in terms of profitability, the record is not strong."

    79彩票注册网址Along with expansion, Skogsbergh's plan involves some trimming in Advocate's current portfolio. The chain is divesting three of its 28 hospitals: Two downstate are going to Urbana-based health system Carle, and its financially struggling Calumet Heights hospital will become part of a new South Side health network. Advocate's physicians group, the largest in the Chicago area by net revenue, also is closing clinics at seven Walgreens stores where it said volumes were "unsustainable."

    Those moves could inch Skogsbergh toward his goal of reducing Advocate's current costs by about 9.5 percent.

    At the end of the day, it comes down to the numbers, D'Aunno says, adding "I'm not sure their plan adds up."

    7072彩票开户 7073彩票地址 963彩票开户 7073彩票网址 689彩票邀请码 7073彩票注册 8炫彩彩票app 677彩票开户 7073彩票登录 66顺彩票app
    Letter
    to the
    Editor

    Have something to get off your chest? You can?send us an email.79彩票注册网址?Or tell us on our page or on? @CrainsChicago.