Children's Hospital CEO talks strategies

Hospitals face uncertainty in the years ahead as they adjust to changes in federal law and cuts in funding. Despite that, Children's Hospital of Philadelphia is expanding on multiple fronts. Inquirer staff writer Chelsea Conaboy spoke with chief executive officer Steven Altschuler about how growth is part of his coping plan.

Question: Children's recently partnered with Virtua's South Jersey hospitals. What's the strategy?

Steven Altschuler: Our view is that you try to care for the patient in the most appropriate venue, based on their acuity, or how sick they are. If you are a kid that has an ear infection, you can be seen in a primary-care office. If you have recurrent infections and need ear tubes, that can done in a day surgical unit off campus. Our relationships with community hospitals are quite important, first as a source of referrals, and to make sure we have a proper complement of these different venues.

The hospital at our main campus then will basically become a 500-bed intensive-care unit. Only the kids that need the most specialized services will be cared for there. Everyone else would be cared for out in the community, where it's much more convenient for the family and the cost of care is a lot less.

Q: You have an aggressive building plan for the main campus. Is there any concern about being overcommitted while the industry is in flux?

Altschuler: That's a very valid question. There's always anxiety. We have a $2 billion capital plan for the next seven years. That includes more than $700 million for a new state-of-the-art outpatient center and an investment in information technology. There's additional money to build specialty centers in Princeton and King of Prussia.

The outpatient center has two major components. You could theoretically stop at the first if conditions change. We could put the brakes on if we need to.

Q: CHOP may lose $21 million for training new pediatricians in a proposed Medicaid cut. How will that impact you?

Altschuler: We're one of the largest recipients of that money. There was a realization in the mid-'90s that training for pediatricians was in peril, and the Medicaid program was instituted. It really did what it was supposed to do. There was a substantial increase in training slots nationally.

With this cut, you will see a dramatic decrease. It's happening when there is a need for more training. With health-care reform, there will be more people insured and more people looking for access to high-quality medical care. If you cut training, you're really going to hurt access. This is a critical policy mistake. We're trying to reverse it.

Q: Children's has been pushing its brand abroad. Why?

Altschuler: Our international health program is an initiative to bring more complex patients here from around the world. If you think about the care of very specialized patients, the more experience you have, the more volume you can generate, the better the quality.

We've been actively marketing the program. Our team will actually go to Embassy Row down in Washington, D.C., and speak directly to the medical attachés and talk with them about the different programs we have. Early next month, I'm accompanying [senior vice president] Cynthia Haines and some doctors to Hong Kong and Singapore to try to develop that market. We're looking at other relationships in South America.

What's very clear about health-care reform, no matter how you cut it, is there's going to be less revenue per patient. This has become one of our strategies for revenue diversification. Typically the rate of reimbursement [for international patients] is higher. The majority come from the Middle East - Qatar, Dubai, Saudi Arabia, Kuwait. Health care for most of those patients is paid by their governments. With their natural-resource revenue, they tend to be able to afford it. In 18 months, the revenue on that program has grown from $6 million to $30 million.

Q: As you grow here and abroad, how do you protect the hospital's brand?

Altschuler: Internationally, in some ways, it's easier. We bring patients here as opposed to shipping CHOP facilities away.

Regionally, the issue of preserving the brand becomes very important. We provide cardiology services in New Brunswick at St Peter's University Hospital, for example, so that's about 80 or 90 miles away. [To carry the brand] we have one information system for our entire network. We utilize the same protocol at every facility. Most physicians, in addition to serving our network, provide care on the main campus.

Q: You've ushered the hospital through a lot of changes. What's next for you?

Altschuler: CHOP is a fantastic place. It's hard to find a job that's comparable. That said, there's going to be a point in time in the future where it would be appropriate for me to move on. These are very demanding jobs, both physically and mentally. Right now, I feel pretty good.