With insurers demanding discounted rates in the 1990s, Johns Hopkins and other prestigious hospitals looked to bolster the bottom line by luring international patients.
Then came Sept. 11, 2001. Visitors, particularly from the Middle East, had more trouble getting visas to enter the United States, and the flow of international patients became more of a trickle.
Now, instead of bringing patients to Baltimore, Hopkins is going where the patients are.
In the past few months, representatives of Johns Hopkins Medicine International have been jetting to ribbon cuttings and announcing new deals. Just this year, gleaming new Hopkins-affiliated hospitals opened in Beirut, Lebanon, and Panama City, Panama. Hopkins announced a consulting deal for a hospital in Dublin, Ireland, due to open this summer. It began a "co-branded" Center for Safety, Quality and Management with a technical institute in Monterrey, Mexico.
And, as debate raged in the United States about whether a firm from the United Arab Emirates should manage operations at American ports, Hopkins inked its first management contract to run an overseas hospital, in the UAE state of Abu Dhabi.
It's the largest burst of activity since Hopkins launched its international division in 1998 with the opening of a micro-Hopkins in Singapore. Now those seeds are blossoming, giving Hopkins an edge as it raises its flag worldwide to enhance its brand and prestige and widen the net for revenue.
"We don't advertise, but through this use of our brand, we are marketing the Johns Hopkins Health System throughout the world," said Steve J. Thompson, chief executive officer of Johns Hopkins Medicine International.
While other big-name American hospitals and medical schools were later to the starting line, somewhere between a dozen and two dozen are seeking patients - and income - overseas.
Harvard advises on a "health care city" in Dubai, UAE, and the Mayo Clinic runs a cardiology center in Dubai as well. Cleveland Clinic owns a small piece of a hospital in Jiddah, Saudi Arabia. Cornell has a full-scale medical school in Doha, Qatar. The University of Pittsburgh Medical Center operates a transplant facility in Palermo, Italy, and is developing two cancer centers in Ireland.
Because most of these projects are in the early stages, evidence is still thin as to how closely they match the quality of the American institutions that are advising them. It's also unclear whether they can be a significant money generator for academic medical institutions in the United States.
"Reverse outsourcing" is what John Hutchins, who used to run programs for international patients at Hopkins and Cleveland Clinic, calls it. Rather than sending work that used to be done here overseas, American medical institutions are reaching into other countries to do work there.
U.S. hospitals and universities have always sent professors abroad to lecture or researchers to seek cures for tropical diseases. But the kinds of deals being pursued now target countries that need modern medical facilities and can pay for them.
"Traditional revenue sources for organizations like ours get squeezed," said Hopkins' Thompson, "and we are looking for new sources of revenue."
The roots of these international ventures reach to the 1990s, as managed care insurers began to dominate the market. The HMOs negotiated discounted fees, pushed many procedures that once meant a hospital stay to outpatient and reduced the length of hospital stays. Those changes reined in the patient revenue that had helped subsidize teaching and research.
Hospitals now generally get paid 39 percent of "sticker price" for insured patients, said Gerard F. Anderson, director of the Johns Hopkins Center for Hospital Finance and Management. Maryland is an exception; state regulations require everyone to pay the same. But hospitals here still felt the impact of shorter stays and the shift to outpatient, and academic hospitals feared HMOs would drive patients to lower-cost community hospitals.
Besides, Maryland's regulated prices don't extend to doctor bills. Although the data aren't as precise for hospitals, indications are doctors get paid at an even deeper discount, according to Anderson.
One place that high-prestige hospitals turned was to international patients, who still paid the full price and didn't need an HMO's permission for a hospital stay or a procedure. The American centers set up offices, such as those Hutchins ran at Hopkins and the Cleveland Clinic, to attract international patients and help them make arrangements for their travel, stay and care.
"I had the CFO of a major teaching hospital tell me international patients made up 5 percent of their patients and 50 percent of their profit," said Dr. Robert K. Crone, dean for international programs at Harvard Medical School and president and chief executive of Harvard Medical International.
Hospitals generally don't report profitability by residence of patients, but Hutchins estimated international patients could be twice as profitable, sometimes more, as locals with discount-demanding insurers.
The aftermath of the Sept. 11 attacks, however, made it more difficult to get visas quickly enough for timely treatment. In some cases, the patients couldn't get visas at all, or were afraid they would be unwelcome.
Hopkins treated more than 4,500 international patients (both inpatient and outpatient) in fiscal 2001, the last full year before the Sept. 11 attacks. By fiscal 2003, the number was about half that. It has since rebounded somewhat, but is projected at less than 3,500 for the current fiscal year.
"There's a realization those patients are not coming back," Crone said, and the American hospitals decided "they're going to have to care for these patients where they are."
In many cases, however, the American institutions aren't caring for the patients directly; they're advising those who are delivering the services.
"We are not providers of care," Crone said. "What we do is set up the quality governance system in such a way that we can monitor outcomes and monitor behaviors."
Other institutions take a more direct role in their overseas operations. The University of Pittsburgh Medical Center, for instance, runs hospitals in Italy and Ireland.
"It's not the selling of a name," said Dr. Charles E. Bogosta, Pittsburgh's managing director for strategic business initiatives. "We operate it. We staff it."
Hopkins has tried, and is still trying, various models. "Hopkins and Harvard are taking a more strategic approach," building up consulting agreements over time, said Hopkins' Thompson.
Johns Hopkins Singapore, its first foreign venture, is a division of Hopkins. Hopkins employs the staff and runs two 18-bed units inside a larger hospital, specializing in oncology. Hopkins also does research and teaching, and the scientists there are officially Hopkins faculty members. The funding comes from Singapore's government. The Singapore model hasn't been replicated.
For what it calls "institutional relationships" - including programs in Beirut, Panama City and Istanbul - Hopkins doesn't have any full-time staff on the other campus, but names a Baltimore-based faculty doctor to serve as medical director of the relationship. It is, however, thinking about adding one full-time person at each location, who would report to Hopkins and to the local hospital CEO.
The medical director travels overseas a few times a year and keeps in touch by teleconferences between trips. Others travel as needed. Hopkins, for example, sent safety specialists to work with local personnel at one unidentified hospital after hypodermic needles were found in bed linens in the hospital laundry, said Dr. Charles Cummings, JHMI's executive medical director.
The Abu Dhabi deal offered yet another model - Hopkins isn't just consulting, as in its institutional relationships, and isn't hiring the full staff, as in Singapore. Rather, it's hiring a dozen or so top managers for the 469-bed Tawam Hospital, including a CEO and a director of nursing, and overseeing the hospital with a management contract.
"The main difference is that you not only give advice, but make sure your suggestions are actually implemented," said Harris Benny, chief operating officer of JHMI and interim chief of the Abu Dhabi project. Whether Hopkins acts as a manager or consultant in the future will depend on local conditions and on what clients want.
Other Hopkins consultancies are much looser - an occasional limited training program, for example. Those hospitals don't use the Hopkins name.
So, the precise model - limited consulting, more comprehensive consulting, management, full operation - varies among American hospitals and even within Hopkins.
"I'm not sure the business model has been tested yet," said Harvard's Crone of the overseas programs being tried by American institutions. "I'm not sure how they're going to get their revenue."
Although Hopkins doesn't disclose the details of any deal, Thompson said, "the revenue model is basically fee-based" - getting paid for consulting - and there are some partnerships in which Hopkins receives a share of ownership.
"We've been able to return some profit the past two years," said Scott Holcomb, a JHMI spokesman. Holcomb said consulting revenue is still just a small fraction of the amount paid by patients who travel to Baltimore.
JHMI reported "downstream revenue" - patient fees to the hospital and to doctors - of more than $50 million in fiscal 2005, after several years in the $30 million to $40 million range. But Hopkins doesn't report how much of that was profit, after subtracting out the cost of patient care. Through its hospitals, physician groups and other entities, Johns Hopkins Medicine has annual revenue of about $3 billion.
Like profitability, quality isn't proven, either.
Hopkins requires that its partners seek international accreditation, but the programs are new enough that none has yet completed the process.
"All of them have a mandate for highest quality medical care," said Cummings, the executive medical director. "They sign a memorandum of understanding, and there is a lot of on-site evaluation before any formal agreement is signed" permitting the use of Hopkins' name.
The American institutions say they struggle to maintain a balance between respecting the culture in the host country and American values.
For example, Thompson said, Hopkins turned down an opportunity to collaborate in a medical school in the Middle East because the school insisted on keeping male and female students separated. It is, however, is in discussions with an Asian medical school where, at the host's suggestion, medical lectures would occur in an auditorium with a balcony, so the genders would get the same instruction but not sit together.
In the end, can Harvard, say, assure the same standard of care in the Persian Gulf as at Harvard-affiliated hospitals in Boston?
"With some of our partners, the answer is absolutely yes," said Crone. "That's our aim: that a patient who walks through the front door can expect an international standard of medicine."
Patients should expect world-class care, said Hutchins, but "providing it is really a challenge. To the extent you bring doctors over from Hopkins and they're on the ground, yes. If not, you water it down. If they do it with gusto and with a lot of good quality people, it's probably a no-lose deal."
Since it was created in 1998, Johns Hopkins Medicine International (JHMI) has built a variety of partnerships and consulting agreements around the world , in addition to Hopkins' tradiditonal role in international academic exchanges and worldwide public health efforts. Below is a list of JHMI's project locations.
China: Beijing, Changsha, Foshan, Guangzhou, Shanghai, Wuxi, Xiamen.
Ireland : Dublin
India: Chennai, Hyderabad, New Delhi
Panama: Panama City
Trinidad & Tobago: Port of Spain
United Arab Emirates: Abu Dhabi
United Kingdom: Bradford, Burton, Nottingham
SOURCE: Johns Hopkins Medicine International SUN NEWS GRAPHIC