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Franchising the Human Heart

A big-name brand may transform cardiac care in the Northwest

Seattle's Swedish Heart & Vascular Institute, a division of Swedish Medical Center, is on a quest to expand its share of the fiercely competitive market for heart surgery by establishing itself as a world-class program. To do that, it's taking a somewhat novel approach: affiliating with the Cleveland Clinic's Department of Thoracic and Cardiac Surgery in Ohio.

Ranked by U.S. News and World Report as the top hospital in the country for cardiac surgery 12 years in a row, the Cleveland Clinic brings to Swedish a well-known brand, access to top practitioners and technology believed by many to be the best in the nation.

"This [decision to affiliate] was a threeyear process," explains Dr. Howard Lewis, executive director of the Swedish Heart & Vascular Institute. "We had contacted other facilities within the region, including the University of Washington Medical Center, without finding any takers."

The decision will heighten competition in an already crowded market. Virginia Mason Medical Center's Heart Institute is an established regional referral center for heart care, seeing patients from Alaska, Montana, Idaho and Oregon as well as Washington. The University of Washington Division of Cardiothoracic Surgery is also widely respected. Its department spreads over four University-affiliated medical centers: Children's Hospital and Regional Medical Center, Harborview Medical Center, Veteran's Affairs Puget Sound Health Care System, and the University of Washington Medical Center. Additionally, it extends to programs and faculty physicians at Harrison Memorial Hospital, Northwest Hospital and UW Eastside Specialty Center. With heart surgery consistently among the most profitable fields for hospitals, a lot is at stake.

But Swedish officials say their new heart center will help raise the overall level of treatment in the region. It could also help attract patients from outside the region. In fact, Swedish already claims "relationships and discussions with several contacts along the Pacific Rim," including Japan, China and Korea. "By affiliating with Cleveland and creating a premier center for heart surgery in the Pacific Northwest, the entire Puget Sound region will benefit from the increased awareness, including that generated in the minds of would-be patients overseas," says John Capps, administrative director for Swedish Heart & Vascular Institute.

But if Swedish succeeds in increasing its market share, it's also likely to take share from its local rivals. That, at least, has been the experience in other markets in which Cleveland has opened branches. When Cleveland Clinic opened a 150-bed facility in Broward County, Fla., north of Miami, in July 2001, there was initially a 10 percent drop in admissions to nearby hospitals within the district.

People don't like to talk about competition among hospitals in the same breath as competition in other areas. Yet boutique surgery centers and specialty hospital wings vie for a limited number of patients the same way malls across town lure shoppers with new food courts and free valet parking. That doesn't always sit well with the nation's collective conscience. And while competition often generates advancements in technology and best practices, it can also drive up costs. Capps says the economics of health care are unique. "You can't treat the health care business the same way you can other businesses, or you lose your customers."

For the most part, patients do not drive across town -much less to another state - to obtain a cheaper emergency appendectomy, as opposed to traveling across the border to Canada for less expensive medications, which many do. Yet within its first half-year of operation, 30 percent of Cleveland Clinic Florida's patients came from outside Broward County and 9 percent from out of state.

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© Washington CEO Magazine 2008