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LifePoint Development Chief Doubles Down on Partnerships

Analysis  |  By Philip Betbeze  
   March 16, 2017

The success of a groundbreaking business partnership with Duke University Health System has led to another in Kentucky, and a founding employee who recently assumed the role of CDO expects more deals to come.

The joint venture between Duke University Health System and LifePoint Health started life as a bit of an odd duck. It combined the operational skills of a for-profit hospital company with the clinical skill and reputation of a top-shelf academic medical center.

Some imitators followed their lead, with mixed results. But Duke-LifePoint has thrived, with 10 hospitals under management, and some are far from the eastern South, where Duke's brand is most well-known.

Indeed, the creation the two organizations pioneered in 2011 may represent the acute care business model of the future, one that leverages the quality regimes of well-respected nonprofit health systems like Duke, combined with the operating expertise of a for-profit hospital operator like LifePoint.

The model will proliferate if Jeff Seraphine, LifePoint's chief development officer, has his way.

Seraphine was named to the post in February after serving 18 years at the company, which he joined as a founding employee. HealthLeaders spoke with him recently to discuss the new partnerships that have become possible, how the strategy differentiates the company, and how value-based principles and reimbursement are affecting acute healthcare. Following is a lightly edited transcript.

HealthLeaders: What are you most looking forward to in your new role?

Seraphine: I've been with LifePoint since 1999, starting as CEO of one of our first 20 hospitals. For the last six years I've served as a division and group leader, primarily with newly acquired hospitals, evaluating acquisition targets, and also with the Duke-LifePoint partnership.

We paused [acquisitions] last year as we absorbed a heavy acquisition load from 2015 and early 2016, so I'm excited to focus on building a robust pipeline so we can position ourselves as buyer of choice based on our ability to be a good partner and successfully drive quality.

HealthLeaders: How does the Duke partnership, and others since modeled on it, differentiate LifePoint?

Seraphine: What has made that partnership successful is that we came together on improving quality and established foundational trust before we bought a hospital together.

That aim has carried forward to 14 hospitals with almost $2 billion in annual revenue. There was a need for consolidation in North Carolina and the region.

Through the partnership, we were able to put together a unique value proposition that featured the best operational background like ours, with a strong focus on regional referral centers and community hospitals and team them up with a world-class academic medical center.

That resonated well in the market, but also outside the market.

HealthLeaders: So it led to additional partnerships with nonprofits. How did that begin?

Seraphine: Duke-LifePoint eventually extended beyond the original region into Michigan and Pennsylvania. Broadly, regional providers were taking a role in building out stronger networks.

Most of those occur with [organizations] already in the market, but occasionally that's not the best choice, especially for regional or rural referral centers that want to continue to be able to be tertiary hospitals and find that goal at risk in some of the regional network strategies.

Duke-LifePoint, or others like it, can be a unique value proposition for those types of hospitals. We also have a partnership with Norton Healthcare in Louisville.

Norton is highly regarded in the area, so it is a strong partner in that region. Since that partnership we've purchased two hospitals.

In addition to that, because we have become comfortable in our ability to operate in a partnership model, we have been willing to work with local hospitals to directly JV their local hospital and we do that in a way that allows them to maintain some ownership and participate in some governance.

HealthLeaders: Many experts see hospitals as a slow- or no-growth area in healthcare as more care moves outside its walls. How does the trend affect the company's strategy going forward?

Seraphine: One thing we're confident in is that well-capitalized, well-operated systems that have scale will be able to navigate through these difficult times when utilization is slow and we're getting a lot of risk in contracts.

Over time, being able to be a provider of choice for a sizable population and operate at scale that allows us to do things more efficiently than our peers will be a successful strategy.

As we forecast the future, we'll be successful if we're buying in a disciplined manner, and we're not paying for something inconsistent with where the market's going. We're essential in almost all our markets and we'll continue to grow out different service lines on an outpatient basis.

For smaller standalone hospitals, value-based payer relationships take significant resources and those are hard to come by in a soft-volume environment. Often they know the challenges, but it's difficult to invest in everything they need. We can help scale those solutions and build them out.

HealthLeaders: How does the drive to repeal and replace the PPACA affect your strategy?

Seraphine: Our assumptions are that there's not going to be an immediate change that's going to be overly disruptive. It's in everyone's best interest to find a slow transition, but it's also obvious there's not any near-term relief.

So that means there will continue to be a healthy pipeline of hospitals and health systems looking for different models. They will not be able to wait. We'll continue to be disciplined. We don't have to do anything in a certain time frame.

Philip Betbeze is the senior leadership editor at HealthLeaders.

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