10 of the biggest rivalries in healthcare

Marketshare. Physician recruitment. Clout with payers.

Despite the marked increase in collaboration within the industry, huge rivalries persist, especially in the largest urban markets across the country.

Who are the greatest rivalries in healthcare? Here are 10, as selected by our editors and presented in alphabetical order.

Carolinas HealthCare System vs. Novant Health (Charlotte, N.C.). In no market is the battle over inpatient beds hotter than in Charlotte, where 16-hospital Novant Health, actually based in nearby Winston-Salem, and 35-hospital Carolinas control all eight hospitals in Mecklenburg County (where Charlotte is the county seat). Currently, the two are fighting to obtain approval for additional beds in Mecklenburg County, where the state has deemed 40 new beds can be built. Both had submitted proposals to the state, but in April, Carolinas was granted a certificate of need for all 40 beds. Novant is appealing the decision. If the clash is anything like the one for a CON in nearby Fort Mill, S.C. — which involved the two systems and Tenet's Piedmont Medical Center — don't expect a quick resolution. The three systems fought each other and the state of its CON decision there for nearly eight years.

While Carolinas, led by Michael Tarwater, is a larger system, Novant's growth in the last 10 years, led by former CEO Paul Wiles and succeeded by Carl Armato, has been more significant. According to the Charlotte Observer:

"With nearly $7 billion in annual revenue, Carolinas HealthCare runs about 30 hospitals and owns more than $1 billion worth of property in Mecklenburg County alone. It has more than $2 billion in investments. In the five-year period ending in 2011, it spent $1.8 billion on capital projects. Growth at Novant Health, the region’s other major hospital system, has been almost as dramatic.
Novant owns 13 hospitals, including the three Presbyterian hospitals, and has total annual revenue of more than $3 billion. The system had about $1.6 billion in cash and investments in 2010 – a three-fold increase over the decade."

Cerner vs. Epic. Both Cerner and Epic were founded in 1979, and nearly 35 years later, the two compete head-to-head for health IT business, electronic health record implementations, in particular. Verona, Wis.-based Epic leads the EHR market, with roughly a 40- to 50-percent market share, according to various estimates. Kansas City, Mo.-based Cerner is second and is thought to have a 15-percent share, according to KLAS. Cerner Founder, Chairman and CEO Neal Patterson oversees more than 12,000 employees who make up the company, which had $2.91 billion in revenue for 2013. Epic, also still led by founder Judy Faulkner, has roughly 7,400 employees and $1.7 billion in 2013 revenue. (Cerner's portfolio of products is larger and also includes hardware). Both have been criticized for their high costs and implementation challenges, as well as inoperability difficulties. In response, Cerner and other EHR vendors, including Allscripts and athenahealth, formed the CommonWell Health Alliance, an industry coalition aimed at increasing interoperability between EHR platforms. Epic refused to join, calling the group an attempt to increase the vendors' market shares. Epic instead partnered with client Kaiser Permanente, Walgreens, Surescripts and other organizations to form Carequality, which aims to increase data exchange between hospitals, physicians, payers, retail clinics and other healthcare stakeholders.

Cleveland Clinic vs. Mayo Clinic (National). While Cleveland and Mayo Clinics both are the most prestigious provider organizations in their individual markets, they are competitors on the national and international stage — two organizations that come to mind when people think of local-based, but nonprofit, national healthcare organizations. With locations in Rochester, Minn., Florida and Arizona, Mayo is home to more than 4,000 physicians and scientists. It also operates the Mayo Clinic Health System, a network of clinics and hospitals in Minnesota, Wisconsin, Iowa and Georgia. Further extending its national reach (and tertiary referrals), Mayo has entered into 28 affiliations with hospitals through its Mayo Clinic Care Network, which provides e-consults and other clinical expertise to local healthcare providers. Cleveland Clinic, with 3,200 physicians and scientists, operates 95 care sites in northern Ohio, including its flagship campus and a handful of community hospitals it has merged with or acquired. Its affiliate network provides regional systems with clinical consulting and a branded affiliation, as well as the opportunity to enter into national bundled payment contracts with employers. So far, 14 systems have signed on to be either cardiovascular or orthopedic and spine network affiliates. Like Mayo, Cleveland Clinic also has a Florida presence, with its Cleveland Clinic Florida in Weston. Internationally, it operates Cleveland Clinic Canada in Toronto and Sheikh Khalifa Medical City in Abu Dhabi. It will open its much anticipated 364-bed Cleveland Clinic Abu Dhabi next year. Mayo has been less aggressive in the international market, though it does cater to medical tourists from outside the U.S. and counts hospitals in Mexico and Puerto Rico among its affiliates. Both systems have gained national recognition for their high levels of integration and clinical outcomes. Cleveland Clinic, led by Tony Cosgrove, MD, has expanded rapidly under his tenure and established a reputation for outstanding patient care and service — an approach Dr. Cosgrove details in his new book, "The Cleveland Clinic Way." John Noseworthy, MD, who leads Mayo, is sharply focused on improving efficiency and wants reimbursement to reflect the quality of care provided — quickly.

Community Health Systems vs. HCA (National). With 208 hospitals in 29 states, Franklin, Tenn.-based CHS is the largest for-profit hospital operator in the nation. Just down the road in Nashville, HCA oversees its 165 hospitals in 20 states. Last year, CHS announced it would acquire another for-profit operator, Health Management Associates, in a deal valued at $7.6 billion. The deal made it the largest for-profit operator, "dethroning" HCA — a term used to describe the deal by the Nashville Business Journal. Although CHS edges out HCA on number of hospitals, HCA operates 115 standalone surgical facilities, making the two companies' overall footprints across the country somewhat similar. HCA has consistently had higher same-facility admissions growth than CHS, according to the Journal, and has higher revenue — at $34.2 billion for 2013 compared to CHS' $13 billion in fiscal 2013. Both are publicly traded, and they often go head-to-head on RFP responses to acquire facilities across the country to expand their ever-growing folds.

Duke Medicine vs. UNC Healthcare (Raleigh-Durham, N.C.). Headquartered less than 20 miles apart, Duke and UNC have more than just a basketball rivalry, where Duke's Coach K (Mike Krzyzewski) and Dean Smith (UNC's winning coach from 1961-1997) have become legends for their leadership and successful development of teams. Durham-based Duke Medicine and Chapel Hill-based UNC Healthcare are also notable health system competitors. U.S. News & World Report' rates Duke top in the state, while UNC comes in third. For the Raleigh-Durham metro area, it's second. While Duke has a larger number of nationally recognized adult centers of excellence, the systems nonetheless battle it out for patients, as well as clinical and administrative talent. And, they are both shrewd negotiators. An Aetna representative has said its payments to North Carolina hospitals are 10 percent higher than its national average, according to the News & Observer.

Highmark/West Penn Allegheny vs. UPMC (Pittsburgh). Highmark, the largest health insurer in Pennsylvania, and 20-plus hospital UPMC have had quite a contentious relationship in the last few years. In 2009, Highmark sued UPMC alleging antitrust violations. And in 2011, the payer announced, in an unusual move, it would acquire bankrupt West Penn Allegheny Health System — one of UPMC's largest competitors, in an attempt to maintain the viability of a lower-cost competitor to UPMC. UPMC, which operates its own insurance arm, announced after the deal that it would not renew its contract with the payer, saying doing so would benefit the, now, direct rival. It also counter-sued Highmark alleging anti-competitiveness in the state's insurance market. UPMC, with more than 60 percent of the Allegheny County market and 40 percent of the state, has long been viewed as a "must-have" provider for Pennsylvania insurers. The contract dispute between the two grew to such proportions that the government attempted to intervene, with both the state Senate and House introducing legislation to force an agreement. However, neither was passed. Though, the two came to an agreement, brokered by the governor and state attorney general, that will allow Highmark patients to continue to receive care at UPMC after the current contract expires at the end of the year. The vast majority of Highmark enrollees will be covered by their out-of-network coverage rates, though UPMC services provided outside the greater Pittsburgh area will remain in-network for Highmark customers. 

Houston Methodist vs. Memorial Hermann vs. St. Luke's Health (Houston). As one of the hottest markets in healthcare, Houston has always had a competitive landscape. However, recent development plans by Houston Methodist — rated the top hospital in the Houston area by U.S. News — Memorial Hermann and St. Luke's, have heated up the competition. In May, Houston Methodist announced it would spend nearly $870 million to upgrade its flagship facility at Texas Medical Center and construct a new facility in The Woodlands, set to open in 2017. The announcement came just after Memorial Hermann announced it would spend $650 million to upgrade its Texas Medical Center campus. Houston Methodist's play in The Woodlands has also been countered — this time by Baylor St. Luke's Medical Center (the no. 2 Houston hospital, according to U.S. News). St. Luke's — which became a 50/50 partnership between Baylor College of Medicine and CHI St. Luke's Health earlier this year (and which CHI acquired only in 2013) — will spend $110 million to build a new facility near Exxon Mobil's headquarters, just south of The Woodlands. And when CHI St. Luke's and Baylor originally partnered, the agreement included plans to replace the St. Luke's facility at Texas Medical Center with a new, 650-bed hospital at Baylor's College of Medicine campus.

Kaiser Permanente vs. Sutter Health (Northern California). Sacramento-based Sutter Health operates 24 hospitals throughout Northern California, while Kaiser Permanente is a 39-hospital integrated delivery network whose managed care plan covers nearly 9 million people throughout California and several other states, including Washington, Oregon, Colorado and Georgia. While competitors such as Stanford Hospital & Clinics and UCSF, are known best for specialized, complex care, Sutter and Kaiser have a different plan in mind — the biggest population managed. Last year, Sutter launched its own managed care plan, Sutter Health Plus, which it offered on the California Health exchange. While Kaiser's covered lives dwarf Sutter's, the move shows Sutter's commitment to reenter the insurance space and moves the system closer to Kaiser's competitive cross hairs. Both organizations have benefited from visionary leadership: Kaiser's George Halverson led the organization to prominence over the last decade, retiring last year. At Sutter, CEO Pat Fry is preparing to lead the organization into an era of consumerism, where convenience and mobile health reigns. 

NorthShore University HealthSystem vs. Northwestern Medicine (Chicago). NorthShore University HealthSystem is headquartered in Evanston, a suburb just a 14 miles north of Chicago — and home to Northwestern University, whose Feinberg School of Medicine and flagship Northwestern Memorial is located in Chicago's Streeterville neighborhood. In 2010, Northwestern, led by CEO Dean Harrison, acquired what is now Northwestern Lake Forest and pledged to create a new $400 million facility there by 2014 — the acquisition was seen by many as a play by the system to establish a larger footprint in the affluent "North Shore" market just north of Chicago, where NorthShore had long been the major player. Now, NorthShore, led by CEO Mark Neaman, wants to spend $74 million to update its facility in nearby (and equally affluent) Highland Park. According to Crain's Chicago Business, "Both Highland Park and Northwestern Lake Forest also want to keep their physicians from switching teams. With more efficient facilities and equipment, for instance, surgeons can perform more outpatient procedures to make up for softening patient admissions." NorthShore also recently upped its clinical ante, so to speak, by announcing a collaboration with Mayo Clinic for certain clinical services. The rivalry extends to the two systems' affiliated medical schools. NorthShore is a primary teaching affiliate for University of Chicago's Pritzker School of Medicine. Pritzker ranks no. 16 nationally for medical research, while Feinberg came in at no. 18, according to U.S. News.

Saint Alphonsus Health System vs. St. Luke's Health System/Treasure Valley Hospital (Boise, Idaho). St. Luke's and Saint Alphonsus have been fighting for roughly two years over St. Luke's 2012 acquisition of Saltzer Medical Group, one of the largest multi-specialty physician practices in the state. Saint Alphonsus and Treasure Valley Hospital, also in Boise, sued, claiming the deal violates antitrust law. The competitors claimed St. Luke's acquisition would leave the combined entity with control of more than two-thirds of primary care physicians in the area. In January, a judge ruled in the competitors' favor, forcing St. Luke's to unwind the deal. The system appealed the decision in June, and a judge recently ruled it cannot maintain its relationship with Saltzer while the appeal is pending. St. Luke's has said the acquisition was part of its efforts to better integrate care and achieve higher quality at a lower cost.


 

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