While its competitors grab headlines with large-scale partnerships and acquisitions, the Oak Cliff-based Methodist Health System has quietly made its moves behind the scenes. But that may soon change: it has five pending nondisclosure agreements with hospitals it’s interested in, all of which are either in Dallas-Fort Worth or near it. Its chief executive hopes these strategic moves will be inked—or not—by the summer. In the meantime, the system has been exploring the benefits of its formal relationship with the Mayo Clinic while bolstering both its physician base and its technology to help make care more convenient to its patients. And it still makes dedicating about 12 percent of its services to charity care a priority.
Methodist currently accounts for about 10 percent of the market share in North Texas—trailing larger competitors like Texas Health Resources and Baylor Scott & White—but that balloons to nearly 40 percent in southern Dallas. In an interview with D Healthcare Daily, CEO Stephen Mansfield explained the nonprofit’s recent strategies to enhance what it provides and where it provides it, and how it’s responding to what is one of the most competitive times in history to be a healthcare provider in North Texas.
It’s been edited for length and clarity.
DHCD: In the last six months, we’ve seen Texas Health Resources and UT Southwestern link up in a formal partnership. Baylor Scott & White has paired with the Baylor College of Medicine and launched a joint operating agreement with Tenet’s East Dallas hospitals. HCA North Texas is buying facilities and expanding its market share. How is Methodist responding to such an active market?
Mansfield: I think Methodist is focused on what we can control and exerting influence where we can have influence. On the things that we can control, we’re really focused in three primary areas: The pursuit of excellence, strengthening our presence—which is one of the more strategic aspects of what we’re focused on—and transforming the way we do healthcare. I hold a strong view that while I have competitors, they are not my enemy. My enemy is a broken healthcare system, and I think that’s what we all have in common. Because of that, it’s led us to have an opportunity to collaborate with Texas Health Resources; we’re in their health plan, which excludes Baylor and HCA and includes us. Same thing with Baylor, we partnered with the Baylor Scott & White health plan because we view that as working on the broken healthcare system. That network excludes THR and HCA. We also participate in the Catalyst network with Dr. Chris Crow and those independent physicians. The focus there is the enemy, the broken healthcare system.
Methodist is smaller in market share, we’re a little bit below 10 percent in DFW we have a v strong presence, almost 40 percent, in the southern sector of Dallas county but across the whole metro it’s almost 10 percent. Our board is very committed to growth. We’ve grown a lot we want to grow a lot more. We have 29 primary care clinics and nine hospitals now. We had two when I came to Methodist. If you drew a diagonal from Mansfield to McKinney, most of what we have is along that corridor. So with only 10 percent market share, and compared with the others in the market—I think HCA is in the teens but Baylor and THR are both in the low 20s, so they have a more comprehensive presence than we do—we have a very condensed presence through the heart of DFW.
We have five nondisclosure agreements that we’re working that we hope will result in additional components to the health system over the next few months. We have locations put up for ambulatory campuses in areas that we think are underserved or under penetrated. We have an expansion growth plan for urgent care clinics and also for outpatient imaging, more and more commercial payers don’t want their folks to go to hospitals for outpatient imaging. I understand that there’s a cost variance for them, so we’re taking imaging through the community through a partnership we have with the imaging company. We are opening our sixth this week, in Richardson about a mile from the hospital.
DHCD: In 2014, you became part of the Mayo Clinic Care Network. How has that changed your operations?
Mansfield: The decision to partner with Mayo was the pursuit of excellence and the quality initiatives with that. That has exceeded my high expectations. We do about 10 second opinions a month, where our physicians collaborate with Mayo physicians in the better pursuit of excellence and we don’t charge extra for that. We get their evidence based care pathways, so even though it’s not technically Mayo doctors practicing in Dallas, it is our physicians practicing using evidence-based medicine, the same as in Rochester.
The interesting thing about Mayo that a lot of people don’t know is that it’s not just the medical staff they’ve assembled, but they have such a deep, robust research component that there are so many unusual things that we have referred to Mayo since we’ve been involved with them and, without exception, we feel like we’ve gotten the most current research that’s out there and gotten our patients in these complex clinical trials in DFW without having to go to Mayo. That has been a big plus as well. So it has helped immensely. I would say, the way that process works is we pay an annual fee and for that fee we get a certain number of consultative hours and we choose how we use those consultations.
So last year we spent a lot of hours working on a condition called sepsis, which has a very high mortality rat. It’s lethal in many cases, and it’s lethal not only in the elderly but in the young as well. So our learning in that, learning the early symptoms and the early interventions that need to take place, and how the key is early intervention, and the impact that has had on the way we practice across Methodist as it relates to sepsis is dramatically different today than it was 12 months ago. And the impact, well, it’s a life saver. There’s no question about it. We were average in that area, I would say, among hospitals in America. Today I would say we’re in the top decile. That’s a result of focused effort and energy on our part and Mayo’s part at Methodist.
We are now part of a cancer care network with academic health systems that we wouldn’t have the chance to otherwise. That allows many residents of DFW to participate in clinical trials that wouldn’t be accessible to them otherwise. That’s a big deal for us. Sixty percent of the patients treated by that service were from outside Dallas/Fort Worth. In addition, we’re becoming more of a treatment destination.
We’re at that point with the digestive diseases center, and we were the first in the nation to be accredited by the Joint Commission for pancreatic cancer treatment and that’s been a great success for us. Our transplant center, we transplant three different organ systems and those patients come from all over the southwest. We’re also an epicenter—the only in DFW and one of a handful of around the world for the Whipple surgery, which is done through the da Vinci robotic system. Dr. Mejia is particularly adept and skilled at use of the robot for that procedure and so he has physicians who come, literally, from around the world to do that with him. We have a lot of patients from outside of Dallas come to us for that procedure.
DHCD: You mentioned urgent care and some of your more outpatient-focused strategies. Can you elaborate on those? I know you recently aligned with TeamHealth to open some urgent care clinics.
Mansfield: We inherited TeamHealth, we didn’t select them. We partnered with a company called Exigence that was a small boutique player in the urgent care space that we really liked a lot. But almost immediately after we formed our relationship with them, they were bought out by TeamHealth. So we inherited TeamHealth. We had a relationship with them in other areas—they provide our hospitalist coverage— they’re a good company, I’ve worked with them in the past so I don’t mean that negatively, per se.
But we may be the only health system in DFW that hasn’t chosen to do freestanding ERs or ERs independent of a hospital. I have to say our board has struggled with the decision on that. We would consider buying one of those companies that is already in the market but we don’t anticipate adding to that because we see it as somewhat problematic from the standpoint of value. No question there’s a convenience factor associated with it, but I think a lot of consumers have sticker shock when they end up in a freestanding ERs and frankly a lot of what goes there should be in urgent care. And some of what that urgent care can do they can handle it virtually.
(Urgent care) was a way to get into markets we haven’t been in traditionally, and I think urgent care centers do provide high value because they provide extended hours at a price point that isn’t much higher than primary care. It’s a strategy that has good application in DFW in the right places. We’ve gone through an extensive process for selecting those places and will open two to three places a year.
DHCD: So part of the board’s struggle, would you say, is that these freestanding ERs would be profitable for the system but aren’t aligned with the ultimate goal that you guys are trying to accomplish in terms of redefining the delivery of care?
Mansfield: That’s well said.
DHCD: That’s an interesting cultural line in the sand for you guys, that you’re declining to get into a space that would probably bolster your financials because of your beliefs around it. Can you talk about making those sorts of difficult decisions?
Mansfield: It’s like doubling down on wellness. It’s very difficult to prove out the value of a wellness program, you know, a lot of people say, ‘gosh, why do I want to invest in wellness when a third of my employees leave every year ? I’m just getting someone healthy for someone else.’ But is that bad? We’re a not-for-profit faith based system, so our view is that being the healthiest employer the last two years in a row means a lot to us, it means a lot to our board. There’s no question that a lot of our investment on wellness, those employees are somewhere else today, but if they’re healthier that’s the right thing to do. And at some point that’s got to be your mantra in healthcare. And so I applaud our board for trying to balance their fiduciary role to make sure the health system is successful—we can’t deliver our mission if we run out of money—but at the same time they have a very strong sense of what’s right, and a strong sense of let’s attack the enemy here, which is a broken healthcare system and a lack of accountability for health in America. And they stay very true to that mantra.
The miracle of Methodist, and I say this to new orientees every Monday when I talk to the new employees that are coming to Methodist, we give away about 12 percent through charity for the poor. So we give away about 12 percent of our product. I tongue in cheek say we do better than our tithe. That’s about almost double on our percentage basis what Baylor does, and it’s almost three times more than what Texas Health Resources does. It’s not as much as what Parkland does, but frankly Parkland gets more taxes to cover their charitable work. Arguably Methodist, and it’s largely because we’re dominant in a geographically poor region of DFW, Methodist gives away a lot of the care we provide. And yet we’ve managed to have a double digit margin.
To me, that’s the miracle of Methodist, to have charitable care for the poor that’s over 10 percent and have a margin that’s 10 percent speaks very well to, I think, the operational acumen of the health system and the focus that we have around our cost structure. We have to overcome the variance that we have in uncompensated care versus our competitors and you can’t do that unless you manage your other cost components in your system very well. That’s the legacy for Methodist that I think has allowed it to position it well for value based care because it’s forced us to have a very frugal cost structure.
DHCD: You’ve alluded to digitizing some of your services, and embracing scaling technology. Are you doubling down on telehealth, and are you concerned about the Texas Medical Board’s attempt to limit it that’s being challenged in court?
Mansfield: My biggest concern in Austin is the failure to accept the dollars 0n the Medicaid expansion program, but probably one of my next highest is Texas is that we are one of the least friendly states to telehalth. There’s no question that, it’s not the way you want to establish a relationship with a PCP, but once you’ve established a relationship with a PCP there is so much value with virtual health and telehealth for the patient and the provider.
I don’t know if you’ve talked to the Oscar Health (startup insurance company) who are getting involved in DFW, but one of the most interesting things about what they do is they basically make telehealth visits free. So if you wake up with a sore throat, instead of scheduling a meeting at the urgent care or freestanding ED or with a primary care physician, you call their virtual health department. They have a physician on call 24/7 and, assuming it’s your run of the mill strep throat, they can decide to give you a prescription online and order the prescription for you. You just run and pick it up. How much better is that than having to take out of work and miss half a day of work trying to get seen and the results are the same?
So I am very concerned about anything that makes telehealth more difficult. I think it’s one of many answers to the future because we’re not going to have enough physicians, we’re going to have to use extenders more than we do today. We’re going to have to be smarter about ways that we provide healthcare. We already have available to our own employees and our ACO patients consultations with a nurse. The problem is it’s very helpful in trying to talk a patient through a crisis or a situation to help them make a rational decision with their health at a moment in time. But because we don’t have a physician involved, we aren’t able to write a prescription. So if we get the latitude that we would like to have, we would envision that some of our physicians in urgent care and primary care would double up for us as our backup for our virtual care program, which would be provided at the onset.