PND: Do you have any interest in acquiring more hospitals in Pennsylvania?

GN: We will evaluate each opportunity on a case-by-case basis. There’s no particular strategy to go, or not to go, forward. There are only certain hospitals that meet our criteria. We expect each of our hospitals to stand alone and be successful. We generally are expecting to grow four or five hospitals a year, nationally. We currently have 53 hospitals in 20 states.

 PND: How does acquisition of Brandywine Hospital and Southern Chester County Medical Center fit into your general strategy?

GN: We think both of those institutions are excellent additions and very consistent with our strategy since we’ve been involved in health care since 1985. Brandywine is an excellent hospital poised for a lot of success, in need of additional capital and in need of development of the existing medical staff—in need of many of the fundamentals that we bring to the table to help hospitals be successful. It’s located in the center of Chester County. There’s approximately 100,000 people in a radius around the hospital where there’s no other competitor and where we can basically be the dominant provider for that primary service area and be able to grow the volume at the hospital by enhancing the services that are currently there, by recruiting additional physicians and by capital infusion. These are the fundamentals we use to improve hospitals financially and to grow their market share. Southern Chester County is at least 45 minutes from a competing hospital in a portion of the county that covers a significant population base. This facility has significant physician recruitment needs to meet the needs of that community. It has significant capital needs. About 80 percent of our hospitals are sole community providers. We have approximately 20 percent that are in markets that are considered more competitive—that have two or more hospitals in those primary service areas.

 PND: Can you outline the key elements of your business strategy?

GN: Some of the fundamentals, like physician recruitment and capital infusion, are a very broad stroke of our business strategy. Specific and technical investments that we are going to make are being developed with the medical staffs and boards at the hospitals. To a certain extent, we may not want our competitors knowing what we’re doing, specifically, as we develop these programs and continue to grow our market share. The strategy that we employ throughout all of our hospitals is to develop the medical staff, in many cases by working with existing physicians to recruit partners, and to recruit physicians in areas that haven’t been traditionally served in that community, to invest in the newest technology, to retool and expand the facilities and the range of services that are available.

 PND: How do you hope to reduce costs at those facilities?

GN: There are several ways that we are able to reduce the cost of the delivery of care in a hospital. Because of the size of our hospital company, we have very favorable pricing in terms of supplies and equipment. This really helps us be competitive on the purchasing side. We work with our medical staff to develop protocols, which in today’s environment allows the hospital to be, not only efficient, but very high quality in the delivery of health care, possibly avoiding unnecessary steps in the health care delivery process and thereby reducing costs and improving quality. It’s very important for us to be able to work closely with the medical staffs and to develop a relationship with them. It’s the doctors who bring the patients to the door of the hospital, for the most part, and it’s very important for them to feel comfortable with the care delivered—that it’s high quality and state-of-the-art. We think we’re able to do that. We have tremendous resources at the corporate office that offer a broad range of services to help us deliver care more cost-effectively than a stand-alone hospital can do.

 PND: Can you give an example of protocols that reduce inefficiencies?

GN: We have a resource management department that works in tandem with a physician advisor at the facility and case managers as well as resource managers at the hospital to assure that care is delivered cost-effectively, to assure that protocols are in place clinically, in terms of case-mapping. These are uniquely adapted to each facility because of the range of services that is available, as well as the physicians who make up that medical community. We have a standardized measurement model that allows us to gather data and to benchmark against sister hospitals within our system, as well as the industry.

 PND: How do you hope to improve quality at those facilities?

GN: All of our hospitals are JCAHO-accredited. We have corporate resources available for each of our facilities to assure compliance with regulatory agencies. We have standardized patient satisfaction surveys throughout all our facilities. We survey our medical staffs throughout the company periodically. Each hospital has a physician advisor, generally a member of the medical staff, who works closely with the medical staff and who meets quarterly with peer physician advisors from our other hospitals. We currently have six groups from which a representative meets quarterly with the four group operators, including myself, and the CEO of our company, Wayne Smith, to give us input from the physicians’ standpoint on how we’re doing and whether or not we’re meeting their needs. They have the chance to evaluate protocols and to assure that we’re meeting the needs of our customers. They also help in the administration and follow-up of physician surveys.

 PND: What sort of relationship do you want to have with physicians on staff at Brandywine and Southern Chester hospitals?

GN: Our medical staffs have their own by-laws, just like they do in most cases before they’re part of CHS. We have a local governing advisory board. Generally, our advisory boards have nine to 11 members and anywhere from three to five members of that board are medical staff members of the hospital, including the medical staff president. Physicians have a tremendous input in how the medical staff is developed, which new physicians we’re bringing into the community, how we’re developing existing services, how we’ll develop new services. As representatives of the board, they will be part of our capital planning and our strategic planning overall.

 PND: What is your model for physician partnerships? Are you interested in owning physician practices?

GN: We have a variety of models. We have hospitals with virtually zero employed physicians. We have hospitals where a significant portion—20 to 25 percent—of the physicians on staff are employed. That is dictated by the individual market and the expectation of what is necessary to the growth market share and maintain the physician base. So, we don’t necessarily have a strategy to employ, or not employ, physicians. It’s really an independent market decision. But a very low percentage of physicians on our medical staffs are employed by us, overall. At Brandywine, less than two or three percent of the medical staff is employed, but there are some services where we do have employed physicians. For example, the majority of ob/gyn physicians there are employed. In Southern Chester County Medical Center, it’s even less, at this point. We’ll continue to evaluate that as we go forward strategically with the medical staff.

 PND: Is it possible for owned practices to make money these days?

GN: I think it’s possible for individual, stand-alone, owned practices to be efficient. We have practices that are very financially successful.

 PND: A study done for Brandywine Hospital indicated that only 47 percent of Chester County residents use Chester County hospitals. How do you hope to increase that number, particularly given the draw of high-prestige medical centers in Philadelphia?

GN: There are certain services that may not ever be provided at Chester County hospitals, including Brandywine. But, we think that, through the development of a well-executed physician development plan and through the enhancement of physician services at Brandywine, it’s possible to start up new services that will be able to meet the needs of those in Chester County in a variety of ways. To be able to offer high-quality health care services closer to home is very important to most people. If we deliver an appropriate level and range of care, and strategically work with our medical staffs to market those services within the community and meet expectations of patients who come to the facility, they’ll choose to use us. We see the 47 percent as an opportunity because there’s 53 percent upside.

 PND: Are there specific services that you have in mind to beef up or bring to those two hospitals?

GN: We’re evaluating that currently with the medical staff and board. Obviously, we’re going to enhance all the services that we currently offer, while looking at opportunities to move into certain care areas that traditionally have not been offered there. We’re evaluating that very aggressively at this point. I think there’s an opportunity for us to look at the cardiology services that are being delivered now and to look at a higher level of care at Brandywine Hospital.

 PND: Is an open-heart surgery program an option?

GN: That very well may be an option. Brandywine offers a fairly broad range of services, but there are opportunities to grow those services by bringing in additional doctors for surgical services, maybe neurosurgery, maybe to expand orthopedics. We obviously want to continue to grow our maternal and child health care services. We’re looking at all those and have actually begun the process of moving forward to enhance some of them. Southern Chester, being a smaller facility, has a smaller range of services. The opportunity there right away is to improve outpatient diagnostics capabilities, as well as radiology, and to enhance the surgical capabilities of the hospital, to recruit a wider range of physicians, specialists and possibly sub-specialists to work with existing groups, possibly in other parts of the county. It’s a tremendous opportunity for a relatively unknown hospital in Chester County, but we have seen time and time again, as we employ these strategies, that we can be successful.

 PND: Southeastern Pa. has seen particularly high medical malpractice awards and increases in liability insurance premiums, making it difficult to retain and recruit physicians. Do you have specific plans to overcome this obstacle when recruiting physicians?

GN: Because we’re in 20 states throughout the U.S., we’ve experienced almost every hurdle that you can imagine in terms of developing medical staff physician recruitment. While we recognize it as a barrier or hurdle that we have to overcome, we’re not overly concerned with our ability to recruit these physicians. We have a very organized and aggressive physician recruitment department that’s based here in the corporate offices and works very closely with each hospital. Many hospitals are stand-alone facilities that don’t have the financial resources to establish and recruit these higher-end specialists because of the financial commitment of equipment and tools that are necessary, as well as the income guarantees required to get these physicians in and established. We have those resources and this really gives us a leg up when it comes to recruiting those physicians.

 PND: What sort of alliances to you plan to form with other institutions?

GN: We are committed to a good faith effort to continue Southern Chester’s alliance agreements with Fox Chase Cancer Center, Christiana Care and others. Very likely we’ll have an opportunity to form additional relationships.

 PND: Will they be with academic medical centers?

GN: We have relationships in many of our hospitals with academic medical centers. For core services, it’s very unlikely that we would have strategic alignments with an in-market competitor. We’ll evaluate the opportunity on a case-by-case basis, but we have historically and can work collaboratively with tertiary care facilities.

 PND: When a for-profit health care company moves into a primarily not-for-profit region such as southeastern Pa., there’s concern about preserving levels of charity care and about a bottom-line mentality to medical decision-making. How will you address those concerns?