Are turnkey hospitals possible?

September 13, 2010

Jon Weiner envisions a day when he can quickly build a new hospital utilizing American best practices and state-of-the-art technology anywhere in the world. While our experts were excited by Weiner’s healthcare concept they were mixed on his ability to ultimately pull it off.

Weiner co-founded the New York-based startup OR International LLC (www.orintl.com) with the goal of exporting a higher-quality American brand of healthcare throughout the world, with a primary focus on improving patient treatment (see original story here). In just six years ORI has opened specialty hospitals in the UK, Africa and Cyprus.

“Our first hospital in the UK has the highest patient satisfaction rates of any hospital in England,” said Weiner, whose company operates five specialty hospitals in the UK, one in Cyprus as a partnership with the American Heart Institute and last January opened the doors on a new $100-million facility in Botswana, Africa.

“Given how we are operated we can basically become much more profitable than local providers because in fact we’re significantly more efficient.”

THE PITCH

Global healthcare spending in 2009 reached $4.7 trillion, according to the World Health Organization, and the market for specialty hospitals in the U.S. alone last year was about $33 billion, according to an IBISWorld annual report.

This portends well for ORI, if the company can keep streamlining costs without sacrificing patient care.

TAKING IT TO THE EXPERTS

Dr. David Brailer, who served as the National Coordinator for Health Information Technology under President George W. Bush and currently as the chairman for San Francisco-based venture firm Health Evolution Partners, said Weiner’s company fills a definite need in countries that are currently unable to match the level of care that exists in the U.S.

“The need for American-style high quality hospitals is being felt in many countries that are losing indigenous patients to the U.S.,” said Brailer, who added the void is mostly felt in the absence of life-saving procedures which are routine in U.S. hospitals. “All indicators point to the conditions being set for another attempt to globalize hospital care, and OR International is in the lead.”

Brailer said the key for OR International’s continued success would be to recruit high-quality physicians, “who work like physicians do in the U.S., but who are sympathetic to local culture and lifestyles.”

Mina Sooch, the managing partner at West Bloomfield, Michigan-based Triathlon Medical Ventures, thought ORI was interesting, but worried that the upfront capital costs would not justify the investment.

“How long would it take to break even on the one hospital $100-million investment?,” asked Sooch, who felt it was a “very high” setup cost. “It’s not clear this more efficient hospital model will even make money.”

Sooch also had misgivings about how ORI would be able to differentiate themselves enough from the competition, as she said many hospitals are increasing IT and already employ U.S. standards all over the world.

“My sense is there is an overcapacity in the global markets,” she said, adding with the possible exceptions of China and third-world countries. “They may be better providing a consulting and implementation service to existing hospitals.”

Lawrence Gelburd, a serial entrepreneur who lectures at Wharton’s Small Business Development Center, was fascinated by the idea of a paperless hospital and thought Weiner’s model would be well-received internationally.

“I was a big fan,” confessed Gelburd, who immediately saw many other applications for ORI’s healthcare technology, including being implemented in combat zones and within the confines of nuclear submarines. “Those guys go down for six months, so they don’t just pop up if you have an appendicitis attack. They have to do it in the submarine.”

As excited as Gelburd was about the concept of turnkey hospitals, he cautioned that the logistics of building them in foreign countries presented enough significant obstacles as to make the idea a virtual impossibility.

“In reality a hospital system is such a complex and massive effort – even without the paperwork – that it’s impossible to have it completely be one in a box,” he said, noting cultural differences alone would be enough to torpedo the whole venture. To that point Gelburd was impressed ORI already had a hospital up and running in Botswana.

“The developed world knows that Africa is in very tough shape economically and also in very tough shape with medical care in many of the countries, so it’s an attractive thing to help there for a lot of reasons.”

3 comments

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I wonder how long it will take a 100 million USD investment in Botswana to break even, and to begin to make profit for the hospital?

Posted by TravelDoc | Report as abusive

Exporting the ideal parts of the American health care system to areas in the developing world is noteworthy, but what kind of “box” can accomodate only the good America has to offer, leave out the bad, and make it fit functionally in the new place? Areas which are developing still have existing health care systems,developed locally, based on need and local resources. Patterns of referral, insurance reimbursements, and family socio economic status all play unique rolls which need to be considered.
People in the developing world are not usually as fortunate to have access to many of the services we take for granted in the USA. Not all the “best” services which exist in the USA can be plopped into the developing world, and certainly not the typical management style.

Posted by TravelDoc | Report as abusive

ORI has not performed up to expectation on this project.

Ask any nurse or doctor. I am tired of the free advertising ORI gives itself, while they have been complete mismanagers of the project.

Where is the media? Where are the tough questions? A lot of money was thrown at this hospital, and it appears to be failing at the moment, lay offs, etc.

For things to change, there is going to need to be accountability.

Posted by klk | Report as abusive