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Friday, Jul 19, 2024

Bruins Go On Offense

The grand opening of the UCLA Health System clinic in Porter Ranch included the usual ribbon-cutting by a politician, as well as proclamations from across the state. But beyond the formalities, the recent opening represented the latest move in an aggressive strategy to gain market share in the San Fernando Valley as health care reform expands the pool of insured patients. UCLA started its expansion out of Westwood with one clinic in Westlake Village in 2012, then added one in Thousand Oaks last year, followed by the Porter Ranch facility in late January. Next, it plans to open a clinic in Simi Valley by June and expand its Santa Clarita offices in September. A Calabasas clinic should open by early 2016. Dr. Matteo Dinolfo, director of UCLA Department of Medicine community offices, said that after all these build-outs are complete, the organization will expand east into the Burbank-North Hollywood area, too. “Once all the consolidation has occurred, we will be one of the biggest health systems in Southern California,” he said. “We can’t be a Westwood and Santa Monica health system. We have to cover the entire county.” Covered California, the online health insurance market created by the federal reform law, has signed up nearly 200,000 people in Los Angeles County, according to state figures, and those people will need primary care doctors. While UCLA is far from the only area system growing –other non-profit providers such as Kaiser Permanente and Providence Health & Services are pursuing their own expansion strategies – UCLA’s status as an elite academic system brings special challenges and advantages. Federal health care reform provides financial incentives to keep patients out of hospitals, and UCLA has built its reputation as a world-class hospital, drawing patients from across the globe. Now the system, which had about $2.7 billion in revenue last year, needs the primary care clinics to treat patients without admitting them to hospitals, as well as feeding those with serious conditions to the hospital. But a major question is whether UCLA’s brand of academic medicine will be too expensive for these patients. Martin Gallegos, vice president at the Hospital Association of Southern California in Los Angeles, noted that medical schools historically provide high-cost, high-quality care. Usually the most difficult cases are referred to academic hospitals from community hospitals and clinics. Because those cases are also the most expensive ones, they add costs to the system. At the same time, a medical school must teach and train student doctors, another drain on resources. The students necessitate higher malpractice insurance costs and other risks. Also, medical research isn’t cheap and the system must absorb some of those costs. “Your costs are higher, so your reimbursements and charges must be higher,” Gallegos said. Greater access Located on the third floor of the Porter Ranch Medical Plaza at 19950 Rinaldi St., UCLA’s newest Valley outpost provides primary care as well as immunology, cardiology, hematology, oncology, pulmonology and rheumatology specialists, among others. All doctors are faculty members at UCLA. The facility also has diagnostic imaging, ultrasound and echocardiogram equipment. The system has agreements to send some patients to local hospitals, including West Hills Hospital in the Valley and Los Robles Hospital in Thousand Oaks, as well as an oncology program at Henry Mayo Newhall Memorial Hospital in Santa Clarita. For cancer patients, the expansion allows them access to clinical trials and research doctors in Westwood, as well as chemotherapy bays near their homes for on-going treatment. Dinolfo said the new clinics, which include three new locations in the South Bay, have been very successful at attracting new patients into the UCLA system. “It takes three to six months once the physicians are in place and then we have seen rapid growth,” he said. One advantage of academic medicine is it provides a pipeline for young doctors. Dinolfo said there is a scarcity of primary care doctors nationally, but he has no problem staffing his expanding number of clinics, which total about 16. “I have a wealth of riches in qualified physicians,” he said. “Coming to UCLA and having a faculty appointment is attractive for those who are academically oriented.” In addition to clinics, the expansion features the rehabilitation of a hospital in Century City in partnership with Cedars-Sinai Medical Center, and an agreement to take over management of the Woodland Hills-based Motion Picture & Television Fund’s six clinics this summer. Under the latter deal, UCLA would assume the lease for six clinics and all 43 primary care doctors on staff would join the UCLA Faculty Practice Group. The drive for expansion also has taken UCLA into nearby drug stores. In 2012, it signed an agreement with pharmacy giant CVS Caremark Corp. to make UCLA doctors the directors of 11 in-store Minute Clinics. The doctors don’t work in the clinics. They are staffed by nurse practitioners, who need a doctor’s supervision to practice. The 11 stores include locations in Burbank, Agoura Hills, Montrose, Reseda and Sherman Oaks. Dr. Jeffrey Nordella, a primary care doctor with clinics in Porter Ranch and Santa Clarita, said the UCLA clinics represent new competition but they don’t loom as a threat to competent doctors already in the neighborhood. In fact, he’s not sure if UCLA will attract newly insured patients under health reform given its costs, and these patients could swamp established primary care doctors. “If UCLA is not part of the network that these patients belong to, then they really can’t use the UCLA health system,” he said. “The whole health care arena is in such disarray – the dice are all in the air right now. Nobody knows what it will look like when it ends.” Gallegos said UCLA has a prestigious reputation as a world-class institution, but for some insurance shoppers, it’s too high priced. He noted that the system is not an option in many Covered California networks due to its costs. However, Dr. David Feinberg, chief executive of UCLA hospital system, said his organization is active on the Covered California exchange through an agreement with Anthem Blue Cross. He added that the policy providing access to UCLA hospitals is priced lower than a similar policy for Kaiser Permanente. “As the exchange continues to expand, I think you’ll see us in more plans,” he said. Gallegos believes that the market will see more expansions, acquisitions and affiliations as the drive for size increases in the health industry, both among academic and other players. (The USC health system also has been expanding aggressively.) “This is just the start of what you’ll see happening,” he predicted. “It’s in response to the Affordable Care Act because clearly the ACA favors scale and size. Folks who are not part of large integrated organizations could be left on the outside looking in.”

Joel Russel
Joel Russel
Joel Russell joined the Los Angeles Business Journal in 2006 as a reporter. He transferred to sister publication San Fernando Valley Business Journal in 2012 as managing editor. Since he assumed the position of editor in 2015, the Business Journal has been recognized four times as the best small-circulation tabloid business publication in the country by the Alliance of Area Business Publishers. Previously, he worked as senior editor at Hispanic Business magazine and editor of Business Mexico.

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