The prestigious UCLA Health System is entering the San Fernando and Conejo Valley markets with plans to build a network of primary and specialty care practices in five cities. The move likely will be welcomed by patients who will have more choice for their care, but feared by existing Valley region providers. “Our goal is to make health care easier and bring it closer to home,” said Dr. David Feinberg, CEO of the system. “We already take care of many people (from the Valleys) and we’re happy to take care of more.” The hub of what will be known as the UCLA Health System Northwest Medical Campus will be Calabasas, where the academic health system is purchasing a 52,000-square-foot medical building to house extensive imaging and diagnostic services, primary and specialty medical care and urgent care. The facility, located at 25685 West Agoura Road, is set to open in 2014. That hub will be surrounded by four outlying medical buildings in Westlake Village, Thousand Oaks, Porter Ranch and Santa Clarita. It will offer a mix of primary and specialty care services, including cardiology, dermatology, endocrinology, rheumatology, gastroenterology and basic X-ray services. Dr. Feinberg said UCLA’s goal is to grow its patient visits by 33 percent to two million a year, a plan driven by the desire to achieve meaningful economies of scale and to “leverage the system” to drive down costs. Regardless of how the Supreme Court rules on the Affordable Care Act this month, he said, health care is moving away from what he called “volume based treatments…doing complicated things” to a system of “taking care of a large population, where you are rewarded for high quality, low-cost care.” In addition to Calabasas, UCLA’s Northwest Campus also will consist of an expansion of the UCLA Health System Westlake Village, where the system already operates a 4,000-square-foot center with 12 doctors; Porter Ranch, which will be a 23,000-square-foot center opening May 2013; and Thousand Oaks, an 18,000-square-foot facility visible from the 101 Freeway at the former headquarters of Baja Fresh, opening in December. A lease for Santa Clarita has not yet been signed, said Ann Sullivan, project director for the Department of Medicine, which is spearheading the expansion. UCLA is also spreading south with a new office planned for Redondo Beach. “With these new offices, we can provide convenient, high-quality care to people who do not live or work near our Westwood and Santa Monica medical campuses,” added Dr. Matteo Dinolfo, medical director for the new practices. “Our patients have access to all the services of UCLA Health System should they ever need them.” Creating competition UCLA is not the only prominent Los Angeles health system trying to gain a foothold outside of its core market. The Keck Hospital of USC is in the running for the purchase of Verdugo Hills Hospital in Glendale while the Children’s Hospital of Los Angeles recently opened a satellite in Valencia. Behind these decisions is consolidation in medicine at all levels as doctors, health plans and health systems all try to figure out the optimal operating strategy in a rapidly changing landscape. “It’s all driven by the need to achieve scale,” said health care consultant Dr. Mitch Morris, principal with the Los Angeles office of Deloitte. “To be successful, you have to be able to do more with less and one of the ways is to through achieving larger scale.” Scale helps health systems spread the cost of equipment, facilities and labor across a much larger patient base, allowing health systems to drive down the cost per patient, Dr. Morris said. That will become even more critical as the reimbursement system changes from a fee-for-service model to one of bundled payments or capitation. “The larger they are, the more bargaining power they have, and the more they can share resources to lower the cost per unit,” Dr. Morris said. But the expansion by one of the best known brand names in medicine already is being perceived as a threat by Valley hospitals and specialty physicians, who see it as more competition for limited business, especially when it comes to specialty services. “They can be seen as partners or poachers,” said the prominent Thousand Oaks cardiologist Dr. Irv Loh, director of the Ventura Heart Institute. “If they wanted to be partners, they would want to do the outreach before they set up their shop. If they don’t do that, you might conclude they will be de facto poachers.” Recruiting doctors Cardiology is one of the specialty services UCLA plans to offer at its five new medical offices. Dr. Feinberg said he has spoken with some physicians in the Valley region and while they were initially concerned, they ultimately understood the rationale behind the plan. “They get it,” he said. As part of its expansion, UCLA is recruiting and hiring physicians and support staff. In some cases, the health system is bringing new doctors into the community. In other cases, it is appealing to private practice doctors to join the UCLA team, Sullivan said. The physicians will be employed by UCLA as faculty. Attracting physicians is not a hard sell, Sullivan said. “It’s hard for a private practice physician to survive and have sustainable contracts these days,” she said. The system plans to hire some 15 primary and specialty physicians in Thousand Oaks, and potentially as many in the other outlying offices, she said. The Calabasas facility also will employ numerous imaging technicians, though Sullivan did not know yet how many. Dr. Feinberg said for the vast majority of cases, rather than referring patients to the Ronald Reagan UCLA Medical Center, the physicians of the Northwest campus will refer patients to Valley hospitals. Sullivan said local hospitals plan to hold a ceremony to welcome the UCLA physicians. “It’s not our strategy to tell those doctors to go and bring the patients to Westwood for care,” Dr. Feinberg said. “If they are really sick, yes, but 99 percent of the time if they need a hospital we will use a local hospital from the area.” Los Robles Hospital & Medical Center in Thousand Oaks and West Hills Hospital & Medical Center will be partners to UCLA doctors, Sullivan added. “The plan for UCLA Health System to set up satellite offices in our service area should be good for both the community and West Hills Hospital. It will give the community members an additional option and will provide an opportunity for West Hills to build a relationship with UCLA,” West Hills Hospital Chief Operating Officer Omar Chughtai said. Community benefits Real estate owners and city officials in Thousand Oaks said UCLA’s move into the Valley region is a significant positive development, one that will help spur the continued development of the East Thousand Oaks Boulevard stretch, where city planners have long hoped to create a more vibrant downtown with more foot traffic. “It’s very exciting what UCLA is doing,” said CBRE Senior Vice President Michael Slater, who represented owner Tony Principe on the Thousand Oaks lease as well as the owner on the sale of the Calabasas property. “It will bring high-paying jobs and good services too. Right now people have to drive to Westwood. They won’t have to drive through crazy gridlock.” UCLA could not say how many jobs will be created. Slater estimated that if you count four jobs per thousand square feet of space, the Thousand Oaks office could employ 80 people while the 52,000-square-foot Calabasas facility could employ more than 200. But Dr. Loh said area physicians and hospitals are likely to be wary of UCLA’s entry into the market. He said people he knows inside Los Robles Hospital were unaware of UCLA’s plans, as were other prominent cardiologists in the area. He said the West Valley cities where UCLA plans beachheads are saturated with specialists, especially cardiologists. Competition for patients is fierce and another player— especially one with the name recognition of UCLA — is likely to siphon off patients. He warned that if UCLA “ends up poaching patients …we are much more likely send our complex patients to other tertiary centers who are not threatening our livelihood.” But property owner Tony Principe, who leased the Thousand Oaks building to UCLA, said consumers will benefit from the competition. “UCLA is the best at what they do,” he said. “I think it’s great to have more competition out here.”
UCLA Health System Gains Foothold in Valley Region
