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UPMC Leaders Press Ahead with Technology Solution Innovation

January 6, 2016
by Mark Hagland
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Leaders at the UPMC Health System continue to move forward to innovate on commercializable technology solutions

Things continue moving forward at a rapid pace at the University of Pittsburgh Medical Center (UPMC) health system, the vast, 20-plus-hospital integrated health system based in Pittsburgh. On a scale that is virtually unique in U.S. healthcare, senior executives at UPMC have been pursuing the development of technology solutions that can potentially be commercialized, and that, when successful, have been commercialized.

While several other large integrated health systems are pursuing the path of technology development incubation, and sometimes, of commercialization, of internally developed technology solutions (among them Cleveland Clinic and Intermountain Healthcare), senior executives at UPMC have for a number of years been moving forward to develop and to co-develop, with partnering organizations, solutions that might gain traction across healthcare. As its website notes, “UPMC Enterprises believes that the smart integration of technology within the health care industry is an opportunity to both improve the quality and lower the cost of health care.As a leading integrated delivery and finance system (IDFS), we harness the strength of our clinical, technical, business, and capital resources to develop, test, and deploy health care products and services that improve the lives of patients across the globe and reduce costs.”

Talbot C. “Tal” Heppenstall, president of UPMC Enterprises, the division of the UPMC organization that is developing technology solutions, spoke recently with HCI Editor-in-Chief Mark Hagland about some of the recent developments at UPMC Enterprises, and the broader context of the health system’s strategies. Below are excerpts from that interview.

What has been and is the vision of UPMC around developing technology solutions that can be brought to the broader U.S. (and even international) healthcare market?

Our vision here is to continue to be what we’ve been for the last 40 years, which is ahead of the curve. If you look at our health system’s $12 billion in annual revenue, we got to that level by acquiring hospitals and medical groups earlier, and by building our own health plan. Meanwhile, like many of our peer health systems, we’ve been looking to diversity our revenue stream. But unlike many others, we’re making much bigger plays in the development sphere than many of our peer health systems.

Tal Heppenstall

Tell me a bit about your role and about the evolution of UPMC Enterprises.

My role is as president of UPMC Enterprises. How this has evolved is that, originally, we had a department called the International and Commercial Services Department, and half of that became UPMC International; and we took the commercial half of that and merged it with the Technology Development Center, and now call it UPMC Enterprises. So we continue to try to create diversified revenue for UPMC, and most of that will come from technology companies. In the past year, we’ve tried to focus our efforts even more, so we’ve divided the efforts into four different domains: Business Services and Infrastructure; Clinical Tools; Population Health; and Consumer.

Two examples of companies we’ve launched are Prodigo Solutions, which is a supply chain [cost management] company; and , Ovation [Revenue Cycle Services], which is a revenue cycle company. Both of those are really spinouts from our existing support services group. Most of the revenue, we expect to come out of the other three divisions. Clinical Tools is really aligned with our hospitals and physicians. Businesses they’re looking to start should help UPMC’s own hospitals and physicians. Two pillar areas for us are New Models of Care and Good Science. New Models is really better patient care. Sometimes, it’s not so much of it sometimes; or to practice more efficiently. Population Health is aligned with our insurance plan. We’re an integrated delivery and financing system, and our expertise is something that a lot of provider organizations want to learn to do—to take on risk. So they come to us. And we’ve launched two companies in that space. One is Health Fidelity, a company in California that does natural language processing and helps insurance companies around their hierarchical category codes. We bought that company three years ago and have been increasing our investment in it. And the other is Evolent, a company that UPMC started as a joint venture with the Advisory Board Company five years ago and which was intended to teach other non-profit organizations around the country how to become integrated delivery and financing organizations. Evolent was so successful that it was able to do an initial public offering last June 5. We own 22 percent of that company.

And the final domain is one in which we continue to see a lot of opportunities, Consumer. There, we want to help make healthcare a consumer-facing business, which it isn’t really new. So we have a lot of efforts ongoing there.

Have there been any challenges in all this work?