Value-based care has not only changed the way health care is paid for, it has also significantly altered what medical organizations do, extending services beyond patient care. Forecasting this trend years ago, Northwell Health executives implemented business initiatives to generate new revenue by pursuing new commercialization opportunities, reducing purchasing and operational costs and expanding service capabilities.
While some of these entities have been operating independently for several years, the health system this year joined them together under a new entity called True North Enterprises. The new business arm oversees about $200 million in annual revenue, and develops and invests in products, technologies and services that will help fund Northwell’s mission to improve the health of our communities.
“True North is Northwell’s answer to health care’s evolving landscape,” said Michael Dowling, the health system’s president and CEO. “We are at a critical stage to lead reform by identifying business opportunities beyond patient care delivery. By selling the new services and capabilities we have developed and collaborating with start-ups, high-tech firms and other businesses, we can generate revenue from areas we never thought of before.”
True North Enterprises assembles all health system entities that focus on business and retail services, consulting, new joint ventures, and investments in start-ups and innovative ideas that originate with Northwell clinicians, researchers and staff members. True North Enterprises commercializes and sells these products and services to other health care providers, pharmaceutical companies and through other business-to-business relationships.
“True North is the home of revenue diversification and innovation for the health system,” said Donna Drummond, Northwell’s senior vice president and managing director of True North. She added that the health system needs to identify new revenue sources in order to:
“Joining all of these entities together shines a light on them,” Ms. Drummond said. “We’re not an organization that just provides clinical care anymore. We’ve gained expertise in providing products and services, and we are monetizing them.”
True North began in 2006 as North Shore Enterprises with the creation of Vivo Health, the retail specialty pharmacy, pharmacy benefits manager and new mail order prescription medication program (see page 10). There are now Vivo Health pharmacies at 410 Lakeville Road in New Hyde Park, the Center for Advanced Medicine, Lenox Hill Hospital, Long Island Jewish (LIJ) Medical Center, and North Shore University, Phelps, Southside, Staten Island University and Zucker Hillside hospitals. This year, projected revenue for the venture is $150 million.
“This is an exciting time for the organization,” said Onisis Stefas, PharmD, vice president and chief pharmacy officer for True North Enterprises. He added that Vivo Health remains responsive to changes in the health care landscape. “Identifying new opportunities and business solutions through innovation and collaboration is one of the things we do best.”
True North’s growing portfolio incorporates business services, retail, ventures/investments and clinical trials for pharmaceutical companies.
Thriving entities such as Vivo Health and Northwell Health Alliance, the health system’s group purchasing organization (GPO), are among the health system’s business services. The GPO serves as the intermediary between manufacturers, suppliers and health care providers, leveraging collective buying power to negotiate discounts and generate independent fee income on behalf of its members. Northwell Health Alliance members include all of the health system’s entities, plus affiliate hospitals such as Crouse Health in Syracuse and Nassau University Medical Center. The GPO earned $13.1 million in fees last year.
Beyond discounts, the GPO provides data analytics, benchmarking, market research, consulting and additional services. It has 380 unique members, 460 contracts and about $900 million in goods and services that are purchased through Alliance GPO contracts annually.
“We want to keep growing and help other providers develop value-based models to improve the quality and availability of products and services they acquire,” said Phyllis McCready, vice president and Northwell Health’s chief procurement officer. “With the ever-increasing consolidation of our vendors, we take a holistic approach with our business and relationship development. This strategy gives us the advantage to procure new products and technologies more efficiently.”True North also oversees the health system’s new central sterile facility in Bethpage (see page 8). Other opportunities to monetize include internal businesses such as the Bioskills Education Center, workforce safety, telehealth, employee wellness, population health management capabilities and numerous other areas, Ms. Drummond said.
Northwell has already dabbled in retail by selling vitamins and medical supplies through its Vivo Health Pharmacies, and Ms. Drummond expects expansion in this arena. “There is a lot of money spent on health and wellness aside from medical care,” she said. “We are talking to potential partners about a medical spa, healthy meal delivery and other retail opportunities.”
Northwell Ventures, the health system’s entrepreneurial arm, invests in early-stage companies and employee-driven innovations. Currently investments include 14 emerging health care companies that help advance Northwell’s strategy. Mostly start-ups, these joint ventures have provided unique solutions for products and services such as telehealth, imaging, physical therapy and more.
“Our endorsement sends a strong message to the market,” said Richard Mulry, executive director and chief operating officer at True North. “As a strategic investor, we rely on our internal team of experts to conduct product-use cases across the organization — validating efficacy and often enhancing the product offering.
“A successful implementation at Northwell decreases risk and makes the investment opportunity more attractive for future investors. Through this process, Northwell can increase its equity stake in the company.”
Investments focus on patient experience, clinical informatics and health transformation. “Ultimately, we are looking for a market event anywhere from two to seven years, depending on the investment, to realize a return,” Mr. Mulry said. “Due to the early stage of these companies, we expect that not every venture will be successful. We calculate the risk and deploy resources to help the initial launch, seeking the best possible outcome for the company and return for Northwell.”
Ventures also covers ideas that originate within the health system. For example, Lorenz “Buddy” Mayer, assistant director of support services at North Shore University Hospital, created Hand Shield, a privacy curtain that reduces the spread of germs and risk of infection. Ventures also collaborates with winning teams from Northwell’s Innovation Challenge, which gives employees an opportunity to present their entrepreneurial ideas for support from the health system.
Established in 2015, Pharma Ventures focuses on gaining the health system’s involvement in valuable clinical trials, focusing on education initiatives, population health, innovative contracting and specialty pharmacy services.
“We have developed strategic relationships with most pharmaceutical/biotech companies that help accelerate the growth of key initiatives that are advantageous to both Northwell and the companies,” said Elaine Brennan, executive director and chief commercialization officer at True North. “Connecting with these organizations positions Northwell as a premier destination for collaboration — not just to execute clinical trials, but also for other innovative projects. It’s a win-win for all.”