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How Children's Health Decides Where to Grow Next · The Strategy Catalyst Dispatch

• 0:02
  Dennis The: So healthcare in general, especially pediatrics, is facing generational headwinds.
• 0:08
  Dennis The: And while this is daunting, your organization's mission should be at the forefront of every decision that you make.
• 0:14
  Dennis The: Secondly, prioritize the right kind of growth in tandem with the optimization of clinical and operational performance.
• 0:27
  Anika (2): Welcome to the Strategy Catalyst Dispatch, a podcast from the Strategy Catalyst team at the Health Management Academy.
• 0:34
  Anika (2): I'm your host, Anika Rashid and each episode we'll explore The trends and insights shaping healthcare strategy today.
• 0:41
  Anika (2): Let's dive in.
• 0:49
  Anika: Health in Texas is sitting in a really fast-growing pediatric market, and they're having to make choices about where to prioritize.
• 1:00
  Anika: So to unpack how they're making those decisions, I'm joined today by Dennis Tay, Vice President of Strategy and Business Development at Children's Health.
• 1:08
  Anika: thanks so much for joining us today.
• 1:10
  Anika: Really happy to have you.
• 1:11
  Dennis The: Excited to be here and, thanks for having me
• 1:15
  Anika: So to start, can you give us a quick overview of Children's Health and your role there?
• 1:21
  Dennis The: Absolutely.
• 1:21
  Dennis The: So the Children's Health System of Texas, we are located in the Dallas-Fort Worth Metroplex.
• 1:28
  Dennis The: we serve about one million patients annually.
• 1:32
  Dennis The: we have 700 total beds across two campuses.
• 1:36
  Dennis The: We are the leading pediatric healthcare system in North Texas, and one of the largest pediatric healthcare providers in the nation.
• 1:44
  Dennis The: we have one of the nation's busiest EDs.
• 1:46
  Dennis The: We perform more heart transplants than any other program in the nation, for the third straight in year.
• 1:54
  Dennis The: and really as a testament to our clinical operational leaders and frontline staff, we have been ranked by US News and World Report across all pediatric subspecialties for eight consecutive years, I am very fortunate to be the vice president of strategy and business development.
• 2:13
  Dennis The: I oversee enterprise strategy at the system level, for both of our campuses as well as at the enterprise
• 2:24
  Anika: for many of our listeners, rationalization often means figuring out where to cut, in our previous conversations, you've described it a little bit differently, and I don't want to scoop you.
• 2:34
  Anika: So at Children's Health, how would you describe it?
• 2:37
  Dennis The: Yeah, absolutely.
• 2:38
  Dennis The: So we are building a$5 billion campus in partnership with UT Southwestern.
• 2:44
  Dennis The: And, just to give you a sense of what our market and what our landscape looks like, similar to the rest of the pediatric industry and broader healthcare industry, we are certainly not immune to headwinds, from payer and reimbursement pressures.
• 3:02
  Dennis The: We have inflationary pressures on the expense side.
• 3:06
  Dennis The: all of this is compounded by pediatric workforce shortages.
• 3:10
  Dennis The: I think we've truly considered this to be a perfect storm of generational problems that our industry is facing.
• 3:19
  Dennis The: in our market, not all of it is this grim.
• 3:21
  Dennis The: what makes us unique in North Texas is that we are continuing to experience pediatric population growth that outpaces the national rate the counties and cities that we serve continue to be the fastest-growing, not just in Texas, but across the US.
• 3:39
  Dennis The: we continue to see corporations move and relocate to North Texas, and just in Dallas County alone, we have a population of two point six million, with almost seven hundred thousand children.
• 3:52
  Dennis The: Many of these children where we're seeing gaps in care, so if you put all these factors together, we see demand outpacing resources, right?
• 4:03
  Dennis The: We see so much opportunity, to increase care and access locally in the communities around us.
• 4:10
  Dennis The: And so the question for us is not should we grow?
• 4:13
  Dennis The: we've decided that we wanna grow and we have a growth mandate through the new campus as well as our Plano campus.
• 4:21
  Dennis The: Our question usually starts with where should we grow and what will position us, for long-term success?
• 4:30
  Dennis The: when we think of growth and expansion, we don't think of growth, in a silo, right?
• 4:34
  Dennis The: we think of this holistically in terms of how do we continue, in parallel to growth, continue to push the envelope on redesigning our care model, incorporating the use of AI and digital health tools to ensure we are, able to see patient in the right care settings, high quality, lower cost of care to, to patient, closer to homes.
• 5:01
  Dennis The: And so we look at those things holistically, in terms of being, allowing us to enable, expansion into areas, without maybe bringing more opportunities as well.
• 5:12
  Anika: Okay, that is really helpful to understand.
• 5:15
  Anika: you know, you have more opportunities than you ultimately have resources for.
• 5:18
  Anika: A lot of things look really good on paper.
• 5:20
  Anika: When you're looking at, know, a dozen opportunities that all look promising, what kinds of frameworks do you use to narrow that list?
• 5:29
  Dennis The: Absolutely.
• 5:29
  Dennis The: So we have a very rigorous methodology or heuristic that we tend to look at.
• 5:35
  Dennis The: And at the heart of it, it combines quantitative and qualitative inputs, to really drive a decision.
• 5:44
  Dennis The: And we look at all the traditional strategy data that, that most of, our peers look at around demographic data, pediatric growth projections, demand forecasts.
• 5:56
  Dennis The: we do like taking it a little bit further and truly understanding sort of drive time patterns, what, what types of services are patients leaving these areas for.
• 6:08
  Dennis The: obviously, we look very closely at the competitive landscape, at the payers and the dynamics there.
• 6:15
  Dennis The: and then we really combine that with a, a qualitative lens around what are some of the things that those communities are requiring.
• 6:25
  Anika: so you mentioned you're looking at, you know, that qualitative overlay on how to make these kinds of decisions.
• 6:32
  Anika: Are there things that are unique to pediatrics that maybe other health systems aren't looking at that maybe they should?
• 6:39
  Dennis The: Yeah, I would say a-absolutely.
• 6:41
  Dennis The: i-in terms of workforce challenges and pediatric subspecialty shortages, we do, as an industry, see significant headwinds coming down, in terms of the sort of the supply of specialists and expertise.
• 6:59
  Dennis The: And so that is a true factor in how we, think about expansion, and obviously things like digital health and AI, those are gonna play a central role in how we deliver care with the resources that we have.
• 7:13
  Dennis The: I would say the other nuance is really around, the inpatient care that we provide, right?
• 7:19
  Dennis The: If you look globally at adult volumes versus inpatient volumes, I think the two big things that, that differ is, one, there are usually a lot less inpatient volumes relative to adult volumes, right?
• 7:35
  Dennis The: For example, in our market at a pretty high level, if we look at all the inpatient volumes in our market, in our service areas, over 90% of those volumes are adult volumes, and the rest are pediatric volumes.
• 7:49
  Dennis The: on top of that, we also have volumes on the pediatric side that are higher in acuity, with longer lengths of stay.
• 8:00
  Dennis The: And so that dynamic exists, where we have patients that stay in the hospital for a very long time, right?
• 8:08
  Dennis The: Re-specifically relative to NICU stays as an example.
• 8:12
  Dennis The: we are a level four NICU, and it is not uncommon for us to have, lengths of stay with greater than 20 days in, in some of those programs.
• 8:21
  Dennis The: And so obviously this really changes how we think about growth and expansion when we have a population, that is smaller in scale and tends to be higher acuity compared to adults.
• 8:32
  Anika: Yeah, if you're a parent with a sick child, that would definitely impact, you know, the drive trends that you mentioned versus, your kind of standard adult care.
• 8:42
  Anika: would that be right?
• 8:44
  Dennis The: Absolutely.
• 8:44
  Dennis The: with pediatrics, families will drive for these high acuity service, for that sort of best in class expertise.
• 8:52
  Dennis The: And so which really drives for the importance of building these, I would say, regional networks, expanding to areas where we're not today to drive those, those patient channels moving forward.
• 9:06
  Anika (2): Right.
• 9:08
  Anika (2): the topic of physician capacity, and you know, you mentioned we have workforce constraints moving forward.
• 9:16
  Anika (2): How much does physician capacity drive where you ultimately decide to grow and build versus the other way around?
• 9:23
  Dennis The: So we recognize that our people, our workforce are our greatest assets, and we cannot grow without our people.
• 9:30
  Dennis The: We actually conducted an internal study, I won't bore you with the details, that estimated the number of providers that we would need to support our growth.
• 9:41
  Dennis The: And, that number ended up being a lot larger than we anticipated.
• 9:45
  Dennis The: And so, considering this dynamic landscape that we are in, we are forced to think very creatively about growth, right?
• 9:54
  Dennis The: And this starts with, looking very closely at existing and new partnerships with new and existing provider groups, as well as health systems.
• 10:04
  Dennis The: we are looking very creatively at our network strategy and how we partner and collaborate with our independent community physicians.
• 10:13
  Dennis The: We are looking very closely at our acquisitions, our de novo expansion opportunities, as well as overall recruitment.
• 10:22
  Dennis The: and really, I would say the common denominator, the common thread across all of these are, leveraging technology so that we can provide care outside the four walls of our hospitals, as well as expand specialty access to more and more people in a very sustainable way.
• 10:41
  Anika: you've mentioned that you're thinking about growth at the portfolio level, rather than site by site, and that maybe includes moving around programs between campuses to optimize capacity.
• 10:55
  Anika: you walk us through what that looks like and maybe some examples of some times where you've done that?
• 11:00
  Dennis The: Yeah, absolutely.
• 11:01
  Dennis The: So we think about growth truly at the system level.
• 11:05
  Dennis The: Today, we have about seven hundred system beds spread across our main campus in Dallas and Plano.
• 11:11
  Dennis The: And one of the things that we continue to look at is where patients are traveling for care, as well as what the demand for services in Plano and Dallas are.
• 11:23
  Dennis The: And so through a similar exercise, we saw that a disproportionate number of patients were traveling from Plano, our northern market, and they were traveling to Dallas for inpatient rehab.
• 11:36
  Dennis The: In addition, we saw a significant backlog and demand for critical care services in our Dallas market, and so we made the decision to wholesale move our inpatient rehab unit from Dallas to Plano.
• 11:51
  Dennis The: in Plano, there was more capacity, there was more room for growth for our inpatient rehab unit, and we were able to convert the freed-up capacity at Dallas into more NICU beds to really grow access, and meet the growing demand in our Dallas market.
• 12:10
  Dennis The: So this is truly, a great example of how we've taken this system approach to growth, in both of our campuses.
• 12:18
  Anika: Okay, so you were able to sort of, Tetris it together a little bit.
• 12:22
  Anika: service isn't necessarily locked into one specific site.
• 12:25
  Anika: You can move things around the capacity where you need it, to better serve your community
• 12:30
  Dennis The: Absolutely.
• 12:31
  Anika: What about with the new campus?
• 12:33
  Anika: how does that reshape your thinking about where things go?
• 12:37
  Dennis The: Absolutely.
• 12:37
  Dennis The: So the new campus is our growth engine, right?
• 12:41
  Dennis The: we will continue to grow key, programs, such as our best-in-class heart, our transplant programs.
• 12:50
  Dennis The: we, in terms of NICU, we will have a developed, expanded, NICU services.
• 12:57
  Dennis The: and in partnership with UT Southwestern, that campus will, will be connected with Clements University Hospital through their L&D services.
• 13:07
  Dennis The: And so this will be a campus that is truly gonna drive a high acuity services in Dallas.
• 13:15
  Dennis The: It will be a destination hospital.
• 13:17
  Dennis The: And as we think about this notion around high acuities patients, longer lengths of stay, I think the way we're setting up, these other programs, including Plano and other specialty centers and primary care clinics, is really around this hub-and-spoke around, the main campus that's gonna drive growth for years to come.
• 13:41
  Anika: I would love it if you could walk me through a few more examples of expansions or build decisions from start to finish.
• 13:48
  Anika: So, you know, what did the data show?
• 13:50
  Anika: What were those qualitative factors?
• 13:52
  Anika: And then how did it ultimately play out?
• 13:54
  Anika: And I'll let you pick, you know, what examples you wanna talk about today.
• 13:58
  Dennis The: Absolutely.
• 13:59
  Dennis The: So I think the Red Bird Specialty Center is a very, good example here.
• 14:05
  Dennis The: Redbird, which is located south of Dallas, is a area where there is significant need for pediatric services.
• 14:14
  Dennis The: There are about a hundred and thirty-five thousand children that live in that area who live below the poverty line.
• 14:21
  Dennis The: that population has higher rates of chronic illness, and when we looked at the data, they tend to travel further for both inpatient and outpatient care.
• 14:32
  Dennis The: And so as we partnered with that community, as we partnered with the community leaders, we were able to, again, starting with the data and being able to leverage through the true community need and as we went into those communities and got a better understanding, what was driving the need, we were able to set up services, that truly are tailored to that community, specifically around behavioral health, urgent care and primary care service, sports medicine and orthopedic services in those communities.
• 15:07
  Anika: this sounds like it was very much mission-focused, providing the best care for that community, one of your most vulnerable patient populations, many of whom are on Medicaid,
• 15:20
  Dennis The: Absolutely
• 15:21
  Anika: you're making that investment at a time when Medicaid reimbursement is under, you know, some interesting headwinds, I know that, you know, how you make the case for that is definitely for the mission.
• 15:33
  Anika: So how does the financial case work when those headwinds are there?
• 15:37
  Anika: How are you thinking about sustainability, and do you have to balance it in some other ways and, you know, at the portfolio level?
• 15:43
  Dennis The: Yeah, absolutely.
• 15:44
  Dennis The: So I think, we tend to focus less on, on, I would say, profitability or margin at the site of care level, but we look at this sort of globally, holistically at the entire book of business, including, the inpatient centers.
• 16:01
  Dennis The: And so I think one, in this example where there's a true mission need, we continue to my earlier point around pushing the envelope on bending the cost curve, on redesigning our care models in a way that supports higher quality, lower cost care settings.
• 16:19
  Dennis The: we continue to prioritize and parallel, those types of models.
• 16:24
  Anika: So when you're thinking about sustainability, you are thinking about those pieces that allow you to deliver care, lower cost, as you said, AI, telehealth, those other levers that you can pull.
• 16:37
  Anika: my takeaway is, like, those are really instrumental in the sustainability conversation
• 16:42
  Dennis The: Yeah, absolutely.
• 16:43
  Anika: so we've talked about opportunities where you've said yes and why you would say yes.
• 16:48
  Anika: Can you talk me through what it's like to say no to something?
• 16:52
  Anika: Has the framework ever led you to say no to something that looked like an obvious opportunity on paper?
• 16:57
  Dennis The: Absolutely.
• 16:58
  Dennis The: I think, nothing would please me more to be able to execute on all the recommendations that we develop.
• 17:04
  Dennis The: but I think again, given the dynamic that we've been talking about around payer pressures, inflationary pressures, right?
• 17:11
  Dennis The: we've been talking a lot about, the shortage of pediatric subspecialists.
• 17:16
  Dennis The: we know we can't be everything to everyone, everywhere.
• 17:20
  Dennis The: And we are very deliberate in how we prioritize and make decisions and weigh things beyond the data.
• 17:28
  Dennis The: But it certainly starts with the data.
• 17:30
  Dennis The: we are also required, I would say, as an industry, to be nimble because, as you can imagine, our landscape changes quickly.
• 17:40
  Dennis The: even today as we're having this discussion, you can see what's prevalent in our news cycles.
• 17:46
  Dennis The: they are things like childhood vaccine schedules, RSV vaccine adoption, and things like that.
• 17:53
  Dennis The: And even nationally today, we're seeing, shifts from the inpatient side to more observation volumes.
• 18:01
  Dennis The: That is a national trend that we are seeing across all pediatrics.
• 18:05
  Dennis The: And so our ability to understand these dynamics and shifts and react quickly, according to our growth and expansion strategies are also very important parts of the conversations that we continue to have.
• 18:19
  Anika: absolutely.
• 18:20
  Anika: I think this is the perennial challenge with strategy is, you know, you've gotta make a plan for the future, but also remain flexible and adaptable to, especially in the unique times that we are living in now, when things are changing so quickly and in such interesting ways.
• 18:35
  Anika: So last question, you know, if you could give one piece of advice to another strategy executive at a system that's trying to figure out, how do I prioritize growth right now, what would you say to them?
• 18:47
  Dennis The: So healthcare in general, especially pediatrics, is facing generational headwinds.
• 18:53
  Dennis The: And while this is daunting, four themes come to mind.
• 18:58
  Dennis The: First and foremost, your organization's mission should be at the forefront of every decision that you make.
• 19:05
  Dennis The: Secondly, prioritize the right kind of growth in tandem with the optimization of clinical and operational performance.
• 19:14
  Dennis The: Thirdly, today more than ever, it is crucial to leverage technology to drive innovation, develop new care models, and bend the cost curve.
• 19:25
  Dennis The: Technology today touches virtually every corner of your business.
• 19:31
  Dennis The: And last but not least, be creative in how you think about both capital and partnerships when it comes to growth and expansion.
• 19:42
  Anika: so important to stress just holding the mission as a guiding light as you think about all the other things that you have to balance and sustainability, Dennis, this has been a really fantastic conversation.
• 19:55
  Anika: I'm really happy that you joined today.
• 19:58
  Anika: thank you so much for your time and for being so open about the work that you're doing at Children's Health
• 20:04
  Dennis The: You're welcome.
• 20:04
  Dennis The: I am, really excited to be part of this conversation, and thank you for having me
• 20:10
  Anika (2): That wraps up this episode of the Strategy Catalyst Dispatch.
• 20:14
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• 20:19
  Anika (2): If you have other thoughts or questions, we'd love to hear them.
• 20:22
  Anika (2): Email us at Strategy catalyst@hmacademy.com.
• 20:26
  Anika (2): You can also find more of our resources on HM academy.com/strategy-catalyst.
• 20:33
  Anika (2): That's it for this dispatch.
• 20:35
  Anika (2): Thanks for listening.