Later this month, USC’s Keck School of Medicine will formally open doctors’ offices in a neighborhood that has historically been serviced by Cedars-Sinai Medical Center and UCLA Health System.

The offices will provide highly rated specialists and encroach upon Westside territory far outside the university’s medical campus, located in the working-class community of Boyle Heights.

The expansion is not part of an all-out effort to take on its Westside rivals, but rather is part of a wider strategy to rebuild USC’s medical system after the collapse of its partnership with Tenet Healthcare Corp. several years ago.

“You cannot remain an island and be successful in health care,” said Carmen Puliafito, dean of the Keck School of Medicine. “We’re building a network of offices and affiliations to make it easier for patients to access our physicians.”

At its peak in 2003, the medical school’s flagship USC University Hospital recorded 73,401 patient days, according to the Office of Statewide Health Planning and Development. That figure is the total number of days spent in the hospital by all admitted patients.

During that period, the hospital was staffed by USC doctors and owned by Tenet, which at the time was the biggest private hospital operator in Los Angeles County with 18 facilities and one of the leading U.S. hospital chains. Tenet’s community and regional hospitals referred complex cases to USC for such procedures as brain surgery and organ transplants.

But the year before, in 2002, the company had got caught in a Medicare billing scandal that eventually caused it to sell off nearly all its Southern California properties. The loss of those feeder hospitals eventually took a toll on USC’s patient volume, which dropped to a low of 49,621 days in 2007.

Two years later, after several years of litigation, USC and Tenet came to an agreement and the university bought USC University Hospital and the adjacent USC Kenneth Norris Cancer Center from Tenet for $275 million.

Rebuilding

Puliafito was recruited in 2009 to both rebuild the health system and to turn the medical school into one of the nation’s elites. It is currently ranked the No. 3 hospital in Los Angeles by U.S. News & World Report behind UCLA and Cedars-Sinai, Nos. 1 and 2 respectively.

Since arriving, Puliafito has hired 10 teachers and department heads, and instituted a $52 million physician recruitment fund. The plan also calls for more capital investment in the hospitals and facilities, more interaction between academic and clinical staff, and better patient outreach.

The establishment of the roughly 14,000-square-foot Westside office space at Archway Medical Plaza, 9033 Wilshire Blvd., is an example of that outreach. The office will feature outposts of the Doheny Eye Center, the Norris Cancer Center and the USC Institute of Urology. It will house seven rotating and three full-time physicians all on USC’s faculty.

The office will build on what Puliafito called a strong patient base on the Westside; two of the facility’s oncologists have been running their practice in another Wilshire facility for the last two years after leaving Cedars–Sinai for USC.

The university has two other satellite medical offices, one for primary care in La Canada Flintridge that opened late last year and a specialty center in Pasadena that is slated to open in February. Puliafito promises even more.

“They are the first attempts by us. They won’t be the last,” he said.

It’s particularly timely for USC to open medical offices. Commercial lease rates, even for medical offices, are relatively low. At the same time, the entire health industry is gearing up for an expected 32 million newly insured patients that will be brought into the system over this decade as a result of federal health care reform.

“They need to do something to capture more volume,” said Steve Valentine, president of Camden Group, a national health care consulting firm based in El Segundo. “(USC) is doing what others have done, which is consistent with trying to grow market share. USC’s strength is in its specialty programs, so they play to their strength.”

UCLA Health System already operates 75 outpatient clinics across the county. Those offices offer specialty and primary care. But UCLA doesn’t see those offices – or USC’s – as competitive.

“This isn’t Target fighting Kmart,” said Dr. David Feinberg, UCLA Hospital System chief executive. “We’re in the human care business.”

Puliafito said USC expects that the initial satellite offices will take some time to be successful financially and become integrated into their communities.

“We’re taking the long view on this. We’re not concerned about how we do financially in the next year or two. We’re doing this as a service to our patients and to expand the USC brand,” he acknowledged.

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