A bold new step in U.S. health care is to  to make money by exporting expertise,
and ugrading medical care in Sicily. 5 years ago the University of Pittsburgh Medical Center opened a $58 million Transplantation Center in Palermo Sicily.

While providing Italians with Care paid for by the government at negotiated reduced rates, UMPC will charge Non Italian International patients the retail rate, Cash!
UMPC may be able to enjoy profits of $20 million. UPMC is eliminating the financial sting of Medicare cutbacks and the commanding power of health insurers.

Because it is the first organ transplant program in southern Italy, and one of only 18 nationwide, the government was spending more than $36 million a year to send transplant patients to northern Italy or abroad.

The program appears to be good Sicily not only for offering more convenient quality health care for the patients of the region, but also the economic benefit.

ISMETT's medical services are not limited to transplants. Its doctors are doing heart bypass surgery and cancer surgery. As part of the care patients need before these procedures, the hospital also houses outpatient clinics for blood work, X-rays and MRI scans.

ISMETT also has applied for government permits to perform heart and lung transplants, as well as weight-reducing gastric bypass surgery.

ISMETT's original mandate was much broader than organ transplantation, McKenney said, and all procedures performed at the hospital are approved by Sicily's government.ISMETT's interest in taking over one of Palermo's long-standing cancer clinics.

Orlando, now president of the Sicilian Renaissance Institute, fears ISMETT will become a "normal hospital," competing with Palermo's other hospitals.
[RAA: Could that be bad?]

UPMC GIVES HOPE, DRAWS FIRE IN ITALY
Pittsburgh Tribune Review
By Luis Fabregas
Sunday, October 17, 2004

PALERMO, Sicily -- When Pittsburgh doctors began doing transplants on this rugged Mediterranean island five years ago, they worried organs would rot in the stifling heat of operating rooms without air conditioning.

They worked around the clock in an abandoned wing of the century-old Civico Hospital, Sicily's largest but decaying medical center.

"Health care in Sicily was in shambles," said one of them, Dr. Victor L. Scott. "Before we got there, the quickest way to get health care was to go to the airport and go somewhere else."

That changed six months ago, when the University of Pittsburgh Medical Center and two Italian partners opened an ambitious, $58 million hospital in a former parking lot on the Civico campus.

The hospital represents a bold step in U.S. health care: a new way to make money by exporting expertise.

"Transplantation has changed the entire University of Pittsburgh," said Scott, an anesthesiologist who was one of the hospital's founding doctors but has since left the project. "Why not take advantage of that? Why not do the same thing overseas?"

By stamping its name on a hospital six time zones away, the nonprofit UPMC is eliminating the financial sting of Medicare cutbacks and the commanding power of health insurers.

Those familiar with the project say UPMC -- the project's dominant partner, with full control of its operations -- has the potential to make $10 million to $20 million a year in profits. That amount could increase UPMC's $100 million annual profits by about 20 percent.

"It's a crapshoot for hospitals to find money," said Stuart H. Altman, an economist at Brandeis University in Waltham, Mass., who has advised Congress on Medicare issues. "There are many services that they don't get adequately reimbursed for, and they're trying to make up for it. They're just being creative."

But embracing new business strategies and crisscrossing the globe has sparked criticism.

"UPMC will never do anything for nothing," said Dr. Carlo F. Marcelletti, a heart surgeon at Civico. "If the day comes when they are not making any money, they will say goodbye."

UPMC administrators in Italy and in Pittsburgh refused repeated requests for interviews. Instead, in answers to questions submitted by e-mail, they acknowledged their desire to become a world leader in health care.

"Serving patients where they live rather than having them leave home is our priority," wrote Michele McKenney, the UPMC executive who oversees the project, known as the Mediterranean Institute for Transplantation and Advanced Specialized Therapies, or ISMETT.

"It's about money and reputation," said Dr. David Blumenthal, director of the Institute for Health Policy at Massachusetts General Hospital in Boston and a professor of health care policy at Harvard Medical School. "They wouldn't be doing it if they were losing money."

'Cathedral in the desert'

ISMETT resembles a five-star hotel more than a hospital.

It stands out in the maze of Civico's aging buildings, with an imposing but inactive volcano as a backdrop.

The campus is surrounded by low-income high-rise apartment buildings and cafes that fill up with customers at midday. A deli nearby sells $2 tiramisu and a store peddles $500 caskets.

While Palermo's other hospitals have broken windows and cracked walls, ISMETT's warm design features gray marble floors, a two-story atrium and treatment areas with multimillion-dollar MRI machines.

Patients are greeted by receptionists seated behind mahogany counters. They wait in overstuffed couches surrounded by donated artwork. And they are admitted to private rooms instead of dated wards.

"It's a cathedral in the desert," said Dr. Nicoletta Salvatto, a Boston-trained cardiac surgeon at Civico. "We are just the poor neighbor."...

Unstoppable growth

UPMC has long embraced expansion.

Under the leadership of Jeffrey A. Romoff, a shrewd commander with a penchant for military books, it acquired $400 million in assets and amassed a network of 19 hospitals, 39,000 employees and 1,700 doctors....

"Since they don't want to compete on cost, they just take the cases that come to them. It makes sense that they would go after the international market," Lagnese said.

In 1996, Romoff and others -- including McKenney and UPMC's longtime leader, Dr. Thomas Detre -- began making almost monthly business trips to the Mediterranean.

While Italians recounted their health woes, Romoff and his team found an opportunity to market their most recognizable brand, the organ transplant program pioneered by Dr. Thomas E. Starzl.

UPMC surgeons have performed more than 12,000 organ transplants in the past 20 years. But the program has been assailed by an uncontrollable foe: a distressing shortage of organs. About 1,150 people are waiting for organs at UPMC's flagship in Oakland.

For Romoff, going abroad was not about money and geography but finding organs to meet an ever-growing demand, UPMC officials said.

Their relationship with the Italians became so tight that Romoff asked Cardinal Salvatore Pappalardo, Sicily's influential Catholic leader, to marry him and McKenney. Pappalardo married them in Rome in May 1997.

Romoff and McKenney's marriage later fizzled, but the scope of the project ballooned.

"If we were going to do something, why not do something that would benefit the entire area of the Mediterranean?" said Dr. Luigi Pagliaro, one of two Italians who first approached UPMC.

The catalyst was Pappalardo, who joined forces with his old friend Ignazio Marino, then a UPMC surgeon and ISMETT's founder. Together, they lobbied Italy's minister of health, Rosy Bindi, who earmarked $55 million to build the hospital.

Billion-dollar deal

In the end, Romoff and his team conceived a plan that UPMC controlled and Italians paid for. The total cost to Italian taxpayers will reach nearly $1 billion by 2012.

ISMETT gets two sets of payments from the government every year. One fee, capped at $84 million, pays for equipment, supplies and salaries. The other fee is based on procedures done at the hospital.

Last year, the fees amounted to $34.7 million, Italian government records show.

A tally of ISMETT's cost over the past seven years shows Sicilians have paid UPMC and its two partners $255 million. About $846 million more in expenses is projected over the next decade.

That hasn't escaped some of the project's observers.

"It's not how much you pay; it's what do you get in return," said Leoluca Orlando, 57, a former Palermo mayor who until last year was an ardent backer of the hospital. "If you pay Americans, let's see what we're getting. Otherwise, don't pay."

Responded Scott, the doctor who spent five years in Palermo and now works in Phoenix: "It galls me to hear that. If people are going to say that what I did is not worth that money, they're right -- they should have paid us more. The health care system in Sicily is in shambles, and they're lucky they got UPMC so cheap."

ISMETT and UPMC would not say how much money they are clearing from the deal. UPMC spokeswoman Jane Duffield said any excess "is funneled back into research and development of new treatments and technologies that benefit the Italian people."

Of the three ISMETT partners, only UPMC is paid for its participation. The others get only the prestige of their association with UPMC, officials said.

The deal calls for UPMC to receive $11.4 million a year from ISMETT in so-called know-how fees. In exchange, Pittsburgh doctors are expected to train doctors, nurses and other workers in the American style of delivering care.

In December, the Sicilian government approved a new payment plan that will reduce UPMC's know-how fees to about $8 million by 2012. Professional fees will be reduced about 45 percent.

UPMC's McKenney emphasized those cuts and said the most recent payments are "far less than the region (of Sicily) had been paying each year before ISMETT was founded to send Sicilian patients abroad for transplantation."

Venturing abroad

In many ways, UPMC needed to be creative.

In 1995, the national agency that regulates the U.S. organ transplant program, the United Network for Organ Sharing, restricted the number of foreigners getting transplants. To appease lawmakers who worried that Americans awaiting organs could be shortchanged, UNOS said it would audit any of the nation's transplant centers where more than 5 percent of patients were foreigners.

The solution: to find suitable real estate in the Mediterranean, a magnet for patients from countries such as Egypt, Morocco, Libya and Jordan.

"We do want to make our transplant expertise available to anyone who needs it regardless of where they live and ISMETT helps us do that," Duffield, the UPMC spokeswoman, wrote by e-mail. "We believe that we live in a global society, and medical expertise should be accessible to everyone."

Italy does not restrict the number of international patients who arrive for transplants, said Dr. Alessandro Nanni Costa, director of the Italian National Transplant Center in Rome. The government does set some guidelines, though: Patients must come from regions without organ transplant programs and must be able to get follow-up care where they live.

Treatment of international patients can be lucrative. They pay cash. The treatment of Italians is covered by a national health care system.

That makes international patients a coveted target for American hospitals, which each year earn about $1.5 billion for services provided in the United States, according to the U.S. Department of Commerce.

ISMETT won't say how much it charges foreigners. For Italian patients, it charges the government about $73,000 per liver transplant.

In the United States, hospitals such as UPMC Presbyterian in Oakland charge an average of $194,000 for a liver transplant. The ultimate payment is generally lower, averaging $89,000, depending on the recipient's insurance coverage.

"It's clear the University (of Pittsburgh) wouldn't be involved in it if it wasn't financially solvent," said Dr. John J. Fung, who recently stepped down as ISMETT's scientific director and as transplantation chief at UPMC.

Costly but justified

Italians see ISMETT as a necessity. Because it is the first organ transplant program in southern Italy, and one of only 18 nationwide, the government was spending more than $36 million a year to send transplant patients to northern Italy or abroad.

"We're showing that the money Sicily is spending on this project, which is a lot, is producing quality health care for the patients of this region," said Dr. Bruno Gridelli, ISMETT's medical director.

Doctors at the 70-bed ISMETT have performed more than 200 liver and kidney transplants since the program began.

So far this year, ISMETT doctors have performed 46 liver transplants, compared with 41 in all of last year and 22 in 2002.

Costa, the national transplant center director, credits ISMETT with increasing once-sagging organ donation rates. The rate has more than tripled in the past four years, to 10 donors for every million residents.

So far, ISMETT liver transplant recipients have the second-highest survival rate in Italy -- 90 percent, slightly behind that of Milan's National Cancer Institute.

"The medical know-how from America is costly, but it can be justified," Costa said. "We found that people who come from America give an added value to our programs."

ISMETT's medical services are not limited to transplants. Its doctors are doing heart bypass surgery and cancer surgery. As part of the care patients need before these procedures, the hospital also houses outpatient clinics for blood work, X-rays and MRI scans.

ISMETT also has applied for government permits to perform heart and lung transplants, as well as weight-reducing gastric bypass surgery.

"We will never have organs for everybody," Gridelli said. "So we have to find new strategies. Many of the people who need transplants have diseases that are preventable."

And because obesity can damage the body's organs, he said, gastric bypass can prevent some transplants.

ISMETT's original mandate was much broader than organ transplantation, McKenney said, and all procedures performed at the hospital are approved by Sicily's government.

"While there will always be some overlap as there is in Pittsburgh, ISMETT by its very nature cannot replace or duplicate existing surgical programs," McKenney wrote.

But some of the hospital's original supporters aren't buying the argument.

Orlando, now president of the Sicilian Renaissance Institute, fears ISMETT will become a "normal hospital," competing with Palermo's other hospitals.

Surrounded by a collection of elephants in his living room and puffing on an Italian cigar, Orlando rattles off several examples. Among them: ISMETT's interest in taking over one of Palermo's long-standing cancer clinics.

"Why would they want to do that?" Orlando said. "ISMETT today is considered a normal hospital. The project has become something else. This was supposed to be a transplant center. Tomorrow, it will probably be a center without transplants."

ISMETT at a glance

Building cost, size: $58 million, 130,000 square feet; designed by the Pittsburgh-based firm Astorino Beds: 70, including 14 intensive care beds and 4 operating rooms Employees: 314, including 43 physicians and 100 nurses Diagnositic facilities: Microbiology, radiology, infectious diseases, pharmacy, dialysis and pathology Main medical services: Cadaveric and living-related solid organ transplants, including pediatric liver and kidney transplants Future programs: A so-called Cell Factory, where pancreatic islet and adult stem cells will be processed, preserved and distributed to centers within the Mediterranean basin. ISMETT wants to use pancreatic islet transplantation to treat diabetes and adult stem cells to repair damaged organs, as an option to transplants. Scientific equipment will be connected to the University of Miami, where one of ISMETT's top doctors, Camillo Ricordi, is a diabetes researcher.

Luis Fabregas can be reached at lfabregas@tribweb.com or (412) 320-7998.

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