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Institutional Issues

Involvement Abroad of U.S. Academic Health Centers and Major Teaching Hospitals: The Developing Landscape

Merritt, Michael G. Jr; Railey, Chris J. MFA; Levin, Steven A. MBA; Crone, Robert K. MD

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doi: 10.1097/ACM.0b013e318172399e
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During the past 10 to 15 years, increasing numbers of U.S. academic health centers (AHCs) and major teaching hospitals have engaged in significant academic and clinical activities abroad. Headline-grabbing announcements have touted, for example, the development of a transplant hospital in Sicily, Italy, by the University of Pittsburgh Medical Center, a management contract awarded to Johns Hopkins to run a public hospital in Abu Dhabi, United Arab Emirates, and the Cleveland Clinic’s plans to manage a new hospital under development in the Middle East. Harvard Medical School (HMS), through its international subsidiary Harvard Medical International, has been deeply involved in health care systems development and education activities in Dubai, United Arab Emirates. Both Weill Cornell Medical College and Duke University are building medical schools abroad that will confer medical degrees equivalent to those awarded at their home institutions. And specialty cancer centers like M.D. Anderson and Memorial Sloan-Kettering are expanding their regional affiliation models, developed over many years, to a myriad of global locations. Little has been written on this topic to date, and no articles have attempted to describe these offshore activities and explore the reasons why they are being pursued.


We selected the institutions profiled in this study on the basis of our knowledge of significant offshore activities among U.S. AHCs and major teaching hospitals that were organized and contracted at an institutional level that are beyond the scope of sponsored research and focused education programs (e.g., global health development centers, educational exchange programs, international symposia). The initial list was expanded during the course of the study on the basis of knowledge gained through research and interviews with participants. No U.S. AHCs or major teaching hospitals with significant offshore activities of the scope considered for this study were knowingly excluded.

We gathered the information in this report from March to May 2007 and analyzed it during the summer of that year. The information came from several sources, including

  • telephone interviews with the leaders of the offshore activities at 12 of the 16 AHCs or major teaching hospitals that we knew to be active in developing offshore activities (all 16 institutions are listed in Table 1);
  • Table 1
    Table 1:
    Clusters of the Major U.S. Academic Health Centers (AHCs) and Major Teaching Hospitals Engaged Abroad, 2007
  • reviews of the Web sites and annual reports of all 16 institutions referenced above; and
  • Web-based research and a literature review on this topic to find articles and press releases about the offshore activities of these institutions.

We conducted the telephone interviews with the most senior representative(s) of each organization’s offshore activities. The interviews typically lasted one hour and followed an interview questionnaire that had previously been shared with each interviewee. The interviewees then had the opportunity to review our profile of their institution’s activities to confirm its accuracy and completeness. Note that the scope of our methodology did not include gathering data about the content and operation of academic medical institutions’ programs abroad. For examples of detailed program descriptions of some specific programs, see the February 2007 issue of this journal.


Top U.S. AHCs and some major teaching hospitals have historically served significant numbers of international patients who travel to the United States to receive care. However, the events of September 11, 2001 made it more difficult for some international patients to access U.S.-based health care. Many of these institutions began to consider new ways to enhance and build their referral bases to maintain the flow of international patients, who made a significant financial contribution to these organizations and served as evidence of the quality of care they provide.

As the international health care market has evolved during the past six years, the institutions profiled in this study are now pursuing offshore strategies that serve one, two, or all three core AHC missions of providing excellent clinical care, research, and education.

Profile of institutions, services, and emerging markets

Several major U.S. AHCs and major teaching hospitals are engaged abroad in significant ways, and others are actively considering major opportunities and/or developing strategies on how to get engaged abroad. To help organize and better understand the types of activities that the 16 institutions were participating in abroad, we classified each of them into one of three clusters, shown in Table 1 and described below.

  • Cluster A comprises organizations that have a relatively large portfolio of services and are delivering care, education, and/or research abroad. To date, providing core services abroad has been more the exception than the rule, with most institutions getting started by providing advisory and consulting services and, in some cases, licensing the use of the institution’s name in some capacity.
  • Cluster B comprises institutions that have some presence internationally and/or are actively considering or developing major opportunities.
  • Cluster C comprises a few institutions considered in this study who are “getting engaged” abroad by providing limited services or developing broader strategies. We presume that there are more institutions in this cluster than are shown in Table 1 and that the number is growing, but most of those institutions are not among the 16 we studied.

During the past decade, some institutions have transformed their offerings, which will eventually move them up in their cluster grouping. However, at the time of our study, the seven institutions listed in Cluster A were clearly differentiated in their level of activity abroad, and they represented the “leaders” in this arena.

Four-stage development framework

U.S. AHCs and major teaching hospitals have generally developed their programs and services over a period of several years. These programs and services require varying levels of commitment from the institution, and they generally develop in the following four stages:

  • Stage One: Educational programs and training
  • Stage Two: Consulting and advisory services
  • Stage Three: Management services to hospitals, medical schools, or education and research centers
  • Stage Four: Delivering and/or owning patient care, education, and/or research abroad

Stage One involves the provision of education and training abroad. In Stage Two, those services are extended into advisory and consulting-oriented services that can include support to organizations across the academic missions. Generally, the major programs include some type of affiliation status with the U.S. organization that includes the use of that institution’s name. In Stage Three, long-term managed service agreements are established with offshore health care organizations, medical schools, or education centers. A few Stage Four institutions actually own and/or operate programs and facilities abroad, representing the greatest organizational commitment and risk. Although activities across the four stages span the globe, the vast majority of these activities are in emerging and developing countries, primarily eastern Asia and the Middle East, where the levels of activity and economic development in the respective countries are significant. Table 2 depicts the development stage that each of the institutions we studied has achieved.

Table 2
Table 2:
Level of Institutional Involvement Abroad of Each of 16 U.S. Academic Health Centers (AHCs) and Major Teaching Hospitals, by Development Stage, 2007

Many institutions historically provided Stage One-type education and training abroad and began to organize programs at an institutional level. Harvard Medical International (HMI) is the most significant example of an organization with a very robust and organized series of education programs and development services. Educational programs typically include curriculum development, faculty development, scientific symposia, continuing medical education programs, and professional development and training programs for health care professionals and administrators. At HMI, such programs are organized by HMI staff in partnership with the host or client institution. HMI engages the appropriate HMS faculty to deliver these programs. Generally, these programs are conducted in English and sometimes use professional translators.

During the past several years, some institutions have moved into Stage Two by beginning to provide more direct consulting and advisory services around clinical and research development—much of this occurring at the behest of existing or potential clients. These activities have not necessarily been strategically driven, except in cases of institutions that are particularly focused on the development of international referrals (e.g., Memorial Sloan-Kettering and M.D. Anderson).

Some of the significant education and consulting relationships include the establishment of an affiliation arrangement with the main institution that allows the client to recognize their affiliation and relationship in a public way. Generally, these relationships are contracted such that specific services (often focused on improving quality, training, and/or research) are provided to the client institution.

A smaller group of more active institutions have moved into Stages Three and Four by beginning to engage in more significant operational and service delivery. These activities include managed service agreements for operating a hospital as well as ownership and operation of offshore entities, with services including patient care, research, and the provision of degree-conferring education programs. The initiatives pursued have typically been opportunistic as well, with none of the institutions surveyed actively seeking these opportunities in an organized and proactive manner (see Table 2).

The following examples of institutional involvement in Stages Three and Four give some insight into the core programs and focus of the most active institutions:

  • Cleveland Clinic has committed to manage the operations of a hospital under development in Abu Dhabi, United Arab Emirates. Cleveland Clinic also manages Sheikh Khalifa Medical City in Abu Dhabi, which includes acute-care facilities, a behavioral sciences pavilion, and a rehabilitation center, and it owns and operates an outpatient cancer center in Canada.
  • Duke University Medical Center has launched the Duke–National University of Singapore Medical School management/development agreement, whereby Duke will confer joint MD degrees, offer its curriculum, and manage the academic programs.
  • HMI has secured a collaboration agreement to develop the standards and regulatory infrastructure and to have an ongoing role in quality oversight for Dubai Healthcare City (DHCC) in the United Arab Emirates. HMI has established the HMS Dubai Center Institute for Postgraduate Education and Research to develop and direct a wide range of education activities in the region, and it is playing a major role in the planning and design of a new AHC to be located within DHCC.
  • Johns Hopkins Medicine International has secured a management agreement for a major public teaching hospital in Abu Dhabi and is the owner and operator of a cancer center in Singapore International Medical Center.
  • Mayo Clinic owns and operates a heart clinic in Dubai and may be a clinical partner in the new AHC being developed by DHCC and HMI.
  • M.D. Anderson Cancer Center is part owner and development partner in M.D. Anderson International–España, a multidisciplinary cancer center in Madrid, Spain.
  • University of Pittsburgh Medical Center (UPMC) is the owner and operator of a joint venture transplant center in Palermo, Sicily, Italy (Mediterranean Institute for Transplantation and Specialized Therapies) and has plans to develop and operate a European biomedical research center in Palermo. UPMC has also recently opened a cancer center in Ireland and is exploring other European markets.
  • Weill Cornell Medical College is developing and operating a medical school in Qatar that will confer Cornell MD degrees.

The involvement of U.S. AHCs and major teaching hospitals abroad spans the globe, but most of the activity, with the exception of that in Europe, is concentrated in developing and emerging economies. The Middle East and eastern Asia have been particularly active in recent years because a number of factors, including not only post-September 11, 2001, visa restrictions, but also the creation of favorable development environments characterized by progressive and well-funded government programs with increased resources to develop world-class health care services for their citizens. In some cases, the host countries believe they can create destination health care services for a broader region by collaborating with internationally recognized U.S. health care partners.

Why, despite risks, U.S. AHCs and teaching hospitals are engaging abroad

Most major U.S. AHCs and major teaching hospitals have primarily served a local (or maybe a regional) community for health care services; only a select few health care providers can boast of attracting significant numbers of patients from across the United States and abroad. With only a few exceptions, even those AHCs that serve significant numbers of international patients have been very limited in their “offshore” activities to cultivate referrals. The question that many persons ask when learning about the growing number of offshore activities of these institutions is, Why? Often, the question has a tone of skepticism. Some see the “international health care market” as too broad and multifaceted for single institutions to succeed at providing local services of equivalent quality beyond one or two major initiatives. Many AHCs and major teaching hospitals are challenged in their ability to find the capital needed to fulfill their U.S.-based missions and see investing in activities abroad as a diversion of resources and leadership focus. Others question the strategic value and caution that some of the recent developments are “me too” plays that are risky, complex, and will ultimately deliver limited benefit to the AHC’s core mission. All of the organizations’ leaders that were interviewed recognize the potential risk to their brands that have been built over several decades. Most of those interviewed acknowledge that “going global” is a major organizational and resource challenge, because U.S. AHCs and major teaching hospitals have limited experience in providing services abroad and recognize that there is a limit to the willingness and capacity to deploy scarce resources abroad in an environment where recruitment of talented faculty is increasingly competitive and expensive.

The institutions active abroad have clear reasons for that, despite the challenges they have identified. These reasons fit into four general categories:

  • Attract patients from abroad. Serving international patients in U.S. facilities has been financially attractive for hospitals and faculty physicians, with the leaders achieving several thousand inpatient stays from unique international patients annually at their core teaching hospital. U.S. institutions saw a major decline in this profitable clinical volume after the September 11, 2001, attacks and are trying to rebuild the lost volumes. At the same time, there is increasing competition from major European providers as well as providers in Thailand and India that offer equivalent services at a lower cost than in the United States. Strategies that are being considered include building better referral mechanisms abroad and developing infrastructure to help international patients efficiently access services in the United States.
  • Develop an international reputation and brand. Globalization is occurring in health care as in other industries. The market for the local development of “world-class health care” is rapidly expanding in emerging and developing economies. Many governments and investors are looking to partner with recognized leaders to aid in the development of large-scale “greenfield” health care developments that often include an academic component and clinical care. Many of the current U.S. AHCs and major teaching hospitals active in this arena view the future of health care as global and expect that 20 years from now, the leaders will be those who became global as well. A few of the surveyed institutions also indicated that building the reputation of the university is an important goal in helping to attract the best and brightest students from other countries to study in the United States.
  • Advance the organization’s research and education missions. Many of the participants seek to engage in research and education globally by linking the activities at the main campus with activities in other countries. A number of interviewees referenced the opportunity to collaborate on research, to share research findings, to enroll different types of patients in clinical trials, and to enable their faculty to directly participate in research in other countries or collaborate with scientists at affiliates.
  • Provide financial benefit to the institution. There is the potential for international activities to enhance profits, but most institutions do not view this as the major driver. To date, the model for engaging abroad has not included major investments of institutional capital that would have the potential to make significant returns. Increasing the number of international patients treated in the United States can have a significant impact, but this takes time to develop. The future may see more direct investments abroad, but, until then, institutions are more interested in ensuring appropriate remuneration for services provided and licensing rights for use of their name to help fund the infrastructure needed to manage and develop international programs and to fund future international business development.

All of the institutions interviewed acknowledge that the development of their portfolios has been largely opportunistic and reactive to date. However, this situation is changing, with some institutions developing more focused strategies for particular parts of the world or for different types of services. The size of the current “international market” for U.S. AHCs and major teaching hospitals is difficult to estimate, given the broad spectrum of potential services that could be provided and the early stage of market development.

It is also challenging to profile the size of the current programs. Institutions like HMI and Johns Hopkins International have developed international organizations with more than 50 employees who carry out advisory and program-management services; annual revenues for these organizations are in the neighborhood of $20 million. Those institutions that own and operate services abroad have larger revenues that are held within their offshore organizations or are part of the parent organization.

It is interesting to note that the institutions we studied have not historically committed significant capital and development funds from their parent institutions to provide offshore programs and services. Instead, funds are generally provided by the sponsoring organization in the host country, with the U.S. institutions entering into a consulting agreement or management contract for their services. Joint ventures have been limited, with some exceptions such as Johns Hopkins’s involvement in Singapore; M.D. Anderson’s in Spain; and UPMC’s in Italy and Ireland.

There have also been some extraordinary examples of philanthropic support that have resulted from relationships and involvement in particular regions and countries. The Qatar Foundation made a 10-year, $750 million commitment to develop the Qatar branch of Weill Cornell Medical College. There was also a recent announcement of a “transformational” gift to Johns Hopkins from Sheik Khalifa bin Zayed Al Nahyan, president of the United Arab Emirates and leader of Abu Dhabi, which will be used to complete construction of two 12-story towers at Johns Hopkins Hospital in Baltimore and to support research.

Organizational structure and governance

Most of the surveyed institutions have created separate legal entities and governance structures to manage their international activities. They have generally done this to manage risk, to create an entity able to operate abroad, to provide a legal entity that can enter into contracts and/or partnerships with organizations abroad, and to separate for-profit activities from the organization’s core tax-exempt activities. Each institution has a different way of organizing international activities. However, the type of organizational structure of the parent organization (i.e., whether the school and hospital(s) are integrated versus affiliated) seems to influence the structure of the offshore activities as well as the types of activities pursued. More specifically, the institutions with highly integrated structures for clinical and academic activities, such as Johns Hopkins, UPMC, Cleveland Clinic, Mayo Clinic, and Duke, can more easily leverage their hospital and academic programs and faculty in developing their offshore activities. In addition, specialty hospital providers who have well-respected brands have an interesting ability to capitalize on their strength and focus in the international space. In particular, the successes of both the University of Texas–M.D. Anderson Cancer Center and Memorial Sloan-Kettering Cancer Center are aided by their experience in developing regional networks in the United States; as a result, their international work is largely an extension of models they have employed within the United States (see Table 3).

Table 3
Table 3:
The Types of 16 U.S. Academic Health Centers (AHCs) and Major Teaching Hospitals Studied, Classified by Cluster, 2007

Most U.S. AHCs and major teaching hospitals involved in providing significant services abroad have established separate entities for their offshore activities. These entities, generally owned by the parent institution, have typically been formed for at least one of four reasons:

  • To provide a clear line of demarcation from the parent organization to minimize commingling of funds, staff, etc., that would confuse any efforts to determine the performance of the offshore activities
  • To insulate the core U.S. assets from the risks inherent in offshore activities
  • To serve as a contracting entity for partnerships with organizations abroad
  • To separate activities that might be considered unrelated, taxable business income by the IRS from the core, tax-exempt, charitable services of the AHC or major teaching hospital

Table 4 shows how the surveyed institutions compare as to how they have organized their offshore activities relative to the level of involvement or commitment abroad.

Table 4
Table 4:
Organizational Structures of 16 U.S. Academic Health Centers (AHCs) and Major Teaching Hospitals, by Development Stage of Activities Abroad, 2007

Most of the entities that have been established for offshore activities are nonprofits that have separate boards made up of key leaders from the parent organization, its trustees, and other community representatives. There are, however, some interesting exceptions. Johns Hopkins and Partners HealthCare System created for-profit, limited-liability corporations for their primary international activities. Duke has chosen not to create a separate entity despite their significant operations and involvement in Singapore. And the Mayo Clinic has chosen to operate a clinic in Dubai through the Mayo Foundation.

Organizations that are not yet significantly engaged abroad tend to organize their global activities within the department that focuses on bringing international patients to their U.S.-based teaching hospital or faculty practice plan.

Use of an organization’s brand or name

The decision of whether and how to allow offshore use of an organization’s brand or name is significant. Some non-U.S. organizations seeking help and support from U.S. AHCs and major teaching hospitals are also interested in leveraging the name of the U.S. institution to help them build credibility and recognition in their own market. Many U.S. AHCs and major teaching hospitals envision developing a network of affiliated institutions to leverage the education, training, and development services that they offer and to foster collaboration with the main institution as well as others in the network.

It is interesting to note that none of the institutions surveyed have prohibited the licensing or use of their names abroad, and all of the Cluster A and B institutions have allowed the use of their organizations’ names as part of either an affiliation or an operation abroad that is fully or partially owned by the parent organization. Table 5 shows how institutions in each cluster have addressed the use-of-name issue.

Table 5
Table 5:
How Each of 16 U.S. Academic Health Centers (AHCs) and Major Teaching Hospitals Have Allowed the Use of Its Brand Name Abroad, Organized by Cluster, 2007

While granting the use of the institution’s name is a significant concern of U.S. AHCs and major teaching hospitals—an issue that they all attempt to manage proactively—it is also part of their value proposition for their international partners. Most organizations that have allowed the use of their names abroad have specific criteria for how their names are used and have processes in place to monitor and manage name use. The surveyed institutions report that for the most part, examples of inappropriate use have been managed through official communications around grievances; in extreme cases, rights to use their names have been revoked. All of the institutions interviewed that allow the use of their names construct their contractual agreements around specific services to be provided along with the right to use the name. None of them solely license the use of the name for a fee in a contract, such as in a franchising arrangement.

Emerging strategies of leading programs

For the most part, none of the institutions in this study have specifically focused on a geography or region except for Jackson Memorial (Caribbean and Central America). Several institutions have recently completed or are currently involved in strategic planning exercises to evaluate a more strategic approach to their international activities, including more proactive business development approaches. Generally, the studied institutions considered the number of major initiatives that can be pursued as relatively limited by constraints on financial and organizational resources. These initiatives require unique managerial and leadership expertise, significant investment of leadership time and organizational resources, and significant capital investment that, to date, has been provided by the host organization or another source other than the core institution. They also carry risk to the institution’s brand and reputation. However, the potential benefits of these activities have been documented in the forms of significant financial benefits (e.g., operating income and philanthropy), new teaching and research opportunities for their faculty, increased awareness of their brand, and increased patient referrals.

There seem to be five potential emerging paths or strategies for global development:

  • Become a global academic health center, with a portfolio of services ranging across clinical education and/or research missions,that includes major operations in multiple parts of the world.
  • Become a global service provider in a focused and specialized area of clinical and research expertise that includes major operations in multiple parts of the world (e.g., cancer care, transplant).
  • Become a geographically focused global service provider that serves a region of the world for strategic reasons without the intention of extending into multiple parts of the world (e.g., take advantage of opportunities that are proximate to the main institution and that will more directly enable the AHC to expand its reach).
  • Become a transnational health sciences university that focuses on major educational degree-granting programs, with some research extensions, that affiliates with other organizations around the clinical mission. This would be similar to nonintegrated AHCs in the United States where the hospital is separate and the university does not get into the business of managing major hospital operations abroad.
  • Focus on developing a global network of relationships and limited services that are intended to build robust referral relationships for advanced health care services to be provided at the primary institution. These organizations would likely not pursue major operational commitments abroad but focus on affiliations and advisory services.

The strategies of the 16 U.S. AHCs surveyed for this study seem to fall into one of these five categories currently. Where their strategies will lead them—and those that follow and emulate them—remains uncertain.


One of the biggest questions considered in this study is why U.S. AHCs and major teaching hospitals are getting involved abroad when they have limited resources and have historically focused primarily on serving patients and students primarily from the United States or a particular region of the United States. Much of the early movement into the international arena has been opportunistic and based on demand from non-U.S. governments and other organizations seeking to improve their health care delivery systems and leverage the skills and brand value of leading U.S. AHCs and major teaching hospitals. Generally, these opportunities required U.S. centers to consider the strategic value and risks of offshore initiatives to address each specific opportunity. Few institutions seem to have proactively thought about extending their capabilities and assets offshore in an organized and strategic manner.

Even so, experience to date has shown that U.S. AHCs and major teaching hospitals have a significant opportunity to leverage their value as providers of some of the highest-quality services and expertise in the world, build their brands, and serve their academic missions. The rapid development of offshore activities among many of the United States ’ foremost AHCs to date suggests that global involvement could, in the coming decades, serve as a new metric for leadership and influence in health care, education, and research.

Yet, this will not be easily achieved. Development of offshore activities requires a major commitment and is only appropriate for those AHCs whose mission is to serve a global market and who are able to dedicate significant faculty, management, and staff resources. While some have achieved tangible benefits, the creation of truly global AHCs will require many years of development with uncertain results.


The authors wish to thank Kristen Massimine, PhD and Ayesha Kanji of The Chartis Group for their research and analytic support, as well as LouAnn Cozzens-Westall and Amanda Pullen, PhD, both of Harvard Medical International, for their guidance.

© 2008 Association of American Medical Colleges