President, UPMC Enterprises
General Partner, LRVHealth
Tal Heppenstall has a dual role at UPMC. He’s been treasurer of the $21 billion dollar health care provider and insurer since 2003, where he’s responsible for the day-to-day cash needs of an organization that integrates 90,000 employees, 40 hospitals, 700 doctors’ offices and outpatient sites, and a 3.9 million-member Insurance Services Division. In addition, Tal is president of UPMC Enterprises, where its mission is to create products and businesses that make life-changing medicine happen.
In this episode of Healthcare is Hard: A Podcast for Insiders, Tal talks to Keith Figlioli about the elements that have created this unique, world-class organization and how it will continue to adapt in a post-COVID world. They address topics including:
- A Culture of Risk. According to Tal, one defining factor that sets UPMC apart from other non-profits is its tolerance for risk. It’s a theme he points to throughout the interview, talking about how the organization’s high-risk tolerance enabled its success on the payer side, but how it is also an inherent characteristic of an academic medical center. Innovation is why UPMC exists, but Tal believes that without the willingness to take risks, it’s just a word.
- Constant Reinvention. Another important part of being rooted in an academic medical center is the bias towards discovery and reinvention. This has always been core to UPMC, but especially in the current environment as big tech, retail and others enter the market, innovation is not optional. However, Tal is quick to point out that the corporate venture operation under UPMC Enterprises is not a fund. It’s not about short term returns, but rather a reinvestment to make sure the organization is successful in its mission.
- UPMC’s Best Startup Ever. Innovation has resulted in a financial difference at UPMC, but one startup stands out in Tal’s mind – the health plan UPMC created in the late 90s. It’s now the largest medical insurer in western Pennsylvania with revenues of $12 billion. Tal recounts an environment in the market where one payer dominated for years and how competitive rates forced UPMC to do more with less. UPMC in turn became a very efficient organization and, as Tal puts it, is why they chose to do more with less of their own money instead of relying on another payer.
- The Pervasive Impact of COVID-19. Tal and Keith’s discussion reflects the fact that COVID-19 has permeated into every aspect of healthcare and is not a single topic of discussion, but an important part of every topic for the healthcare industry. Throughout the interview, Tal shares his thoughts about COVID including how it has accelerated digital health, the challenges it has created for payers and providers, and the role government will continue to play driving change in response.
To hear Tal and Keith talk about these topics and more, listen to this episode of Healthcare is Hard: A Podcast for Insiders, subscribe on Apple Podcasts, Google Podcasts, Spotify or wherever you find your favorite podcasts.
Topics Covered & When During Podcast
- Tal’s career path to the dual role of treasurer at UPMC and president at UPMC Enterprises (5:30)
- UPMC’s heritage as an academic medical center and growth to a $21 billion payer and provider (7:55)
- How UPMC succeeded where other systems have failed in building a health plan (11:20)
- Navigating the government response to COVID-19 (14:23)
- Tal’s predictions on market consolidation and national provider networks (22:00)
- The key distinction between venture capital and health systems investing in innovation (24:16)
- What’s behind UPMC’s focus on life sciences and device diagnostics? (29:18)
- Should health systems around the country be worried about the threat of big tech and retail entering the market over the next five years (32:46)