Beyond Sales – Exporting, Sanford Health’s Meaningful Investment
Beyond Sales – Exporting, Sanford Health’s Meaningful Investment
This episode of Export Nation explores the export journey of Sanford Health with Luke Lindberg, Head of Global Strategy, and Executive Director of Innovation and Sanford World Clinic.
Relevant Links
Company Information: Sanford Health - www.sanfordhealth.org
Office: U.S. Commercial Service South Dakota
Director: Cinnamon King - Cinnamon.King@trade.gov
Services - Gold Key Service
Transcript
Speakers: Derrick Small & Luke Lindberg
[music]
[00:00:03] Derrick Small: On this episode of Export Nation, we explore the export journey of Sanford Health with Luke Lindberg, Head of Global Strategy, and Executive Director of Innovation and Sanford World Clinic. Sanford Health is headquartered in Sioux Falls, South Dakota, where the company focuses on the integrated delivery of healthcare, senior care and services, global clinics, research, affordable insurance, and more. Luke, thank you for taking the time to join Export Nation today. I would love to start with you telling us a little bit about yourself, and your company, and what you do there.
[00:01:09] Luke Lindberg: Pleased to be on with you today, Derrick. Thanks for the opportunity to work with you. I love the US Commercial Service and all the great work done by the International Trade Administration, the Department of Commerce, and just pleased to be a participant in your podcast. My name is Luke Lindberg. I’m based here in the lovely state of South Dakota, hometown of Sioux Falls. I have the benefit of working for a great company called Sanford Health. We are the largest rural health care provider in the United States. A little bit south of $7 billion in annual revenues, about 50,000 employees, and we’re the largest employer in both Dakotas. We operate a little more broadly than that. We have 46 hospitals, 224 clinics, 233 senior living facilities in 26 states, and then we also operate in 10 countries around the world. It’s a pretty neat operation. Our international division, Sanford World Clinic, is a spinoff of our traditional business model here in the United States. Really, we’re targeting helping companies deliver better healthcare around the world. Through our partnerships overseas, we do about a 1.5 million patient visits annually. We are partners in 133 facilities, and have over 2,900 employees globally as part of our partnership operations.
We’re pretty widespread, and I think really have an ability to influence healthcare in the geographies in which we operate. A slight little bit more about me. I had the benefit of previously serving as the Chief of Staff and Chief Strategy Officer at the Export-Import Bank of the United States. I’m a former government employee myself, and had the benefit of working with the Commercial Service from a different angle, when I was with EXIM and conducting the business of the United States government. Love to talk about both angles with you today, and look forward to the conversation.
[00:03:20] Derrick: Given your experience with EXIM, you more than likely already knew about the US Commercial Service. Tell us a little bit about how the relationship between the US Commercial Service and Sanford Health began.
[00:03:33] Luke: I’ll never forget. My first time interacting was with Cinnamon King, who runs USEAC, the US Export Assistance Center here in South Dakota. She’s our state director, and just a tremendous resource for me. Cinnamon and I established a relationship maybe six or seven years ago, to talk about a couple of markets that we were looking to get into. I was introduced to her through some mutual friends, and it was a quick friendship. She really exposed me to all that the Commercial Service has to offer, but not only the Commercial Service. I’ll call it the suite of tools the US government can provide for companies looking to export.
That’s when my understanding of the tools and opportunities became real to me. Then I had the good fortune of obviously working, down the road, with EXIM and then now back here at Sanford again. I feel like every day, I further my connectivity into the agency, and leverage you guys in new ways that help us to be successful in our exporting goals.
[00:04:48] Derrick: You know what, with such a depth of experience then, in terms of exporting, what has been some of the most difficult hurdles or challenges? Especially within the healthcare field, and maybe if you could also expound on any unique hurdles that came about maybe in the last two years or so with the current situation. [00:04:40] Luke: Absolutely. The thing about healthcare exports with respect to healthcare services exports, which is really where Sanford Health is focused. There’s all kinds of companies that send medical devices and products, pharmaceuticals overseas, but when it comes to the services side, there’s a huge, huge demand for what we’re offering. I think of all the industries I’ve worked in and around, with respect to global exports, really, US healthcare dominance is one of the most attractive markets for overseas firms looking to gain an advantage through a US partnership.
The challenge that we have frequently, is being able to identify the projects where, one, we can deliver on what they’re looking for. Two, where we really feel comfortable with our partner. There’s a lot of governments and private entities out there looking to build 1,000 plus bed hospitals, and they’d love to have a US company come and operate it for them. That’s just really not the business that we’re in. We run hospitals and things in the United States, but sourcing the right talent and having the right ability to influence an operation of that size is a pretty daunting task.
We honestly have a pretty key part of our business, which is refining the opportunities that come across our doorstep, because people just want US healthcare. If you ask anybody globally, around the world, what does it look like? “I’m going to get a knee surgery.” “Where do you want to go for it?” I think most people would tell you, they want to come to the United States to get their knee surgery done, or to get treatment for cancer, or a valve or stent put in their heart. There’s such a demand for those services.
For us, it’s really a refining game and making sure that the partnership reflects our ability to deliver, but also our desire to work with that partner on what they’re currently engaged in.
[00:07:25] Derrick: Are there key characteristics you look for in international partners or clients?
[00:07:31] Luke: Yes, there are. We really try to target, I would say, our sweet spot is a private Leone facility or operator, who is looking to take their operation to the next level. They have existing staff, existing revenue, facilities are built, and they’re trying to, one, either expand service lines, maybe they want to get into a cancer program or a heart program, or two, they’re trying to clean up some of their operational deficiencies. They perhaps are having some loss in product, or they feel they can get their throughput up, and we bring the expertise to the table to help them fine-tune and quicken their operation.
I said that that’s our sweet spot, but really, there’s three models that we would consider internationally. There’s the build model, and we have done that ourselves in Ghana, we’ve been operating for about a decade. It was our first international operation. We actually own and operate five healthcare clinics there. There’s also obviously, the consulting model, where somebody would want to pay us a fee to help them with this operational piece. Then there’s an equity model, where we come alongside them as a strategic partner in exchange for equity, and we bring that operational expertise. As the entity grows, we see the value of that as well, in terms of our balance sheet.
[00:09:02] Derrick: Did we touch on the impact of COVID-19 on your organization?
[00:09:09] Luke: I should have mentioned that. Yes. [chuckles] No. COVID-19 has changed the game pretty dramatically. One, our system here in the United States, we had to spend quite a bit of time, obviously, handling the cases that came through. I think the aftermath of that has been a pretty unique opportunity for us to help influence the way that care is being provided around the world.
We recently joined the Global Pandemic Task Force, which is an organizational effort by the US Chamber of Commerce Foundation, in partnership with the State Department, and USAID, and the US-ASEAN Business Council, and all of these NGO type players around the world, to help leverage the US private sector expertise to more effectively deliver COVID treatments and respond to these spikes globally. It started with an emphasis on India.
Sanford was tapped to provide free virtual consultations to Indian physicians, where our physicians would meet with their physicians and really just respond to their questions, help them think through some of the problems they were seeing. We’re exploring a similar opportunity right now in Indonesia, but the desire for our leadership is only growing, and we’re trying to find ways to both philanthropically contribute to those crises as they arise, but then really, the important thing is making sure that these relationships we develop are evergreen.
They go past the COVID, current situation of the crisis into the future, because these markets are hungry for US healthcare, and we want to be the providers of that going forward. I think there’s a strategic win for both parties in the short term is responding to COVID, but then in the long term, really opening up markets to us at Sanford, and more generally to the US healthcare companies writ large.
[00:11:22] Derrick: Perfect. Wonderful. Thank you. I understand you are a DEC member, correct?
[00:11:20] Luke: I’m a proud South Dakota DEC member. Yes.
[00:11:33] Derrick: [chuckles] Wonderful. Maybe talk to me a little bit about your work with the South Dakota DEC. Is that the official name?
[00:11:42] Luke: Yes, South Dakota District Export Council. That’s right. The South Dakota DEC is, I would say, the place in which international affairs or trade is conducted in South Dakota. We have, unfortunately, a pretty low percentage of our GDP attributable to international trade, but I think that’s artificially low because the market that runs king here in South Dakota is the agriculture space. We end up sending quite a bit of agriculture to processing facilities in places like Nebraska and Iowa, that process and then export from there, so sometimes our export numbers are lower than I think are reflective of the actual market dynamics at play.
Our DEC is focused quite a bit on providing the knowledge and expertise needed for companies to consider what that export jump might look like. We do quite a bit of in-person training, and webinars, and provide the materials that are needed to help people understand what it takes. I would say we have a really great team of evangelists. People who are actually doing the work themselves, who want to sit down, with a cup of coffee, and work through a problem with you.
To me, that’s the real value of the DEC, is that you have somebody you can call and look them face to face or sit down, and they’re willing to share their expertise because they’ve become an expert in and of themselves. I just found the forum to be incredibly helpful for me personally. I personally call other members of the DEC for help or thoughtfulness on approaching a problem, and I’ve been on the other side of that, where I’ve done the same for others. To me, it’s a small group of people that has a big impact in all of our bottom lines here in Sioux Falls.
[00:13:45] Derrick: Great. Cinnamon also mentioned to me the Sioux Falls Global Business Council. Is that something you’re involved with?
[00:13:55] Luke: I am. Yes, I was the founder of that group, and if the DEC is operating statewide, the Global Business Council was really targeted at operating in the Sioux Falls market, which is our state’s largest MSA. We brought together a group of companies that are all exporting, in this marketplace, and we got together monthly and began dialoguing around common problems, areas we could grow together, areas we could support one another. We did actual company site visits, where we learned about the international portion of each company’s business, and got a better understanding, just as a whole, of how exporting was done at their individual organization.
I just think it really elevated the level of dialogue because, one, it created common understanding, and a place for us to start, but it also generated ideas for ways to help each other, and a platform for us to address problems in this smaller market. I would say, in many ways, it was supported by our local Chamber of Commerce, but Cinnamon was a huge proponent of it and a big help, and was called a mini-DEC targeted really here at our Sioux Falls market.
[00:15:21] Derrick: That’s wonderful. Starting that just to help start exploring and improving exporting in the local area, that’s amazing. I do want to ask, switching a little bit, but not too much. You mentioned Ghana earlier. From what I understand, Costa Rica and South Africa, the US Commercial Service had some hand in that. Maybe you could talk about how we worked together to access those markets.
[00:15:49] Luke: Yes. This is one of the, I think, the exemplary pieces of the Commercial Service, is that you have tools that help in a variety of ways, that can help expedite business. In South Africa, we have a small research-based partnership with a university down there, conducting research on fetal alcohol syndrome. We really had a desire to grow in that market. We thought the dynamics were right. Our partner down there wanted to see us expand into some health care delivery options with some unique partners, but we didn’t really have a lot of access in terms of contacts, and understanding of the companies that were key players.
Cinnamon helped me facilitate a dialogue with the Commercial Service officer, and a few other folks at the embassy in South Africa, to talk about the healthcare sector writ large, and where they felt like there were opportunities for us to be successful, and where there were gaps in existing care in South Africa. Then we paid a pretty nominal fee. I think it was $300, and they produced a list of 20 or 25 really high quality contacts for us to reach out to, and then walked alongside us. We got the contacts, we were able to reach out to those people, then the Commercial Service officer was also willing to help us facilitate those dialogues in person.
We haven’t been able to get out to South Africa because of COVID, since we developed that list, and since we started working on it, but when we get out there in the country, we’ll invite them along with us, and they’re going to help us facilitate those conversations and opportunities to explore more in that particular market. That’s one tool I think we’ve found to be incredibly helpful, not only in South Africa, but in other places as well. In Costa Rica, we had a pretty unique opportunity. Our partner down there provides healthcare to a pretty good swath of the population.
We were in a place where we were trying to access COVID vaccines in country, and were struggling to figure out the right governmental mechanisms to get access to those COVID vaccines. Also, to advocate the US and more vaccines down to Costa Rica, because they were going through a spike at the time. Cinnamon, again, helped us reach out to the embassy, helped us put together some briefing documents, to think through what we were looking to communicate. Through that relationship, we were able to generate some interest about, how do we privately partner with the government, not through a public-private partnership necessarily, in a structured project finance way, but just a, how do we come alongside what the government’s already doing in Costa Rica to help support the COVID vaccination campaign, and their overall response to the pandemic? That actually led to a number of interesting conversations that helped us establish COVID testing drive-through centers. We figured out that there was a need for the private sector to step in and help develop the testing side of things.
We ended up operationalizing the largest COVID drive-through testing center in Costa Rica. They tested 29,000 people in one month, which for a population of only five million people is a pretty impressive number. Then more after that. One, it helped us respond effectively, but then our partner was able to get in front of the right people because of the support and help that Cinnamon provided to us in accessing the right embassy staff for that discussion.
[00:19:52] Derrick: That’s wonderful. That’s a great story. This is probably a harder question to ask, but are there any experience that have been most satisfying to you or the company? Either one.
[00:19:55] Luke: When I was at EXIM, I had a ton of experiences that were incredibly satisfying, but I think overall, the one that’s most close to my heart is really that I think exporting creates opportunities, not only overseas to expand your business, but it also helps bring new opportunities back to the United States. That’s one of our core tenets in our Sanford World Clinic division, is that we try to bring learned lessons from overseas back home to improve healthcare here, in addition to working in market. The great example for us on that one is in the country of Germany.
We own equity in a highly effective, very unique hospital in Munich, that was really an industry leader on adipose-derived stem cell treatments. It was something that the European Medicine Agency had made significant progress on evaluating, where the United States was lagging. Through that partnership in Germany, we’ve been able to help them operationally and clinically advance their quality of care, but really, we learned and got access to a unique treatment that was not available in the United States.
We started actually sending our patients over there to gain access to this treatment. Then we were able to do some low-level research on their care, after they came back, and used that data to go to the FDA and establish the first-ever clinical trial for this type of medicine in the United States. We learned from our partners in Germany, we supported them. Now we’re operationalizing this clinical trial in the United States, and soon, we hope, it’s going to be a standard of care for orthopedic applications and potentially more, down the road, here in the United States.
Literally, the type of medicine that was being developed in Munich, Germany, is now benefiting our patients right here in South Dakota, North Dakota, Western Minnesota. I just think that’s a really unique example of the benefits that come from exporting, is that you don’t just get additional bottom line dollars, but there’s actually ways to expand your horizon, and think a little bit more outside the box.
[00:22:36] Derrick: Wow. That’s another great story. Do you think that’s happened a lot in other countries too, that you work with? That kind of synergy and bringing that kind of knowledge and expertise back to the US? [00:22:16] Luke: Absolutely. Yes, all the time. We have a great partnership in New Zealand, in primary care, and they’re doing some pretty unique and innovative things there. All of our partnerships, individually, we learn from. It truly is a well-rounded experience for us as a company, but also occasionally, we send staff to these locations. They get to see operations in person and learn from those. Then they come back and they have conversations with their colleagues.
It really opens up our eyes in many ways, to the different medicine that’s being practiced around the world. I think that’s a truly unique situation or setup that Sanford is bringing to the table, and that we personally are benefiting from here in the United States.
[00:23:39] Derrick: Great segue into, well, how much staff is needed to support export sales, roughly, I guess? To put a figure on it.
[00:23:51] Luke: I think that’s a great question. I know from my time at EXIM it can be intimidating, particularly for small and medium enterprise businesses to consider hiring additional staff. I think it’s really dependent on what your goals and outcomes are. For us, because we’re pretty heavily involved in operations, in terms of, we have somebody sitting in Sioux Falls who’s evaluating medical charts in Ghana on a daily basis. For us, we’re right-sized at about 10 or so, I’ll call it dedicated staff members here in Sioux Falls, who are really churning through the information, and in the details, about each of our partnerships around the world.
I think depending on what your company looks like, and the market you’re trying to enter, that can be significantly downsized or significantly upsized based on what it is you’re looking to accomplish. Now, that’s our domestic footprint that we fund from here. We also employ over 120 Ghanaians in the country of Ghana to operationalize our five healthcare clinics. Again, that’s part of our business model. All of our operations are designed to be sustainable.
This is not a philanthropic effort. These are all— There’s a business case in mind for each of these places, and so our overseas employment all contributes to the revenues we need to generate to make sure we stay viable in that marketplace.
[00:25:26] Derrick: Did we speak about the impact of export on the company sales?
[00:25:32] Luke: We have such a large domestic footprint. We’re a $7 billion company based here in the Midwest. Our exporting profile is minuscule in comparison to the overall size and scope of what we offer here. Again, 46 hospitals in the United States, 50,000 employees based here. The actual revenue dollars are pretty small, but I think the impact is big. I think if you asked our CEO, Bill Gassen, he would say the same thing, is the revenue doesn’t tell the full story.
The example I gave about Munich, that is directly impacting the future of medicine that’s going to be provided at our system here, and so we talk about, and we engage in our World Clinic operation frequently, in ways that don’t reflect themselves in the numbers. I think, for us personally, it’s been a meaningful investment because of the learnings we’ve brought back, but also our exposure to the globe, and our ability to start to think outside the box, and provide pretty unique solutions.
I do think there is a revenue number, there’s an operating margin number, all those things, but I just don’t think those tell the full story for us, personally. I do think, for other businesses, that could be more important. [00:26:19] Derrick: That’s absolutely right. Revenue is not the full picture. Luke, tell us a little bit about your company’s future export prospects.
[00:27:01] Luke: Yes, Derrick. The two markets that I think we’re strongly considering right now, and this has the propensity to change, but in terms of where my focus is on is in Israel and India. I think a lot of people realize this, but many don’t, the ecosystem for healthcare in Israel is really pretty unique. Of all the places globally, where healthcare innovations are happening at a rapid pace outside the United States, I would say Israel is number two globally in that space. We have already seen the fruits of some of those innovations come to the United States. Sanford Health was the first company in the Midwest to rollout an Israeli developed device called TytoCare, which is a diagnostic take home device, and so we would love to see additional opportunities like that. I think having some material presence in Israel would expose us to a lot of the innovation that’s happening there. It’d be a pretty strategic win for us to be a part of that, both overseas in Israel, but then more so bringing some of that technology back to the United States. Then it’s undeniable, India is going to be a future powerhouse globally and economically.
They have a strategic role to play in the world, and I think down the road, if you’re not in India, there’s a question, why not? It’s a challenging market to navigate in many ways, which is why we haven’t found our partner yet. We recently, through our response there with respect to their COVID surge, have opened up some new doors and some new conversations that I’m pretty excited about. I think those two markets in particular will probably be on the forefront of our minds for a little while to come. Then more globally, I always liked doing business in Japan. I’m a big fan of the Japanese, and the way they conduct business.
I have a particular affinity for Indonesia. I think they’re going to be a major player and a powerhouse in the future as well, and so I think that whole Southeast Asia, ASEAN market and region is going to be pretty significant and strategic for us and other companies globally, into the future.
[00:29:01] Derrick: A slight transition. Your experience at EXIM, how did that impact your work at Sanford? [00:29:06] Luke: I had been working with Sanford for about five years, in the exporting business, before I went to the Export-Import Bank. I had that experience under my belt, but EXIM broadened my horizons. One of the things that’s great about EXIM is it serves all industry segments, and I talked to folks in energy, and manufacturing, and services, and the whole swath of industry potential export markets. I think the biggest thing that I learned in my time at EXIM and have brought back to the Sanford team, is there’s quite a bit of ability on behalf of the US government, and really interest to de-risk your foreign transactions.
The tools are there through the Advocacy Center, at the Commerce Department, through the Commercial Service, who can help you appropriately evaluate markets you want to potentially go into. Through the Development Finance Corporation, who can take equity or potentially debt finance transactions overseas through EXIMs. A variety of products, one, financing the foreign transactions, but also the insurance packages they can offer you. For Sanford, we’re looking at partnering with USAID in some interesting ways, in countries like Ghana. There’s just a whole suite of tools out there that are really designed to allow you to export confidently.
I think that’s a hallmark of what the US government can provide, is that ability to de-risk. I think as I look at new markets now, and as we explore future opportunities, I’m looking for ways to partner with the US government to help us de-risk the transaction, make sure we meet our goals and objectives and outcomes, and then also to talk about those wins because I want other US companies to do the same. I think the more we export together, the more successful we are individually. I really truly believe that. That’s been one of my big takeaways from my time at EXIM.
[00:31:57] Derrick: Good to go. Last question. Any advice for companies in the initial stage, or formulating an international sales strategy, anything you would tell them to look out for, or any pieces of advice you have? [00:31:43] Luke: I do. Yes. The first thing, and this is my experience as well as my recommendation, is to get engaged with your US Export Assistance Center, in your local geography. I just think they’re a wealth of knowledge. They’re there to help you understand foreign markets. They’re there to get you plugged in. They are a really invaluable resource that you can tap into. I think Cinnamon King has been just a tremendous friend and asset for me personally. I would say that’d be my first piece of advice, is if you haven’t already, definitely get plugged in there.
The second is, be smart about the markets you choose. I think there are resources that are there that could help you be smart about that. One, the Export Assistance Center can do that, but there are a plentiful amount of webinars that the Commerce Department and ITA put on, on a regular basis, to help companies evaluate those potential markets. If you’re not reading things like The Wall Street Journal, or the global papers and things, those can help you evaluate those markets, but really learn about the particular market you want to get into, or are potentially doing business with, and dig into some of those tools because they can really be a value add for you.
The last thing I’d say, which I mentioned a little bit ago, is find ways to de-risk your project. Whether it’s through EXIM and their working capital guarantees, or their trade credit insurance programs, or SBA, or the Development Finance Corporation, there are ways and tools for you to do this exporting thing in a way that doesn’t put all the risk on your shoulders, and the burden to know these markets and feel 100% confident to go into them in a way that you’re going to be supported. I think those are key aspects to being successful. Find the ways you can de-risk your transactions because they’re out there. To be honest with you, quite frankly, they’re underutilized.
[00:34:36] Derrick: Luke, thank you. This has just been a wealth of knowledge you bring. From your experience, to EXIM, to your work with the South Dakota DEC, I definitely hope we can have you back on just in any facet just to talk again. Anything you want to tell people about how they can contact you, or the company, if they’re looking to do business or just to reach out in general, or the DEC or any of the things you have going on?
[00:35:06] Luke: Absolutely. We’d love to get connected with folks. My email is luke.lindberg@sanfordhealth.org. Please shoot me a note. I’m happy to be a reference for you, or to help you think through your problem, but certainly also if you have opportunities or want to explore things with the US healthcare system that is pretty, I would say, innovative in our approach, we’d love to have that conversation. The one other thing I’d plug is the USA Healthcare Alliance is a pretty neat organization put together by Trevor Gunn. He’s a VP over at Medtronic. It is a coalition of US healthcare companies that have come together to partner with organizations like Commerce, and EXIM, and DFC to help support healthcare exports around the world. If you’re not already a member of that organization and you’re in the healthcare space, or you have interest in getting in the healthcare space, we’d love to have you. It’s a broad swath.
Everybody, from the Accentures of the world, and the Microsoft of the world, to the Medtronics, and the Sanford Health, and the Mayo Clinics of the world are all part of this group, trying to bolster and support US healthcare exports. That’d be another great resource for you to consider, if this is part of your personal business plan.
[00:36:29] Derrick: This podcast is intended to provide information that may be of assistance to US companies. Statements made by Export Nation podcast guests reflect the views and opinions of that individual. This podcast does not constitute an endorsement by the US Commercial Service of the individual, his or her employer, or affiliated entity.
The specific information provided, resources mentioned, or products or services endorsed or offered by that individual and his or her employer, or affiliated entity, the US Commercial Service assumes no responsibility for the accuracy, completeness, or timeliness of the information provided by the guest, or for the decisions made in reliance on any information provided by the guest in this podcast. The information provided in this podcast does not constitute legal advice. Thank you for listening to this episode of Export Nation, brought to you by the US Commercial Service. For more information on how you can get started exporting, please visit www.trade.gov.
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