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How Outpatient Strategy Affects Facilities (Part 1 of 2)
Nearly every blog, presentation, or discussion about healthcare services today addresses the expansion of outpatient services in some way. But why? What are the factors pushing this topic into every strategic planning meeting at every health system throughout the country? And more importantly for those responsible for planning and maintaining the facilities, how will they impact building?
As part of the Affordable Care Act, the U.S. Department of Health & Human Services outlined key features by year here. In 2010, they clearly state that “increasing access to affordable care” is a top priority. Rebuilding the primary care workforce, increasing payments for rural health care providers, and strengthening community health centers were identified as primary strategies to achieving this goal. Whether you are in facilities, planning, or real estate, this push for access directly impacts your projects:
- You will be spending more time working on developing off-campus projects than ever before. Small primary care practices have consolidated into groups of employed physicians who can efficiently provide quality, preventative, and managed care. Your health systems have most likely rolled out a primary care network strategy that has identified strategic “hubs” for the PCP’s to be located. Working with your real estate group and planning partners, you should develop a typical (ideal) space program for these locations and a set of standard real estate requirements to aid in quickly vetting locations.
- It’s time to revisit your emergency department master plan. The Affordable Care Act provided $11 billion to Federally Qualified Health Clinics between 2011 and 2015 in efforts to serve 15 million to 20 million additional patients by 2015. This capital was used to expand services (and facilities) over the past 5 years with the direct goal of providing the uninsured and the under-insured access to care outside of your emergency department. As a result, many emergency department construction projects have been on hold waiting to realize the impact of this investment. Now is the time to look at the data and begin to right-size your emergency department for the future.
The key to improving access is to make access easier. Patients choose the emergency room because they know they will get access to a care provider. Health networks are working hard to deliver alternative options to keep lower acuity patients off the main campus and out of the inpatient system.
It’s fairly obvious that care outside of the hospital campus is less expensive than care within the hospital campus. Staffing costs are lower. Operational costs are lower. Construction costs are lower. Real estate costs are lower. The list feels endless when comparing the locations. How can facility development help the goal of reducing costs to the system?
- Develop a network of urgent care centers within your primary care facilities. The public is becoming more educated about the cost of healthcare and generally wants to stay out of the emergency department if possible. I recently broke my toe during an indoor soccer game and did a quick search to compare costs for care at an urgent care facility to the emergency department. I found a similar anecdote where a trip (with x-ray) to the urgent care cost $225 and a trip (without x-ray) to the emergency department cost $1527. Your health system may already have urgent care facilities in the community. If not, an efficient alternative is to include urgent care within your ambulatory developments. With some intentional initial planning, this added service can support your network with minor additional capital investment.
- Partner with local stores to staff a retail clinic. Large retail chains such as CVS, Wal-Mart, and Target are aggressively entering the healthcare marketplace to leverage an untapped demand. Whole Foods co-CEO, John Mackey, recently told Bloomberg that, “Healthcare is broken in America. If we allow markets to work, if we allow entrepreneurs to get in here and do things like I’m talking about doing, we will pretty much solve the healthcare project in a generation.” With strong statements like that, health systems are worried they are not nimble enough to compete. A great option is to approach smaller, local retail establishments to open and operate clinics within their space. You provide the operational expertise as a tenant and they provide the foot traffic. As bank branches turn over, there are numerous opportunities for health systems to grab real estate within existing space for low cost.
- Build observation units (or clinical decision units) on your campus. If the patents end up coming to campus, but do not need to be treated as an inpatient, having this lower cost alternative can lead to significant savings for your health system. Observation units have been a hot term around hospital planning for the past 10 years. Between 2003 and 2011, the number of hospitals with observation units nearly doubled from 19% to 36%; a trend that continues to increase. Insurers are pushing hospitals (through reimbursement limits) to treat lower acuity in these types of units rather than admit them into the inpatient setting. There are many arguments to be made about who should be making these decisions, but the trend of limiting inpatient stays is clear.
In 52 years, from 1960 to 2012, annual healthcare spending in the United States increased 100 times from $23.4B to $2360.4B. Obvious to everyone, this type of growth is unsustainable and all ideas are the table to curb costs. The facilities and planning groups play a key role in developing strategies that align with the goals of the healthcare organizations.
Next month we will continue this conversation by addressing how the drive toward “prevention” and “choice” will impact your facilities and the survival of your health system.