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Could Micro Hospitals be the Next Big Thing? What started as an intriguing experiment almost a decade ago to address changing demographics, consumer expectations and cost pressure... is now a nationwide trend.

A few years ago, I had a discussion with a marketing leader in the healthcare services area about the potential changes Urgent Care Facilities would effect on how hospitals, rehab and nursing facilities deliver services. We discussed having “distributed services”. Looking in the rear view mirror, the trends in delivery of care share interesting commonalities:

– Improve access to care
– Reduce Emergency Room visits
– Divert patients and consumers to the community as soon as possible
– Reduce the lengths of stay in hospitals, rehab facilities and long term care facilities
– Increase Value Based Payments

As we consider Micro-hospitals, they have many of the elements to maintain and build on these trends. Most critically, the operations of Micro- hospitals require competencies, processes and cost structures that may be different than traditional hospitals and other larger facilities.

The shift of our health-care system’s model from volume to value has inspired payers and providers to reimagine health-care delivery. Micro-hospitals started as an intriguing experiment almost a decade ago to address changing demographics, consumer expectations and cost pressure. They’re now a nationwide trend.

Occasionally referred to as “neighborhood” or “community” hospitals – even “urgent care facilities on steroids” — these scaled-down units are more cost-efficient than full-service hospitals for handling lower-acute needs while bringing much-needed 24/7 health care access to underserved areas.

Micro-hospitals can fill the gap between Urgent Care clinics and large hospitals while meeting the specific health needs of their communities. They generally range in size from 15,000 to 50,000 square feet and feature emergency rooms, examination rooms, operating rooms, and typically 8 to 12 inpatient rooms for observation care and short stays (up to 48 hours). They offer lab, pharmacy and imaging services and depending upon the community’s needs, ancillary services such as primary care, dietary services, women’s services, and low-acuity outpatient surgeries. No two Micro-hospitals are exactly the same in their design or service mix. Land may be pricey but the cost to build is generally between $7 million and $50 million.

Diverting less-ill patients to a Micro-hospital can provide more streamlined care for emergent but non-life-threatening issues. Micro-hospital ERs are staffed by emergency physicians, and are fully-licensed hospitals, unlike standalone emergency departments. While not designed for trauma care, Micro-hospitals can stabilize a patient for transfer to an acute-care facility.

Most Micro-hospitals at this time are affiliated with a larger system, delivering hospital-based care in a smaller footprint and thereby operating more efficiently. This new segment of a health system’s portfolio offers new opportunities for supports services companies such as Aramark, Sodexo or Compass. While smaller in profile, some health systems are looking to Micro-hospitals as additional venues to add residency positions for doctor training.

Texas-based Emerus is arguably the pioneer in the Micro-hospital concept, operating or building over 60 across the country and partnering with leading health systems such as Dignity Health, Baptist Health, SCL Health, Hospitals of Providence and Highmark Health. Free-standing ER specialist Nutex Health is promoting its “ER-centric micro-hospital” project slated for Mechanicsburg, PA this year. Even upscale senior living developer Shepherd is exploring the notion of siting Micro-hospitals near its complexes.

“Right now (Micro-hospitals) seem to be popping up in large urban and suburban metro areas,” Priya Bathija, senior associate director for policy development at the American Hospital Association, tells Kaiser Health News. However, “we really think they have the potential to help in vulnerable communities that have a lack of access.”

That may be the next challenge for the micro-hospital concept – to cover the service gaps for at-risk groups outside major population centers. The current thinking is to site micro-hospitals within 20 miles of an affiliated health center campus, to exist as a quicker 24-hour alternative to the ER in the traditional large hospital and for outpatient procedures.

As we continue to explore this area, we want to compare the trends in Micro Hospitals to the experience in shifts to Urgent Care and other “distributed services” facilities in healthcare. We are particularly interested in the operational costs and efficiencies, especially as they relate to value based payments. Join the conversation!


Fady Sahhar

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